Trends in Technology
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Beyond the Moratorium What Cleveland’s data center pause means for the construction industry By Ciaran T. Kelly Frantz Ward LLP
T
he growth of artificial intelligence (AI) is creating unprecedented demand for large-scale facilities that house the infrastructure necessary to store, process and transmit data, commonly referred to as data centers. While a handful of data center projects have been approved throughout Northeast Ohio, the city of Cleveland will not be approving any in the near future. On July 15, 2026, Cleveland City Council approved a temporary three-month moratorium, which may be extended for up to an additional three months, on the review and issuance of all use, building and zoning permits, certificates of occupancy, and other license or permit applications for new standalone data center projects. The moratorium is designed to allow the city time to develop policies to regulate data center projects after evaluating the impacts on residents associated therewith.
Other authorities having jurisdiction (AHJs) are likely to eventually adopt policies addressing the city’s concerns identified above. Accordingly, owners, developers, contractors and design professionals should expect the following moving forward:
Impacts the city plans to evaluate
The specific impacts of data center projects that the city plans to evaluate include:
Required infrastructure upgrades Data centers often require new or upgraded electrical transmission infrastructure and/or water supply, treatment or distribution infrastructure to meet increased utility needs. Disparate economic impacts Utility requirements for data centers may increase utility costs for all 30
other consumers. Additionally, costs to upgrade utility infrastructure have historically been shared by all consumers, potentially resulting in residential consumers bearing a portion of a data center’s development costs.
What to expect moving forward
As demand for data center projects is only expected to grow, the city’s concerns regarding the impacts of data center projects will remain.
Stricter zoning restrictions + permitting Owners can expect to encounter more issues obtaining zoning approval for data centers, depending on the availability of land for development in a given AHJ. Environmental concerns associated with data centers will also likely require navigating a more complex permitting process and obtaining permits from various agencies. Increased code requirements The environmental and safety concerns associated with data centers have Properties | August 2026
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Environmental impacts + resource allocation Data centers require disproportionate amounts of electricity and fresh water to power and cool the equipment. They also constrain the availability of land for other types of development, including those that may be better suited to the needs of the community.
Increased development + operational costs Owners will likely be required to fund necessary improvements to existing infrastructure needed to support a data center, along with having to pay higher utility costs to ensure other consumers’ prices remain the same.