Palo, Iowa, Adopts Data Center Ordinance Requiring Developers To Fund City Upgrades

A crowded Monday meeting at Palo City Hall underscored intense local interest as the City Council gave final approval to a new ordinance governing data centers. The 4-1 vote establishes rules that could shape how the small Iowa city responds to proposals for large-scale technology facilities.

What the Ordinance Does

The ordinance—passed with Council member Doug Hanover casting the lone dissenting vote—sets basic standards for where data centers may locate within Palo and how they must be developed. It requires developers to submit a detailed major site plan describing layout, timeline and projected jobs, and it requires any city infrastructure upgrades tied to a project be paid for by the developer.

Environmental And Infrastructure Review

Palo based much of its ordinance on Linn County's earlier rules but places greater emphasis on review by the Iowa Department of Natural Resources to assess potential water-use impacts. Officials said that many of the more complex issues would likely be resolved later through project-specific development agreements if a company formally advances a proposal.

“This ordinance gives Palo the ability to set the terms, protect our community and ensure that any development, if it moves forward, does so under rules written by Palo for Palo.”
—Council member Eric Van Kerckhove

Local Concerns And Broader Context

Residents at the meeting focused on infrastructure risks, warning that a hyperscale data center could strain Palo’s electric grid and water systems. Rural resident Brenda Lane told the council,

“It appears to us that you're prioritizing the acquisition of this project over addressing safety concerns.”

Those worries echo a national debate: large data centers that support AI and cloud services can demand substantial electricity and, in some designs, significant water for cooling. Supporters counter that AI and other technologies can help utilities forecast demand, reduce waste and better integrate cleaner energy sources, but expansion can still increase overall power demand and local costs if not carefully planned.

Annexation, Google And County Actions

Google has indicated interest in nearby unincorporated Linn County land being annexed into Palo for data center development, but no formal annexation application or timeline has been submitted. Mayor Bryan Busch told The Gazette the company has not provided a timeline.

Linn County supervisors have taken a different path by approving an 18-month pause on data center projects in unincorporated areas while planners consider new rules and a possible exemption for facilities tied to nuclear generation. The site Google has explored is near the Duane Arnold Energy Center; owner NextEra Energy has said it hopes to restart nuclear operations there by early 2029 if regulators approve the plan.

“So the goal tonight is to start taking public comment on this but not to have any draft ordinance language to discuss. It's still too early on in the process to do that.”
—Charlie Nichols, Linn County Planning and Development Director

City officials and residents alike signaled that more detailed, project-specific negotiations and technical reviews would determine whether any large data center actually moves forward near Palo.