CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable Mayor and Members of the City Council FROM: City Manager
SUBJECT: Issuance of Written Report Pursuant to California Government Code Section 65858(d) Regarding Temporary Moratorium on Data Centers Meeting Date: August 25, 2026
It is recommended that the City Council adopt a Resolution (Attachment 1) and issue this Staff Report as the written report required by Government Code section 65858(d), describing the measures taken to alleviate the conditions that led to the adoption of an Urgency Ordinance (Attachment 2), which established a temporary 45-day moratorium on the approval of data centers within the City.
EXECUTIVE SUMMARY
On August 11, 2026, the City Council adopted an Urgency Ordinance pursuant to Government Code section 65858, establishing a temporary 45-day moratorium on the approval of data centers within the City. The City Council adopted the moratorium to provide the City sufficient time to study this land use, infrastructure, environmental, operational, public health, and public safety impacts associated with data centers and to determine whether amendments to the City's General Plan, Municipal Code, zoning regulations, development standards, or other applicable regulations are appropriate.
Government Code section 65858(d) requires the City Council to issue a written report describing the measures taken to alleviate the condition that led to adoption of an interim urgency ordinance at least 10 days before the ordinance expires. Consistent with that requirement, Section 4 of the adopted Urgency Ordinance directs the City Manager, or designee, to prepare the required report for presentation to the City Council no later than 10 days before expiration of the Ordinance.
This Staff Report is intended to constitute the written report required by Government Code section 65858(d). It describes the measures undertaken by the City since August 11, 2026, to study and address the conditions that led to adoption of the moratorium. In addition, consistent with direction provided by the Mayor at the August 11, 2026, City Council meeting, staff are researching and developing a potential ordinance that would permanently prohibit data centers within the City for future consideration by the Planning Commission and City Council.
Staff's evaluation remains ongoing. Staff anticipates returning to the City Council on September 22, 2026, following the required public notice, for a public hearing concerning whether to extend the interim urgency ordinance pursuant to Government Code section 65858.
ANALYSIS
Adoption of Temporary Moratorium
The City's Municipal Code currently does not define or specifically regulate data centers, and the City's existing General Plan, Municipal Code, zoning regulations, and other applicable land use regulations do not comprehensively address the particular characteristics and potential impacts associated with data centers.
Data centers may require extraordinary electrical demand, electrical substation or transmission improvements, substantial cooling systems, backup generators, water and wastewater capacity, and 24-hour operations. Depending upon their location, scale, design, and manner of operation, such facilities may create or exacerbate concerns regarding land use compatibility, noise, air quality, greenhouse gas emissions, public health and safety, heat generation, emergency response, infrastructure capacity, water and energy resources, community character, and the relationship between the intensity of the use and employment or other community benefits generated by the facility.
On August 11, 2026, the City Council determined that allowing data center applications to be accepted, processed, or approved under the City's existing regulations while the City studies these issues could result in development that conflicts with regulatory amendments presently being contemplated and could commit land, utility capacity, water resources, and related infrastructure before the City has had an opportunity to determine whether additional standards and safeguards are necessary.
Accordingly, the City Council adopted an Urgency Ordinance establishing a temporary 45-day moratorium prohibiting the issuance or approval of land use entitlements, permits, agreements, regulatory licenses, or other approvals for the construction, operation, or development of data centers within the City.
Government Code Section 65858(d) Written Report
Government Code section 65858(d) provides that, 10 days prior to expiration of an interim ordinance or any extension, the legislative body must issue a written report describing the measures taken to alleviate the condition that led to adoption of the ordinance. Consistent with this requirement, Section 4 of the adopted Urgency Ordinance provides:
“The City Manager, or designee, is authorized and directed to prepare the report required by subdivision (d) of California Government Code Section 65858 describing the measures taken to alleviate the condition which led to adoption of this Ordinance—for presentation to the City Council—no later than ten (10) days prior to the expiration of this Urgency Ordinance.” Accordingly, this Staff Report is also intended to serve as and constitute the written report required by Government Code section 65858(d). The following summarizes the measures undertaken by City staff since adoption of the moratorium to evaluate and address the conditions identified by the City Council.
Measures Taken Since Adoption of the Moratorium
Since adoption of an Urgency Ordinance on August 11, 2026, City staff have commenced their study of data centers and the potential regulatory measures necessary to address the concerns identified by the City Council. Staff's work to date has included the following:
Review of Existing City Regulations.
Staff has begun reviewing the City's existing General Plan, Municipal Code, zoning regulations, specific plans, development standards, and other applicable regulations to determine how a proposed data center would currently be classified and regulated and to identify areas in which the City's existing regulations may not adequately address the particular characteristics and potential impacts associated with data center development.
2. Research Regarding Data Center Characteristics and Potential Impacts.
Staff has commenced research regarding the operational and land use characteristics of data centers, including issues related to electrical demand and grid capacity, potential substation or transmission improvements, water consumption and cooling systems, backup generation, noise, air quality, emergency response, infrastructure capacity, heat generation, land use compatibility, and potential fiscal, employment, and community impacts.
3. Review of Regulatory Approaches Used by Other Jurisdictions.
Staff have begun reviewing how other California cities and counties have addressed or are presently addressing data center development. This review includes consideration of temporary moratoria, zoning classifications, locational requirements, discretionary permitting requirements, development and performance standards, infrastructure requirements, environmental and operational standards, and complete prohibitions adopted or considered by other jurisdictions. The purpose of this review is to identify potential alternative regulatory approaches that may be appropriate for consideration in the City.
4. Interdepartmental and Agency Coordination.
City staff are coordinating with the Public Works Department, Los Angeles County Fire Department, and utility providers regarding issues within their respective areas of responsibility. These discussions are expected to include matters such as electrical and utility capacity, water and wastewater demand, transportation and public infrastructure, fire protection, emergency response, noise, environmental impacts, land use compatibility, and other public health and safety considerations relevant to data center development.
5. Evaluation of Potential Regulatory Approaches.
Staff have begun evaluating potential approaches for regulating data centers within the City, including prohibiting data centers within the City.
Potential regulatory subjects under review include, as applicable, survey of any existing data center operations, definition of “data center”, and how existing data centers will be treated should there be a ban on data centers.
6. Development of Potential Permanent Prohibition.
At the August 11, 2026, meeting at which the City Council adopted an Urgency Ordinance, the Mayor directed City staff to develop a potential ordinance that would permanently prohibit data centers within the City. Consistent with that direction, staff is researching the legal and land use considerations associated with a permanent prohibition and is developing a potential ordinance for future consideration by the Planning Commission and City Council.
The development of a potential prohibition does not predetermine the ultimate action of either the Planning Commission or City Council. Rather, it provides an additional regulatory alternative for consideration as the City evaluates whether, where, and under what conditions data centers should be permitted within the City.
7. Coordination With Legal Counsel.
The City has consulted with the City Attorney regarding Government Code section 65858, available regulatory approaches, and the legal requirements applicable to potential amendments to the City's General Plan, Municipal Code, zoning regulations, development standards, and/or other City regulations, including the potential adoption of an ordinance permanently prohibiting data centers.
Continuing Need for Study
The work undertaken since August 11 represents the initial phase of the City's evaluation. Given the complexity of data center development and the potential impacts identified by the City Council, additional study is necessary before staff can make final recommendations concerning whether data centers should be prohibited or, alternatively, whether and under what circumstances they should be permitted.
Among other things, additional time is necessary to:
develop a potential permanent prohibition ordinance for Planning Commission and City Council consideration; complete review of existing City regulations and identify regulatory gaps; further evaluate regulatory approaches used by other jurisdictions; evaluate the feasibility and legal and policy implications of a permanent prohibition on data centers; prepare any other proposed General Plan, Municipal Code, zoning, development-standard, or related amendments that may be warranted.
The conditions that led to adoption of an Urgency Ordinance therefore have not yet been fully alleviated. The City's existing regulations continue to not comprehensively address the location, intensity, utility demand, water consumption, cooling systems, noise, environmental performance, infrastructure requirements, and other characteristics associated with data center development.
NEXT STEPS
The adopted Urgency Ordinance will expire on September 25, 2026, unless extended pursuant to Government Code section 65858.
Staff anticipates returning to the City Council on September 22, 2026, for a noticed public hearing to consider whether to extend the moratorium for an additional 10 months and 15 days as authorized by Government Code section 65858.
If the moratorium is extended, staff will continue its study of data centers and the City's available regulatory options. This will include continued development and evaluation of a potential ordinance permanently prohibiting data centers, for future consideration by the Planning Commission and City Council, as well as evaluation of alternative regulatory approaches as appropriate.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
Issuance of this report does not constitute approval of a project that may cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and therefore is not a project subject to the California Environmental Quality Act (“CEQA”). In addition, to the extent issuance of the report may constitute a project, it is exempt pursuant to CEQA Guidelines section 15061(b)(3) because it can be seen with certainty that issuance of the report will not have a significant effect on the environment.
FISCAL IMPACT
Issuance of this report is not expected to have a significant direct fiscal impact on the City.
RELATIONSHIP TO STRATEGIC GOALS
This item relates to the 2016 Strategic Action Plan's goal of Economic Growth, including Guiding Principle 1 to “Create and strengthen our identity, as a community that promotes opportunity and success for business that meets the strategic focus for economic growth, will have a positive impact on the quality of life and the City's financial sustainability,” and Guiding Principle 3 to “Support a long-range planning vision through the City's General Plan, zoning ordinance, and related land use planning documents that incorporate community and stakeholder input and provide a compass for strategic economic growth, infrastructure investments and city fiscal planning.” Prepared by: Mark Murray,
Recommended by: Jessica Serrano, Director of Community Development Reviewed by: Alvaro Castellon, Director of Finance
Approved as to form: Noel Tapia, City Attorney
Respectfully submitted: Ernie Hernandez, City Manager
ATTACHMENTS
Resolution
Urgency Ordinance
City of Commerce Staff Report – Issuance of Written Report Re: Temporary Moratorium on Data Centers August 25, 2026