Agenda packet — Oakley City Council, September 15, 2026

AGENDA

SPECIAL JOINT MEETING OF THE OAKLEY CITY COUNCIL AND PLANNING

COMMISSION
Tuesday, September 15, 2026
6:30 PM
Oakley City Council Chambers located at 3231 Main Street, Oakley, California 94561 Councilmember Shaw will be attending the meeting remotely from the following location: Tulalip Resort Casino Business Center, 10200 Quil Ceda Blvd., Tulalip, WA 98271
Mission Statement: The City of Oakley will create a resilient future that fosters and attracts a vibrant and evolving community that welcomes and values all people.

Vision Statement: The City of Oakley celebrates our unique Delta lifestyle and small-town feel where we Live in a safe, dynamic community, Work together to build the future, and Play in our own backyard.

Agendas are posted in Oakley at Oakley City Hall, outside the gym at Delta Vista Middle School and outside the Library at Freedom High School. Agendas are also posted on the City’s website at oakleyca.gov.

You can view reports on the City’s website at oakleyca.gov. You can also view reports in person at City Hall, 3231 Main Street, during normal business hours. Any other documents distributed to members of the City Council regarding an item on this agenda are also made available in the lobby on the evening of the City Council meeting.

Pursuant to the Americans with Disabilities Act (ADA), the City will make reasonable arrangements to ensure accessibility to this meeting. If you need special assistance, please contact the City at least 48 hours prior to the meeting at 925-625-7000 or [email protected].

Meeting online Link: https://zoom.us/j/93455380825
Meeting call in telephone number: 669-900-6833 | Meeting ID: 934 5538 0825 (*9 to request to speak | *6 to unmute/mute)
Online Participation:

Members of the public may attend the City Council meeting online via Zoom using the link above or watch the City Council meeting at oakleyca.gov or YouTube. Technical difficulties may occur from time to time. The City will follow the adopted Technology Disruption Policy outlined in City Council Resolution 36-26.
1 1. CALL TO ORDER AND ROLL CALL

2. PLEDGE OF ALLEGIANCE TO THE FLAG

3. PUBLIC COMMENTS

4. WORK SESSION

4.1 Data Centers - Focused Second Joint City Council and Planning Commission Public Comments:

Members of the public may address the Council on items of interest that are within the City's jurisdiction. In compliance with the Brown Act, the Council may not take action or have discussion on any item that is not listed on the agenda. Public comment on items not listed on the agenda will be heard under the Public Comments section of the agenda. Public comments on items listed on the agenda will be heard as the Mayor calls the item. Please note that public comments are limited to three (3) minutes. The timer on the dais in front of the Mayor will change from green to yellow at one (1) minute and will turn red and beep at three (3) minutes.

In person public comment:

To provide an in-person public comment, please fill out a speaker card located in the lobby and give it to the City Clerk. Please indicate on the card if the topic is for general public comment or for a specific agenda item. The Mayor will call speakers to the podium by name when the item is opened for public comment.

Online Public Comment:

To provide public comment via Zoom, connect to the meeting online at the link above. Use the Raise Hand feature to request to speak (*9 on a telephone) when the Mayor opens public comment. The City Clerk will announce the names of online participants with their hands raised and invite each participant requesting to speak into the meeting as a panelist when it is their turn to speak. Once in the meeting as a panelist, unmute your microphone, turn on your camera if desired, and begin speaking. Once you are done speaking, the City Clerk will move you back to being an attendee.

Written public comment:

If you wish to enter comments into the public record, please complete the online public comment form by 4 pm the day of the meeting.

Please keep cell phones/electronic devices turned off during the meeting. Please be advised that City Council meetings are video recorded and attendees may appear on video.

The public is welcome at this time to address the City Council on items on the Consent Calendar or other items not listed on the agenda but within the Council's jurisdiction.

There is an opportunity for the public to comment on other agenda items at the time they are discussed.
2 Work Session (Ken Strelo, Community Development Director and Derek Cole, City Attorney)

5. ADJOURN
Staff Report

1. Notice of Work Session

2. Staff Report from Joint Work Session, dated July 21, 2026

3. Minutes from Joint Work Session, dated July 21, 2026

4. Draft Ordinance Language for Data Center Ban (not for introduction/adoption) 3 STAFF REPORT
1 CITY HALL | 3231 Main Street, Oakley, CA 94561
O (925) 625-7000 | F (925) 625-9859 | www.oakleyca.gov
DATE: September 15, 2026
TO: Joshua McMurray, City Manager
FROM: Ken Strelo, Community Development Director
Derek P. Cole, City Attorney
SUBJECT: Data Centers – Focused Second Joint City Council and Planning Commission Work Session
Summary
This is a focused second joint work session with the City of Oakley City Council and Planning Commission to receive additional information on the impacts of data centers from Staff, receive additional public input, and review draft ordinance language that would ban the use of “data centers.” The first joint work session was held on July 21, 2026. At the conclusion of that joint work session, a majority of the City Council directed Staff to hold a focused second work session to address questions related to negative health effects caused by data centers on nearby residential uses, to provide draft ordinance language to ban the use, and to proceed with the steps required to ban the use with a goal of doing so by the end of year 2026.

July 21, 2026 Joint Work Session
The joint work session held on July 21, 2026 included a Staff Report (Attachment 2 to this Staff Report), Staff presentation, input from the City Attorney, public comments, comments from the Planning Commission and City Council, and majority consensus direction from the City Council. Multiple topics were included in the Staff Report and presentation, including how to define a data center, concerns surrounding data centers, current trends and legislation, potential for data centers in Oakley, outside agency input, and whether the City could ban data centers. Minutes from the meeting are included as Attachment 3.

DIRECTION FROM THE CITY COUNCIL
As summarized above, the majority consensus direction provided to Staff by the City Council at the conclusion of the joint work session included holding a focused second joint work session to receive more information on the health effects data centers have on nearby residential, to look at draft ordinance language for a ban, and to proceed with a ban with the goal of doing so by year’s end. During the discussion, the City Council provided additional clarity for Staff to ensure the ordinance to ban the use includes language to capture data centers operating under a different title. Other comments received related to using external effects and jobs per acre as defining criteria. Since the ultimate direction was for a ban, the detailed criteria may not be necessary to include in the proposed ordinance language. The Approved and
Forwarded to the City
Council and Planning
Commission
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definition of the use will be the main qualifier for what is subject to the ban and what is not.

Follow Up on Health Effects on Nearby Residential
The July 21, 2026 Staff Report included discussion on environmental impacts caused by data centers in the areas of air quality, noise, and light. One of the focuses of the current work session is to look deeper into the health effects data centers have on nearby residential uses. More specifically, what the impacts might be at specific distances from residential uses.

It is difficult to provide specific air quality impact numbers based on specific distances from data centers due to unknown variables such as the size of the data center, number of diesel generators and how often they may operate, and local climate on any given day. Still, Staff was able to find information that the Council may find helpful in supporting the ban on data centers.

DIESEL PARTICULATE MATTER (DPM) AND NITROGEN OXIDE (NOX) When discussing air quality health impacts to nearby residential uses, the most common cause associated with data centers would be diesel backup generators.

These generators typically do not run all of the time and are only operated during routine tests or maintenance or when needed due to a drop or loss of power from the electrical grid. Diesel generators commonly produce Diesel Particulate Matter (DPM) and Nitrogen Oxide (NOX). Below are summary snapshots of the publicly available information on DPM and NOX
 According to air dispersion modeling established by the California Air Resources Board (CARB), stationary diesel emissions, such as the emergency backup generator yards inherent to data center operations, present a highly concentrated cancer risk to individuals living within 150 to 300 feet downwind. Particulate concentrations drop by roughly 70% at 500 feet.
 Beyond long-term cancer risks, the sudden, high-volume testing or activation of diesel generators causes immediate, acute health impacts.  Within 0-500 feet, the following acute respiratory distresses are associated with DPM and NOX:
o The US EPA’s Integrated Science Assessment for Particulate Matter notes that sudden exposure to concentrated DPM and Nitrogen Oxides (NOX) causes immediate airway inflammation.
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o For pediatric asthmatics and the elderly living within 500 feet, sudden generator testing can trigger acute asthma exacerbations, a 20% to 40% spike in emergency room visits for respiratory distress within highexposure zones, and immediate cardiovascular stress.  Within 500 feet to 1,000 feet:
o DPM concentrations drop by roughly 70% at 500 feet and roughly 90% at 1,000 feet.
o Residential uses within 500-1,000 feet of acute NOX emissions are still considered to bear the highest risk of immediate airway inflammation and reduced lung function, particularly for children and elderly residents.

NOISE
The noise discussion from the July 21, 2026 Staff Report provided information related to distance. Those key points are summarized below:
 Persistent noise pollution is often related to large HVAC cooling fans or backup diesel generators. These sources can result in a low-frequency drone that can travel a significant distance away from the source, depending on the size of the data center, with smaller facilities being noticeable from several hundred feet away to larger AI data centers being noticeable up to one-half mile or more from the source.
 Low frequencies associated with data centers can range between 63 Hz and 250 Hz and can occur at all times. Attenuating such low frequencies with typical sound barriers is mostly ineffective since low frequencies can pass through solid walls.

Data Centers by Another Name
During the July 21, 2026 joint work session, the City Council asked Staff and the City Attorney to capture and define the use of “data center” in a way that would prevent the same type of use with the same impacts but under a different title. While data center is the most common name currently used, other titles such as server farm, data warehouse, or IT facility could mean a data center by a different name and create potential arguments that what is essentially a data center is not subject to a future ban of data centers. In order to combat that potential future scenario, Staff has drafted a definition that attempts to capture data centers and all similar uses under one umbrella.
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Below is a proposed definition for “Data Center.” It has been drafted to prevent a data center applicant/operator from bypassing a ban of data centers by using a synonyms or alternative title for the use.

Definition
The draft ordinance language includes a definition for “data centers” and the intent of this definition is to capture data centers and equivalent high-density computing facilities. The definition as found in the draft ordinance language is as follows:
“Data Center” means a building, portion of a building, group of buildings, or other facility whose primary purpose is to house computer servers, dataprocessing equipment, digital storage equipment, networking equipment, or similar electronic equipment used for the remote storage, processing, management, transmission, or distribution of digital data or information. The term includes, but is not limited to, facilities commonly referred to as Data Centers, server farms, cloud-computing facilities, hyperscale Data Centers, colocation facilities, cryptocurrency or blockchain computing facilities, and artificial-intelligence computing or processing facilities.

A facility may constitute a Data Center regardless of its size, electrical demand, computational capacity, or the particular technology used to store, process, or transmit data.

A Data Center includes equipment and infrastructure accessory or incidental to such use, including cooling and ventilation systems, electrical substations and transformers, generators and other backup power systems, battery energy storage systems, water storage or cooling facilities, telecommunications equipment, and related security and fire-suppression systems.

ENERGY CAPACITY THRESHOLD (OPTIONAL)
The City Council may wish to use the above definition to capture all data centers of any size, or it could look to include an energy capacity threshold and exemptions. In the first work session, medium and large data centers were used to communicate energy capacity and how that number correlates to an average US home. Not all data centers are medium and large (or larger) and while the above definition would 7 STAFF REPORT
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capture all sizes, Staff could add additional clauses or modify the definition to have the definition cover all data centers of a certain energy capacity or larger. For example, a small data center could operate in a building as small as 1,000-3,000 sf. and on a site as small as 0.25 acres. A data center of this size would typically have an energy capacity of 100 kW. Also, modern AI/Crypto Mining Clusters using highintensity AI infrastructure could operate with an even smaller small footprint (down to 500 sf) and draw 40-100 kW of energy per rack.

Analysis and Recommendation
Staff recommends adopting the definition as proposed above; however, depending on City Council direction, Staff can add any suggested modifications, or modify it further with energy capacity thresholds. If integrating energy capacity thresholds, the Council may wish to consider 100 kW as the threshold and include language that would capture aggregate capacity. This would capture a data center starting as a 40-kW facility that then increases its building electrical service to 100 kW in the future. It is noted that a 40-kW level of capacity is fairly low with 400-amp homes exceeding this capacity as a residential use.

The simpler and more straight forward option is the original proposed definition.

Adding an energy threshold could overcomplicate the process, invite creative attempts to circumnavigate the ban, or unintentionally disrupt the allowance of other uses that may require energy capacity beyond the established threshold, but are not related to data centers or similar uses.

HOME-BASED DATA CENTERS AND SIMILAR USES
During the July 21, 2026 work session, a question was raised by Councilmember Williams on whether the City could also look into regulating home-based data centers. Staff has prepared additional information and options for discussion at this work session. Should the City Council direct Staff to proceed with additional regulations, below are two potential approaches to prohibit home-based data centers and similar high energy draw uses.

The typical standard modern home features a 200-amp main panel, which has a maximum continuous safety threshold of 38.4 kW. A 400-amp main panel, installed in certain new all-electric homes, provides a maximum continuous safety threshold of

76.8 kW. If the City Council would like to regulate the potential for a home-based business to operate a small data center, crypto mining operation, or similar use, they may wish to direct staff to implement one of the options below.

The first option would cap how much energy a home-based business could consume with an exemption if the owner can prove the spike is for electrical vehicle charging, converting to electrical appliances, or HVAC upgrades, which may be normal 8 STAFF REPORT
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building permit applications, but are not typically associated with a home business.

The second option would prohibit the use, in general, without any ties to an energy consumption threshold.

Option 1
One example of language that could be added to the Home Business Ordinance to cap energy consumption could be as follows:
"No home-based business shall consume electricity at a rate that exceeds three times (300%) the median monthly volumetric consumption of a standard singlefamily residential unit within the city, unless the property owner can prove the spike is due to verified vehicle electrification, converting to electrical appliances, or residential HVAC upgrades."
This option permits these uses if they stay under the threshold. However, as previously noted, home-based businesses typically do not require these exemptions.

This threshold would apply more evenly if the language were tied to building permits in general. The downside of that is it falls completely outside of the Home Business Permit ordinance. Should this option be adopted, the City and PG&E will jointly enforce the regulations. When a home triggers an extreme utility anomaly alert (e.g., drawing maximum continuous baseload power every single hour of the month), the utility flags it and makes the City aware, providing code enforcement with the initial data needed to issue a non-compliance notice. This option requires calculating the 300% median monthly volumetric consumption, constant monitoring, and relies on reactionary enforcement, followed by additional research, confirmation, and enforcement. It should be noted that Code Enforcement does not have authority to enter a home to conduct inspections unless through consent or a warrant signed by a judge.

Option 2
A second example of language that could be added to the Home Business Permit ordinance to prohibit all such uses could be as follows:
"Data Centers, commercial data processing nodes, commercial cryptocurrency mining operations, and any accessory computation use that operates server or networking equipment as a primary business activity for off-site or third-party clients."
This language would be added to the ordinance as a prohibited type of home business. Any application for a home business that proposes this type of use would be denied. Should a resident ignore the regulations or proceed without a Home Business Permit, it means they would be operating without a business license. 9 STAFF REPORT
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Should enforcement be required, it would follow the procedures laid out for enforcement in Option 1.

Analysis and Recommendation
Between Option 1 and Option 2, Option 2 would be expected to best serve in reducing the number of potential home-based data centers and similar uses by not allowing them even under a given threshold of power consumption. This would result in less overall pull from the grid, and less required enforcement for an issue that is difficult to inspect and confirm the reason for an energy spike. Should a resident want to operate such a use for personal reasons and without a business license or home business permit, they may do so under the home’s current maximum electrical capacity. That operation would also limit the size of any such personal operation unless someone were to illegally increase the home’s capacity which could result in a building code violation that would be addressed accordingly.

If the City Council directs Staff to pursue prohibiting home-based data centers and similar uses, Staff recommends the Council direct Staff to draft language consistent with Option 2 and include the text amendment with the future ordinance banning data centers.

Consistency with the Oakley Strategic Plan 27+
Holding an advisory work session on data centers is consistent with the goals in the section of the Oakley Strategic Plan 27+ entitled, “Community and Economic Development Goal”.

Fiscal Impact
This is a City-initiated work session. Staff time and materials associated with research and preparation of this Staff Report packet and any follow-up based on policy direction from the City Council are covered by the City’s General Fund.

Planning Commission Advisory Role and City Council Direction to Staff
This is a work session only. The are no resolutions or ordinances requiring action.

The Planning Commission should function in an advisory role to the City Council during this work session. The City Council is being requested to provide direction to Staff on the draft ordinance language for the ban on data centers and similar uses.

Staff will incorporate additional language banning the use from home businesses into the future ordinance, if directed to do so. If a unanimous consensus cannot be reached on direction to Staff, the City Council may be asked to provide direction supported at least by a majority of the City Council.
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Should the City Council choose to direct Staff in a manner consistent with the recommendations throughout this Staff Report the direction to Staff should be as follows:
 City Council directs Staff to use the Draft Ordinance Language for the Data Center Ban as included in Attachment 4 to the Staff Report. The ordinance will be presented to the Planning Commission as a public hearing item for recommendation to the City Council, then brought to the City Council for introduction as a public hearing item, followed by adoption at the next available City Council meeting after the introduction, as a consent calendar item.
 (Optional) City Council also directs Staff to include with the ordinance banning Data Centers additional language that would ban the use and similar uses as a home-based business consistent with the recommendation provided in Option 2 in this Staff Report.

Attachments

1. Notice of Work Session

2. Staff Report from Joint Work Session, dated July 21, 2026

3. Minutes from Joint Work Session, dated July 21, 2026

4. Draft Ordinance Language for Data Center Ban (not for introduction/adoption) 11 NOTICE OF WORK SESSION Notice is hereby given that on September 15, 2026, at 6:30 p.m., or as soon thereafter as the matter may be heard, the City Council and Planning Commission of the City of Oakley will hold a Special Meeting and conduct a Joint Work Session at the Council Chambers located at 3231 Main Street, Oakley, CA 94561 for the purposes of discussing the item described below:

Item Name: Data Centers – Focused Second Joint City Council and Planning Commission Work Session
Location: City of Oakley, CA 94561 (no specific location) Applicant: City of Oakley, 3231 Main Street, Oakley, CA 94561 Request: This is a focused second joint work session with the City of Oakley City Council and Planning Commission to receive additional information on the impacts of data centers from Staff, receive additional public input, and review draft ordinance language that would ban the use of “data centers.” The first joint work session was held on July 21, 2026. At the conclusion of that joint work session, a majority of the City Council directed Staff to hold a focused second work session to address questions related to negative health effects caused by data centers on nearby residential uses, to provide draft ordinance language to ban the use, and to proceed with the steps required to ban the use with a goal of doing so by the end of year 2026.

How to Review: The Staff Report and its attachments will be available for public review, on or before September 10, 2026, at City Hall, 3231 Main Street, Oakley, CA 94561 or online at https://www.oakleyca.gov/129/Agendas-Minutes by navigating to the September 15, 2026, Special Meeting of the City Council and Planning Commission agenda and clicking the project title link.

Interested persons are invited to submit written comments prior to and may provide public comment at the Work Session. Please refer to the meeting agenda, when available, for more information on how to participate remotely.

Written comments may be submitted online at: https://www.oakleyca.gov/publiccomment.

NOTICE IS ALSO GIVEN pursuant to Government Code Section 65009(b) that, if this matter is subsequently challenged in Court by you or others, you may be limited to raising only those issues you or someone else has raised at a Work Session described in this notice or in written correspondence delivered to the City of Oakley City Clerk at, or prior to, the Work Session.

OAKLEY
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CAL IF ORN I A
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DATE: July 21, 2026
TO: Joshua McMurray, City Manager
FROM: Ken Strelo, Community Development Director
Derek P. Cole, City Attorney
SUBJECT: Data Centers – Joint City Council and Planning Commission Work Session
Summary
This is a joint work session with the City of Oakley City Council and Planning Commission to receive information and public input on the feasibility of allowing data centers within the City of Oakley. Currently, the City of Oakley Zoning Code (Oakley Municipal Code Chapter 9.1) does not include a definition for or listing of “Data Centers.” Staff will provide information on potential impacts typically associated with data centers, current trends in California and the country as a whole, and summary findings in well-documented research papers related to the use. The City Council and Planning Commission will receive Staff’s presentation, a City Attorney opinion on the rules governing a potential ban of the use, and public input. After discussions, including input from the Planning Commission, the City Council will provide policy direction back to Staff on whether to prohibit the use or formulate regulations and standards to potentially conditionally permit the use, as well as direction on which types of zones the use may be conditionally permitted within, if that direction is provided. For the purposes of this work session, “Data Centers” includes “AI” or “Artificial Intelligence” data centers.

Data Centers – Defined
“Data Center” is a term that has been in existence for many decades; however, it has recently gained national attention due to rapid advancement in AI technology and large-scale needs for increasingly growing data processing. There are many descriptions and definitions of the term ranging from general summaries to specific definitions within individual local jurisdictions’ codes. In an effort to use a definition that casts a wide net over the various different types of data centers, we can borrow from the definition found in Title 42 U.S. Code section 17112 (Energy Efficiency for Data Centers) which defines the term “data center” as “any facility that primarily contains electronic equipment used to process, store, and transmit digital information.” For the purposes of this work session, we are focused on free-standing data centers or operations with the sole purpose of operating as a data center, rather than smaller operations ancillary to a main building. Common terminology associated with these types of larger-scale data centers are “Hyperscale” or “Generative AI” Data Centers.

Approved and
Forwarded to the City
Council and Planning
Commission
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Concerns Surrounding Data Centers
Concerns over the increase in data centers being proposed and constructed are mainly related to their demand on natural resources or public services, such as electricity, water, and wastewater treatment, as well as environmental impacts created by data centers, such as air pollution, noise and light pollution, and habitat loss. There is another category of concerns that are more ethically focused on the growing expansion of generative AI-driven technology. For the main purpose of this work session, Staff has focused on concerns rooted in resource usage and environmental impact.

NATURAL RESOURCES
It is well documented that hyperscale and generative AI data centers require substantial electricity and water usage. Electricity is used to power the data center, and water is used to cool the equipment operating in the data center. According to key findings in a University of Michigan study1 (“UMich Study”) dated July 2025, and titled, “What Happens When Data Centers Come to Town?”, data centers can have the following impacts related to increased natural resource usage:
• Increased Utility Rates: Data centers increase local electric utility rates by driving up overall energy demand, which can strain grid capacity and force utilities to invest in costly infrastructure upgrades. These costs are passed on to residents through higher rates. Data centers have also secured long-term power agreements, which reduce the available supply and push prices up for other consumers.
• High Resource Consumption: A single data center can consume up to 2 megawatt hours (“MWh”) of power—equivalent to the power used by 2,000 homes—and millions of gallons of water annually for cooling. (Staff Note: The numbers above represent a small or local data center that is continually drawing 2 megawatts (“MW”) of power per hour at all times. Medium or regional data centers (apx. 10,000 sf - 150,000 sf), which based solely on available land in Oakley would be the size most likely proposed, can require up to 20 MW at all times. A continuous draw of 20 MW is the equivalent to the energy consumed by approximately 16,000-22,000 average-sized homes a year. Another way to look at it, is that a 20 MW data center operating at full capacity could require more energy consumption over the course of a year than all of the homes/households in Oakley combined. While some data centers may not operate at their full capacity at all times, it is also true that medium sized data centers may actually require 1.2 times 1 Green, B., & Ananthharama, A. (2025, July). What happens when data centers comes to town? University of Michigan Science, Technology, and Public Policy (STPP) Program. umich.edu 14 STAFF REPORT
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their stated energy use in order to operate ancillary equipment along with their data processing energy usage.
• Resource Efficiency Trade-Off: While advanced cooling methods can offer energy efficiency improvements, current technologies force a trade-off between energy and water efficiency, limiting sustainable solutions.

When data centers are unable to generate their own energy or use recycled water to cool their equipment, demands on the local electrical grid and water supply can be significant. If raising energy demands, such as additions to the grid, are not fully covered by the data center, according to the UMich Study, demand surges and utility companies often pass the costs of infrastructure upgrades and increased energy procurement onto residents and small businesses through higher rates. Staff met with representatives from PG&E to discuss this topic. Notes from that meeting are included in the section entitled “Outside Agency Input” found later in this Staff Report.

ENVIRONMENTAL IMPACTS
Air Quality
The International Energy Agency (“IEA”), a reputable autonomous intergovernmental organization, reports that while renewables are the fastest-growing source of electricity for data centers, natural gas is projected to continue to supply the largest share of data center energy with the US investing heavily in fossil-fueled power plants to support its boom. The increase in burning fossil fuels such as natural gas has a direct negative impact on air quality. The burning of fossil fuels released nitrogen oxides into the atmosphere, which contribute to the formation of smog and acid rain (https://www.epa.gov/nutrientpollution/sources-and-solutions-fossil-fuels).

A December 2024 study out of UC Riverside, titled, “Health-Informed Computing:

Estimating and Addressing the Public Health Impact of Data Centers”2 states that the growing demand for AI and computing technologies is projected to push the total annual public health burden of US data centers up to $20 billion in 2028. The paper follows that up by stating that while the national-impact levels remain modest, data center health costs are unevenly distributed. In the most affected counties, the estimated per-household health burden can reach about seven times the national average.

Noise
Noise pollution is another concern with large-scale data centers. Persistent noise pollution is often related to large HVAC cooling fans or backup diesel generators. 2 Han, Y., Wu, Z., Li, P., Wierman, A., & Ren, S. (2026). Health-Informed computing: Estimating and addressing the public health impact of data centers. arXiv. https://doi.org/10.48550/arXiv.2412.06288 15 STAFF REPORT
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These sources can result in a low-frequency drone that can travel a significant distance away from the source, depending on the size of the data center, with smaller facilities being noticeable from several hundred feet away to larger AI data centers being noticeable up to one-half mile or more from the source. Some communities, along with data centers, have implemented mitigation in an attempt to remedy noise pollution such as acoustical barriers, increased distances from housing, improved insulation on generators, or the use of liquid cooling for fans.

There seems to be a lack of consensus on whether these mitigation measures work or not, with some residents that live near such facilities claiming the mitigation was ineffective and that nuisance citations were ineffective in remedying the issue.

Staff conducted additional research on the low-frequency noise often cited to occur with data center operation. It was found that these low frequencies often range between 63 Hz and 250 Hz. It is noted that attenuating such low frequencies with typical sound barriers is mostly ineffective since low frequencies can pass through solid walls. As a thought exercise, one can imagine hearing music play from another room separated by a wall. Often, only the thump of the bass is noticeable with lyrics and other higher frequencies either not audible or barely audible. These lowfrequency noises from data centers are continuously occurring during all hours of the day and night.

Light
Light pollution from data centers is often associated with security lighting and alarm beacons. Light pollution can potentially be mitigated through natural buffers and screens, such as landscaping, purposeful light placement and direction, and shielding. Depending on the size of a data center, including building height, mitigating for light pollution impacts could be feasible, or difficult to achieve; however, with proper design and location, mitigating for light pollution is more feasible than mitigating for noise pollution.

Current Trends and Legislation
As the topic of data centers gains more attention in the public and with municipalities, there has been a recent trend of cities taking action to address the use. As of July 6, 2026, there is one known city in California (Monterey Park in Los Angeles County) that has permanently banned data centers and they did so through adoption of a measure (Measure NDC) which passed with over 86% of the voters approving the ban. A handful of cities in California have taken similar action as Oakley by passing temporary bans/moratoriums. There is also a growing list of cities that have restricted the use or are actively considering bans. Countrywide, as of July 6, 2026, 141 local municipalities have enacted permanent or temporary bans on data centers.
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There are 15 states (California not included in this list) that have considered bans or moratoriums through various recent bills. Of those 15 states, six have bills introduced, one has a bill that was continued, one had a bill that was vetoed, six have bills that failed, and one has a bill that passed.

STATE BILLS
In California, several bills related to data centers are in progress. A list of these bills and a summary of each are included below. Summary extrapolations are partial and were obtained from www.calmatters.digitaldemocracy.org/bills. The summaries below do not include all details of each bill. For full summaries and bill text, please visit the previously linked site where you can search the bills by their unique number.

All referenced bills are from Session Year 2025-2026.
• SB 886 (McNerney/Padilla): This bill, the California Technology Innovation and Ratepayer Protection Act, would require the Public Utilities Commission, on or before July 1, 2027, to establish separate tariffs for the interconnection of the participating customer facilities and the provision of transmission, distribution, and optional generation services to participating customers, as specified.
• SB 887 (Padilla): The bill would require the State Energy Resources Conservation and Development Commission to develop uniform statewide standards for those conditions for data centers, require regular compliance reporting by operators of data centers for those conditions, and initiate enforcement proceedings in the event of noncompliance with those conditions, as appropriate. The bill would require the quantification and mitigation of impacts for emissions of greenhouse gases of a data center project in the same manner as those certain environmental leadership projects. By increasing the duties of a lead agency, the bill would impose a state-mandated local program.
• SB 1168 (McNerney): Existing law vests the Public Utilities Commission with regulatory authority over public utilities. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. This bill would require the commission to assess opportunities for rate structures to ensure data centers pay a reasonable share of their costs associated with transmission and distribution needs, ensure that data centers pay for their proportionate share of load increases and procurements needed to reliably serve their loads while maintaining consistency with the applicable integrated resource planning requirements, and alleviate cost pressures on residential ratepayers. • AB 2619 (Papan): This bill would require a person who owns or operates a data center, prior to applying to a city or a county for an initial business 17 STAFF REPORT
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license, equivalent instrument, or permit, to provide its water supplier, under penalty of perjury, a good faith estimate of the expected water use, the anticipated source of water, and the data centers projected water use volume for the maximum day, maximum month, and average year. Similar reporting requirements would be required upon each business license renewal. This bill would also require the Department of Water Resources and the State Energy Resources Conservation and Development Commission to develop, on or before January 1, 2029, guidelines and best practices to maximize the efficient use of natural resources to address the developing and emerging needs of technology in California that are consistent with urban water use objectives under prescribed provisions of law.
• AB 222 (Bauer-Kahan): This bill would require the State Energy Resources Conservation and Development Commission (Energy Commission) to establish a process for the owner of a data center, as defined, to submit the power usage effectiveness ratio, as defined, for the data center to the Energy Commission on a biannual basis, and require the owner of a data center to submit this information for the data center in the manner and timeframe specified by the Energy Commission. The bill would require the Energy Commission, as part of the 2027 edition of the integrated energy policy report, to include an assessment of electrical load trends for data centers, as provided.

These bills show that legislators at the state level understand the AI boom is driving the development of data centers and they are looking to implement protections for ratepayers and the surge in electrical and water demands such uses entail. They are also looking to prevent cost shifting by ensuring data centers pay their own way for increased utility consumption, increase water use transparency, and close any California Environmental Quality Act (CEQA) loopholes. If passed, many of the bills would not take effect for up to several years meaning there could still be several years without state-level regulation to protect rate payers and the use of natural resources, or without technology and methods that could assist data centers to operate in a more efficient manner than currently available today.

Potential for Data Centers in Oakley
When looking at the City’s current zoning districts, land use designations, and available land located a substantial distance away from residential uses, the City of Oakley does not appear to be an ideal location to construct a data center. As stated in the summary introduction, the Oakley zoning code does not include the term “data center.” The use is what would be considered an “unclassified use” and there is no similar use in the code that it can be compared to. Small server rooms and ancillary data centers that may operate as part of an existing business are not at the forefront of this work session, rather medium to large-scale AI driven data centers or 18 STAFF REPORT
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hyperscale data centers that are assumed to require significant acreage, building size, and utility consumption are the focus on this work session. One of the main questions to be asked is “If permitted in Oakley…where?” Oakley lacks a Heavy Industrial General Plan Land Use Designation and Zoning District. The closest designation that could potentially accommodate such a use is the Light Industrial Designation with a consistent underlying Zoning District, such as the Light Industrial (LI) District. The only remaining land with such a designation is the area found generally north of Oakley Road, east of Neroly Road, west of Live Oak Avenue and south of the commercial properties fronting the south side of Main Street (LI District 1), and a much smaller area of land north of Main Street and the railroad tracks generally between where Rose Avenue and 4th Street intersect with Main Street (LI District 2).

There is no consensus on established data center setbacks from residential uses.

Some jurisdictions have adopted setbacks of varying distances ranging between 200 and 500 feet. Other sources lean toward a minimum 500-foot buffer between a data center and residential uses. There are even recommendations suggesting a one-half mile buffer between the two uses, such as from the AINow Data Center Policy Toolkit, which provides jurisdictions of all types and sizes tool to stop, slow, and restrict rampant data center development in their areas if that is their intent.

Regardless of the buffer, Oakley is a city with a mix of uses, including legal nonconforming residential uses in commercial and light industrial designated and zoned land. If data centers were allowed to be proposed, environmental impacts caused by the project would apply to both legal and legal nonconforming residential uses. In other words, impacts on a legal non-conforming residential use located in a LI District would have to be analyzed.

An analysis of the City’s existing LI Districts 1 and 2 shows that the largest parcel located in the middle of LI District 1 has a boundary adjacent to Oakley Road with residential uses directly south of the road. Additional nonconforming residential uses are located along the east side of Neroly Road approximately 160 feet from the parcel’s western boundary. LI District 2 is adjacent to portion of the Vintage Parkway neighborhood and just over 200 feet from residential uses south of Main Street. (See Figure 1 which shows both LI District areas and the applicable zoning districts: light blue = LI District; shades of brown/yellow = residential Districts) The only other areas in the City with land use designations consistent with the LI District are the Oakley Logistic Center located north of the railroad tracks and east of Wilbur Avenue and Bridgehead Road, which currently already has uses established, and the recently approved Bridgehead Industrial project north of Main Street south of the railroad tracks and west of Big Break Road north of the railroad tracks which had “data centers” removed as an allowable use at the time of approval. 19 STAFF REPORT
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Figure 1: Li District 1 and 2 Zoning Districts
LI District 1 LI District 2
Outside Agency Input
Staff reached out to Diablo Water District (“DWD”), Ironhouse Sanitary District (“ISD”) and asked if they had any input for this work session. Both districts provided feedback to the City which is summarized below:

Input from DWD
Staff from the City and DWD held a phone call to discuss the focus of the work session and the following bullet list was received by email from DWD on July 6, 2026.
• Diablo Water District’s Regulation 8 (Water-Use Efficiency) and Regulation 12 (Recycled Water) were updated in April of 2026 to reflect:
o Potable water (drinking water) cannot be used for industrial processes such as data center cooling.
o Recycled water is required to be used for industrial processes. o Groundwater cannot be used.
• Development pays for development-related costs and impacts. o The cost of extending a recycled water system to a new development area is paid for by the new development.
o By law, there cannot be an impact to current ratepayers or current rates.
• CEQA analysis for water-related impacts/projects is still required for future projects.
20 STAFF REPORT
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Input from ISD
Staff and ISD held a phone call on July 7, 2026. The following is a summary of the notes from that phone call.
• ISD currently has available recycled water that could be used for industrial uses, such as data center cooling; however, the distribution infrastructure is not in place.
• ISD shares DWD’s stance that all costs associated with infrastructure for distribution expansion would be on the applicant developer of whatever use requires it. ISD also shares DWD’s stance that any capacity increases should not result in increased rates to regular customers.
• ISD has treatment capacity for General Plan buildout which is based on estimated population and non-residential land use acreage. The amount of recycled water available is related to the treatment capacity. • ISD has an Industrial Pretreatment Ordinance. This ordinance requires certain uses defined by ISD as “industrial” to pretreat effluent to a residential effluent standard before being discharged to the wastewater treatment facility.

ISD noted that as of today, Oakley has no “industrial” uses per their definition.

Many uses considered industrial in Oakley’s zoning code are considered commercial by ISD standards (Ex. Logistics warehouse).
• In the event a use was proposed that would exceed the anticipated discharge capacity assumed by ISD for that land use category and facility expansion was necessary with build out, ISD would calculate that additional capacity need and hold the developer financially responsible for the additional capacity need. They do not operate by a “first come/first served” policy in this regard. • Any facility expansion needs, while already built into their permit, would likely take at least five years to plan and build.

Can the City of Oakley Ban Data Centers?
City Staff consulted with the City Attorney on whether the City Council could ban data centers. The remaining part of this section is the City’s Attorney’s response to that question.

Yes. The City can lawfully determine that data centers are not an appropriate use in any zoning district within the City. Unlike some uses where constitutional issues may be implicated—such as the First Amendment issues that affect adult businesses—data centers present purely land use and environmental considerations that would allow for outright bans. There are caveats, of course. If an applicant has been submitted for a data center, there could be issues with imposing a zoning prohibition in the middle of the application process. And in theory, if a data center were the only viable use for a particular property, the prohibition of data center uses could effect a taking under federal and California law. But as the above discussion 21 STAFF REPORT
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indicates, Staff is aware of no site within the City where such unique circumstances would exist. As data centers would only likely be suitable in large, industrially or commercially zoned properties, there are a myriad of other uses the property owners could apply for that would provide for reasonable economic returns.3 Even still, should the City implement an outright ban, it should do so only after finding that the environmental, land use, and other circumstances support such a ban and that no properties within the City would be precluded from developing other reasonable industrial or commercial uses.4
Consistency with the Oakley Strategic Plan 27+
Holding an advisory work session on data centers is consistent with the goals in the section of the Oakley Strategic Plan 27+ entitled, “Community and Economic Development Goal”.

Requested City Council Direction
This is a work session only. The are no resolutions or ordinances requiring action.

The Planning Commission should function in an advisory role to the City Council during this work session. The City Council is being requested to provide policy direction to Staff on how to proceed. If a unanimous consensus cannot be reached on policy direction to Staff, the City Council may be asked to provide policy direction supported at least by a majority of the City Council.

Attachments

1. Notice of Work Session
3 Addition to Staff Report by Derek Cole, City Attorney, July 7, 2026 4 Id. 22 23
24 25
26 27
Draft Ordinance Language for Data Center Ban
Oakley Municipal Code Article 12 (Special Land Uses) of Chapter 9.1 (Zoning) Section 9.1.1246 Data Centers.
a. Purpose and Intent.
1) Article XI, section 7 of the California Constitution authorizes the City to exercise its local police power by enacting ordinances and regulations not in conflict with general law. This police power includes the authority to regulate the use and development of land to protect and promote the public health, safety, and welfare.
2) The Oakley General Plan establishes policies intended to guide development in a manner that creates a balanced and desirable community, maintains and enhances the character and qualities of the community, and ensures that Oakley remains an economically viable City. The General Plan promotes a combination of employment and residential uses that provide both jobs and housing for Oakley's residents and directs the City to consider the fiscal impacts of development to ensure adequate financial resources to fund public services, facilities, projects, and programs.
3) The General Plan establishes a goal of promoting economic growth within Oakley to ensure that employment opportunities and goods and services are available within the community. In furtherance of this goal, the General Plan encourages the development and intensification of employment centers, including professional office campuses, business parks, and industrial parks, and directs the City to ensure that adequate land remains available to accommodate desired industrial development.
4) Land within the City that is suitable and designated for commercial, business park, light industrial, and other employment-generating uses is a finite resource.

The City has a substantial interest in ensuring that such land is developed with uses that advance the City's long-term objectives for employment, economic development, fiscal sustainability, and the provision of goods and services to Oakley residents.
5) Data Centers are a distinct land use with operational and infrastructure characteristics that differ substantially from conventional office, commercial, business park, light industrial, and warehouse uses. Depending upon their size, design, and operations, Data Centers may require substantial and continuous supplies of electricity, specialized electrical infrastructure, extensive cooling systems, backup power generation, telecommunications infrastructure, and other specialized equipment and facilities.
28 6) Large-scale Data Centers may occupy substantial buildings and parcels of land while generating relatively few permanent on-site employment opportunities in comparison with other commercial, professional office, research and development, manufacturing, light industrial, and other employment-generating uses that could occupy the same property. The City Council finds that the use of the City's limited supply of employment-designated land for Data Centers would not further the City's land use and economic development objectives to the same extent as uses that provide greater opportunities for local employment, economic activity, and the provision of goods and services to the community. 7) Data Centers, particularly large-scale, hyperscale, cloud-computing, and artificial-intelligence computing facilities, may require substantial quantities of electricity on a continuous basis. Such facilities may require the construction or expansion of electrical substations, transmission facilities, transformers, backup power systems, and other electrical infrastructure. The City has a legitimate interest in preserving available utility and infrastructure capacity to serve existing residents and businesses and future development consistent with the City's General Plan and economic development objectives.
8) Certain Data Centers utilize water-based cooling systems and may require substantial quantities of water. Oakley is located within the Sacramento-San Joaquin Delta and has a substantial interest in the prudent management of water resources and in ensuring that available water supplies and infrastructure are sufficient to serve existing and future residents, businesses, and other development contemplated by the General Plan.
9) Data Centers commonly utilize emergency or backup power systems, which may include diesel- or natural-gas-powered generators, battery energy storage systems, and associated fuel storage. The operation and periodic testing of such systems, together with continuously operating cooling, ventilation, and electrical equipment, may result in noise, air pollutant emissions, greenhouse gas emissions, and other effects on surrounding properties and the community. 10) Data Centers may incorporate substantial electrical infrastructure, battery energy storage systems, backup generators, fuel storage, cooling equipment, and specialized fire-suppression systems. Such facilities may present specialized fire, hazardous material, and emergency-response considerations and may create additional demands upon public safety and emergency-response services.
11) The infrastructure necessary to serve a Data Center may extend beyond the boundaries of the parcel upon which the facility is located and may require new or expanded electrical, water, telecommunications, transportation, or other public or private infrastructure. The City Council finds that the appropriate allocation of the City's existing and future infrastructure capacity is an important component of the City's long-term land use and economic development planning. 29 12) Data Centers are energy-intensive land uses, and large-scale Data Centers may require electrical loads of 10 megawatts or more, with the largest facilities requiring substantially greater electrical capacity. Such facilities may require the construction or expansion of electrical substations, transmission facilities, transformers, backup power systems, and other electrical infrastructure. The City has a legitimate interest in preserving available utility and infrastructure capacity to serve existing residents and businesses and future development consistent with the City's General Plan and economic development objectives. 13) Rapid growth in cloud computing, artificial intelligence, machine learning, cryptocurrency and blockchain applications, and other computationally intensive technologies has increased demand for Data Centers and has resulted in facilities of substantially greater size, electrical demand, and computational capacity than traditional computer server rooms and data-processing facilities.

The City Council finds that these large-scale facilities constitute a land use distinct from the computer and telecommunications equipment customarily accessory to commercial, office, governmental, institutional, and industrial uses. 14) The City Council recognizes that computer servers, networking equipment, telecommunications equipment, and digital data-processing equipment are routinely necessary to the operation of businesses, governmental agencies, educational institutions, medical facilities, and other uses permitted within the City. This Ordinance is not intended to prohibit such equipment when it is accessory and incidental to an otherwise permitted principal use and primarily supports activities conducted on the same premises.
15) The City has made substantial efforts to encourage business investment, commercial development, light industrial development, entrepreneurship, and employment opportunities within Oakley. The City Council finds that preserving suitable land and infrastructure capacity for uses that generate employment opportunities, provide goods and services, diversify the City's economic base, and otherwise advance the City's economic development objectives is an important component of the City's long-term planning strategy. 16) The City Council finds that the substantial land, electrical, water, and infrastructure demands potentially associated with Data Centers, considered together with their operational characteristics and comparatively limited generation of permanent on-site employment, make Data Centers inconsistent with the City's objectives for the use of its limited commercial, business park, industrial, and employment-generating lands.
17) The City Council further finds that the concerns associated with Data Centers arise from characteristics inherent in the use itself and are not limited to any particular zoning district or location within the City. Accordingly, establishing a uniform citywide prohibition against Data Centers is preferable to allowing such 30 facilities through conditional use permits, planned development approvals, determinations of similar use, or other discretionary land use approvals. 18) Based upon the foregoing, the City Council finds and determines that Data Centers are not an appropriate land use within the City of Oakley and that prohibiting Data Centers as a principal land use in all zoning districts is consistent with the General Plan and constitutes a reasonable exercise of the City's land use authority and police power to protect and promote the public health, safety, and welfare.
b. Definition. For the purposes of this section, “Data Center” means a building, portion of a building, group of buildings, or other facility whose primary purpose is to house computer servers, data-processing equipment, digital storage equipment, networking equipment, or similar electronic equipment used for the remote storage, processing, management, transmission, or distribution of digital data or information. The term includes, but is not limited to, facilities commonly referred to as Data Centers, server farms, cloud-computing facilities, hyperscale Data Centers, colocation facilities, cryptocurrency or blockchain computing facilities, and artificial-intelligence computing or processing facilities.

A facility may constitute a Data Center regardless of its size, electrical demand, computational capacity, or the particular technology used to store, process, or transmit data.

A Data Center does not include computer servers, telecommunications equipment, or data-processing equipment that are accessory and incidental to a principal use otherwise permitted on the property, where such equipment primarily supports the operations conducted on the same premises and does not constitute the principal use of the property.
c. Prohibition. Data Centers, as defined in subsection (b), are prohibited uses in all zoning districts within the City and shall not be established, constructed, operated, or maintained within the City. A Data Center shall not be permitted as a principal, accessory, conditional, similar, or unlisted use in any zoning district. d. Existing Lawful Uses and Vested Rights. Nothing in this section shall be construed to impair any vested right established under applicable law prior to the effective date of this section or to prohibit the continued operation of any lawfully established use to the extent such use is protected under applicable law.
31 e. Avoidance of Unconstitutional Taking.
1) Notwithstanding any other provision of this section, a property owner may apply for an exception from the prohibition against Data Centers if the owner contends that application of the prohibition to the owner's property would result in a taking of private property without just compensation in violation of the United States Constitution or California Constitution. The sole purpose of this section is to provide such relief as may be constitutionally required, and this section shall not be construed to authorize an exception based upon economic hardship, inconvenience, project desirability, or other circumstances that do not establish an unconstitutional taking.
2) The property owner shall submit an application in a form prescribed by the City and shall bear the burden of establishing, based upon clear and convincing evidence, that application of the prohibition against Data Centers to the property would result in an unconstitutional taking. The application shall include all information reasonably required by the City to evaluate the claim, including information concerning the owner's acquisition and use of the property, the property's existing and potential uses, applicable land use regulations, the economic use and value of the property with and without the requested exception, and any other information relevant to the claimed taking. 3) The City Council shall grant an exception only if it finds, based upon clear and convincing evidence in the record, that application of the prohibition against Data Centers to the property would result in a taking of private property without just compensation in violation of the United States Constitution or California Constitution.
4) If the City Council makes the finding required by subsection (e)(4), it shall grant only the minimum exception from this section necessary to avoid the unconstitutional taking. The City Council may impose reasonable conditions upon the exception to ensure that the relief granted does not exceed that which is constitutionally required and to minimize adverse impacts upon surrounding properties and the public health, safety, and welfare.
5) Nothing in this subsection (e) shall require the City to authorize a Data Center merely because such use would be more profitable or economically beneficial than uses otherwise permitted on the property. An exception shall not be granted unless the property owner establishes that application of the prohibition, taking into consideration the uses of the property otherwise permitted by applicable law, would result in an unconstitutional taking.
6) An exception granted pursuant to this section shall apply only to the particular property and circumstances upon which the exception was based and shall not constitute an amendment to this section, establish a precedent for any other property, or authorize a Data Center on any other property within the City. 32

Oakley City CouncilSeptember 15, 2026

Oakley City Council
September 15, 2026