CITY ATTORNEY
Sonia R. Carvalho
CITY MANAGER
Alvaro Nuñez
CITY CLERK
Jennifer L. Hall
20 CIVIC CENTER PLAZA - P.O. BOX 1988, M31 - SANTA ANA, CALIFORNIA 92702 TELEPHONE (714) 647-6900 - FAX (714) 647-6954 - www.santa-ana.org Councilmember-Requested Item Report
DATE
September 15, 2026
TOPIC
Regulation of Data Centers
COUNCILMEMBER-REQUESTED ITEM TITLE
Discuss and Consider Directing the City Manager to Direct Staff as Follows:
(1) Evaluate the Need for and Prepare a Temporary Moratorium on the Acceptance and Processing of Data Center Use Applications Within the City of Santa Ana Pursuant to California Government Code Section 65858 to Allow Time to Study Appropriate Long- Term Regulatory Standards; and
(2) Report Back to the City Council on the Number, Location, and Permitting and Approval History of Existing Data Center Facilities Currently Operating within City Limits and Whether the City has Received any Pending Applications for New Data Center Development
DISCUSSION
Introduction
Advances in cloud computing, artificial intelligence (AI), machine learning, and digital storage have driven a significant increase in large scale data center development across California and the United States. These data center facilities differ from traditional commercial and industrial uses in that they typically operate continuously on a 24-hour basis and require extensive electrical, cooling, and telecommunications infrastructure. The Santa Ana Municipal Code does not currently define or specifically regulate data centers as a distinct land use.
Policy Concerns
Cities that have studied this issue closely, including Montebello, San Jose, and Coachella, have identified several recurring concerns relating to the impacts of data centers in their communities:
Water Resources
Data centers commonly rely on water-intensive cooling systems, raising concerns in regions already facing supply constraints. Peer-reviewed research conducted in 2023 from the University of California, Riverside found that a single major cloud provider's U.S. data centers consumed an estimated 12.7 billion liters of freshwater in 2021 for cooling purposes alone. A 2026 study reviewed by CalMatters found data center development is expanding into water-stressed regions of California, including the
CITY ATTORNEY
Sonia R. Carvalho
CITY MANAGER
Alvaro Nuñez
CITY CLERK
Jennifer L. Hall
20 CIVIC CENTER PLAZA - P.O. BOX 1988, M31 - SANTA ANA, CALIFORNIA 92702 TELEPHONE (714) 647-6900 - FAX (714) 647-6954 - www.santa-ana.org Central and Imperial Valleys, while current state and local disclosure requirements leave the public largely unable to determine actual water use. State legislation to mandate water use disclosure by data center operators was vetoed by the Governor in 2025 and remains pending in the Legislature, meaning no statewide requirement currently exists, underscoring the value of local action.
Electrical Infrastructure
Large-scale facilities can require substantial investment in substations, transmission facilities, and backup generation, potentially affecting long term utility planning and reliability for existing ratepayers. The California Energy Commission reports that data centers accounted for approximately 2 percent of California ISO peak electricity demand in early 2026, a figure projected to grow to 9 percent by 2040, with the state already home to more than 200 active data center facilities. Nationally, a U.S. Department of Energy funded study by Lawrence Berkeley National Laboratory found data centers consumed 4.4 percent of total U.S. electricity in 2023, projected to reach 6.7 to 12 percent by 2028.
Public Health and Environmental Impact
Cooling systems, transformers, backup generators, and battery storage systems associated with data centers can generate noise, vibration, heat, and emissions, and may raise hazardous materials and fire protection concerns distinct from conventional industrial uses.
Fiscal and Employment Tradeoffs
Data centers generally produce fewer permanent jobs relative to their land area, electrical demand, and water use compared to other commercial, industrial, or mixed use development. Research from Good Jobs First found the average public cost per data center job created across major projects exceeds $1.9 million in tax incentives. A 2026 Brookings Institution study using a causal research design across approximately 1,500 U.S. data center facilities found that while data centers do generate some local employment, gains are modest, approximately 100 to 200 jobs per county over a decade, and wages are unaffected.
Land Use Compatibility
Industrial- and employment-designated land is a limited resource, and its allocation deserves careful, evidence-based planning rather than reactive approval.
These concerns support taking time to study the issue before committing to a permanent regulatory approach. A moratorium allows the City to pause new applications while staff and the City Council determine whether an eventual prohibition, conditional development standards addressing sustainability and infrastructure impacts, or another regulatory framework best serves the City's long-term interests. This approach preserves the City's ability to revisit the question if data center design and technology evolve in ways that better address the concerns identified above.
Existing Facilities in Santa Ana
The City has at least one data center or colocation facility currently operating within city limits.
CITY ATTORNEY
Sonia R. Carvalho
CITY MANAGER
Alvaro Nuñez
CITY CLERK
Jennifer L. Hall
20 CIVIC CENTER PLAZA - P.O. BOX 1988, M31 - SANTA ANA, CALIFORNIA 92702 TELEPHONE (714) 647-6900 - FAX (714) 647-6954 - www.santa-ana.org A 2026 study by Next10 and Santa Clara University found this pattern is common throughout California cities: data center projects frequently qualify for ministerial approval, whereby local agencies are required to approve them upon meeting existing zoning standards without any discretionary environmental review. Furthermore, the study found that environmental documentation for California data centers is rarely available to the public even where review does occur. Staff should confirm the current number, location, permitting basis, and operational status of this and any other facility, and separately confirm whether any application for a new data center use is currently pending before the City, as part of any report back to the City Council.
Approach Taken by Other Jurisdictions
The City of Coachella adopted a 45-day urgency moratorium on data center development in June 2026 under Government Code section 65858, extended it through June 2027 to allow staff time to study the issue, and on August 12, 2026 the City Council unanimously approved the first reading of an ordinance permanently prohibiting data center uses citywide. A Second reading and final adoption are scheduled for August 26, 2026, after which the ordinance would take effect 30 days later.
The City of Monterey Park separately banned data centers through both City Council ordinance and a voter-approved ballot measure (Measure NDC, passed 86 percent to 14 percent in June 2026), which locks the prohibition in place unless voters themselves approve a future change.
The City of Santa Ana's moratorium period, if pursued, would allow staff and the City Council to evaluate whether Coachella and Monterey Park's approach of an eventual permanent prohibition is the right fit for Santa Ana, or whether a more tailored framework, such as conditional standards addressing water use, electrical infrastructure impact, noise, and design, better serves the City's interests while leaving room for future data center proposals that meaningfully address these concerns.
Recommended Action
Discuss and consider directing the City Manager to direct staff as follows:
1. Direct staff to evaluate the need for and prepare a temporary moratorium ordinance on the acceptance and processing of Data Center use applications within the City of Santa Ana, pursuant to Government Code section 65858.
2. Report back to the City Council on the number, location, and permitting and approval history of existing data center facilities currently operating within city limits, whether any application for a new data center use is currently pending, and a recommended timeline and process for evaluating long term regulatory options, including permanent prohibition and conditional development standards.
SUBMITTED BY
Councilwoman Jessie Lopez
EXHIBIT(S)
N/A