Data Centers in Colorado Springs

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Executive Summary

Colorado Springs is considering options for data center approval standards and ongoing regulation. The national discourse is developing rapidly, but evidence on how different regulatory frameworks perform remains limited. This report examines the processes and regulatory structures the City has in place, the approaches taken by comparable municipalities, the conclusions the existing evidence supports, and the policy options available.

Key Findings
Colorado Springs is in a unique position. It owns major utilities including electrical, natural gas, water, and wastewater services. The City Council acts as the Utilities Board and can set prices and terms of service without approval from the state’s Public Utilities Commission, allowing the City to address issues that other cities can reach only through zoning.
The Electric Large Load safeguards do not apply to existing data centers whose load is below the tariff threshold. Restrictions regarding Electric Large Load apply only to those plants with actual or reasonably expected demand of 10 megawatts or more. Four of the largest data centers in the City have reported loads of 1, 4, 5 and 6 megawatts each.
The zoning code does not classify data centers as a separate land use category. The City’s Unified Development Code (UDC) classifies them as “Light Industry,” a permissive category that also includes commercial bakeries, print shops, and electronics manufacturing. The UDC includes two data-center-specific requirements, governing landscaping and parking.
Data on current water usage provides a foundation for regulation. The four biggest data centers in the City use about 11,000 gallons per day for each megawatt of electric load, at a rate that holds fairly evenly across the four sites. Collectively they use about 177,000 gallons per day, equal to about 0.3 percent of average system-wide use and the annual equivalent of about 996 households.
The City has enforceable noise codes, but they could be refined and broadened. Levels are set by zone and hour, with the most stringent limit applying to sources measurable from multiple zones. The City applies the limit corresponding to the adjacent use, so facilities next to residential areas face a 55 dB(A) daytime and 50 dB(A) nighttime limit. Measurement is A-weighted, which may not fully account for low frequencies.
The most commonly cited judicial reversal turned on process, not substance. In Board of County Supervisors of Prince William County v. Oak Valley Homeowners Association (March 31, 2026), the Virginia Court of Appeals invalidated three rezoning ordinances for failure to comply with notice requirements under both statutory and local law. The County discontinued its appeal after litigation expenses exceeded $1.7 million.
The City can pursue community investment under several legal authorities. Land use conditions, development agreements, and utility-service terms have different legal limits. Uniformity alone does not authorize every requirement, including local hiring and investment obligations.
Peer jurisdictions offer examples, but not evidence of success. We did not locate published information evaluating whether new regulations achieved their policy objectives.

Recommendations
The Proposed Policy Options section of the report identifies fourteen policy alternatives for the City to consider. Here we briefly summarize and emphasize the key themes of those where there is the strongest precedent and confidence.
Define data centers. Creating a unique classification in the UDC provides the clearest pathway to effective regulation of center approval and oversight. As a component of this, the City could define the threshold(s) above which sites generate enhanced safeguards for mitigating adverse impacts. In conjunction with this, the City might compile and publish an inventory of existing data center sites and could report impacts on an aggregated basis.
Clarify and codify related standards. Noise regulations, water study triggers, and methods for modifying existing uses already exist in City policy. Identifying gaps and updating policies to address this rapid-growth area is more readily adoptable than wholly new initiatives.
Establish a clear, transparent process for approval. Because of their current classification, data center applications do not trigger a public hearing. Establishing a clear and transparent process for center consideration and ongoing oversight, perhaps for sites exceeding certain parameters, could ameliorate public concerns.
Adopt broadly applicable community investment requirements. Adopting initial requirements by ordinance, applying them uniformly, and negotiating anything beyond them through a site-specific agreement based on its unique characteristics offers a broad and sustainable path to securing community investment.

Introduction

The debate regarding data center proliferation has captured national attention. The facilities can be large, and their ongoing operation requires dedicated energy and water. Construction creates jobs, though ongoing employment impacts vary. In many cases, new data centers have been approved under preexisting regulatory schemes that were not designed for that purpose and do not necessarily require public input.

Because it owns its own electrical, natural gas, water, and wastewater utilities, Colorado Springs is in a unique position to create a comprehensive regulatory regime.

Purpose. The purpose of this report is to provide objective, evidence-based data and analysis to city leadership to support its consideration of new data center projects and their ongoing regulation.

Scope of Baseline Data. In order to generate a landscape assessment of the City’s regulation of data centers and public concerns that have been expressed, the report references permitting documents; sound studies; electricity, water, and other utility rates; and additional materials provided by the City.

Evidence Supporting Findings. For identifying and assessing its core findings and recommendations, the report examines an array of ordinances, judicial opinions, administrative and legislative records, as well as secondary sources to supplement these primary materials.  

Terminology. This report uses “community investment” to describe the commitments the City secures from data center developers, often called public benefits or community benefits elsewhere.

TABLES

Customer Electric load (MW) Water use (gallons per day) Water use (gallons per year) Acre-feet per year Household equivalent
Customer 1 5 54,254 19,802,710 61 306
Customer 2 1 9,251 3,376,615 10 52
Customer 3 4 46,123 16,834,895 52 260
Customer 4 6 66,892 24,415,580 75 378
Total 16 176,520 64,429,800 198 996
Zone 7:00 a.m. – 7:00 p.m. 7:00 p.m. – 7:00 a.m.
Residential 55 dB(A) 50 dB(A)
Commercial 60 dB(A) 55 dB(A)
Light industrial 70 dB(A) 65 dB(A)
Industrial 80 dB(A) 75 dB(A)
Colorado Jurisdictions
Jurisdiction Utility Instrument Substance
Longmont Municipal electric Ordinance O-2026-34, June 2026 Prohibits facilities at or above 100 MW; caps others at the lower of 100 MW or 5% of regional grid capacity; confines smaller facilities to one district with specific water, cooling, efficiency, noise and lighting standardsxlvii
Weld County Investor-owned Ordinance 2026-01, effective April 2026 Permanent operating standards including a 65 dB(C) limit at the property boundaryxlviii
Denver Investor-owned Council Bill 26-0431, May 2026 Temporary moratorium; ratepayer protections are not bindingxlix
Jefferson, Boulder, Larimer Counties Investor-owned Moratoriums, 2026 Temporary moratoria while standards are developedl
Aurora Investor-owned None adopted Council advised it lacked authority over energy impactsli
Adams, Arapahoe, Douglas, Mesa, Pueblo Counties Mixed None adopted No data center standards located; Douglas County approved a 35-year rebate of its share of business personal property tax for a Parker data center in August 2026lii
Summary of Out-of-State Peers
Jurisdiction Utility Instrument Substance
Nashville–Davidson County, TN Municipal Executive Order 59 (June 2026); Ordinance BL2026-1391; Ordinance BL2026-1448 EO 59 directed departments to assess infrastructure, environmental, residential and economic impacts; BL2026-1391 enacted zoning categories and the 20,000 sq ft / 5 MW boundary; BL2026-1448 established a temporary moratoriumliii
Birmingham, AL Investor-owned ZAC2026-00001, June 2026 Conditioned on a permitted use; limits routine on-site power to solar or fuel cells and prohibits gas turbines and 24/7 diesel generation, allowing fossil-fuel units only for emergency and testing use; classifies sites by design and functionliv
Chandler, AZ Investor-owned Ordinance No. 5033 Ambient-baseline sound standard evaluated by independent pre-approval study and annual studies for five years, instead of a fixed volume caplv
Phoenix, AZ Investor-owned Ordinance G-7396, July 2025 Special permitting established in five districts; 55/45 dB(A) day/night cap set at residential property lines; 150-foot mechanical setbacklvi
Mesa, AZ Municipal (partial) Zoning amendments, 2025 Resource use standards including water reportinglviii
El Paso, TX Investor-owned Policy framework, July 2026 Framework adopted; implementing ordinance not enacted, so facilities remain permitted by existing code (not data center-specific) standardslviii
Cheyenne, WY Mixed None adopted Proposed moratorium failedlix
Provision Colorado Springs Utilities Platte River Xcel (proposed)
Applicability threshold 10 MW Large load policy 50 MW or more; may also apply to new 20-50 MW customers
Minimum contract term 10 years Long-term contract required 15 years
Minimum bill obligation 100% of contracted load for 10 years Take or pay policy, requiring a minimum purchase whether or not utilized Minimum bill at 80% of contracted demand
Collateral or deposit 36 months of minimum bills Down payment requirements Upfront deposit and study fees
Infrastructure cost Assigned to customer Assigned to customer Assigned to customer, including new generation and transmission
Approval authority City Council serving as Utilities Board Board of Directors Public Utilities
Pathway Options
Pathway for consideration What it produces Tradeoff
Administrative (current) Fast and predictable; notice and written comment are required, with appeal to the Planning Commission, but no hearing is automatic Limited public participation; no data center-specific criteria
Opportunity for conditional or special use permit above a MW threshold Hearing, criteria-based findings, ability to impose conditions or community benefits Slower; each decision reviewable in court
Substantive, data center standards without mandatory hearings Maintains predictability and addresses portion of public concern No forum for public participation so transparency concerns may persist
Option Problem addressed Decisionmaker and instrument Timing Burden Evidence
Define “data center” in the Unified Development Code Without the defined term, clearly applicable standards cannot be applied to this category Council ordinance Near term Staff drafting; standard amendment process High
Reconcile the existing 10 MW large-load threshold with facility scale Electric Large Load safeguards do not apply below the tariff threshold Council as Utilities Board; ordinance for land use threshold Near term Analysis of local load data and weighing of development impacts High
Clarify basis for measuring compliance with noise code Current practice defines relevant cap by adjacent use Council ordinance Near term Low; drafting only Moderate
Codify water study threshold Operative rule exists only as utility practice Utilities Board tariff or rule Near term Low, once technical basis is confirmed Moderate
Require independent pre-approval ambient sound study Avoids arbitrary cutoffs when sites may not add substantial noise Council ordinance; applicant-funded Near term Applicant cost; staff oversight Moderate
Publish aggregate facility reporting No comprehensive City inventory was located Utilities and Planning, administrative Near term Staff time; security review High
Clarify major modification provision Current standard subject to varying interpretation Council ordinance Near term Low Moderate
Convene a City-run public session Public concerns about transparency Administrative Near term Staff time; public safety planning and staffing High
Adopt tiered size thresholds Same standards apply to all industrial users Council ordinance Medium term Threshold analysis Moderate
Add supplemental low-frequency metric A-weighted limit may not capture tonal content Council ordinance Medium term Acoustical consultant; enforcement protocol Moderate
Public hearing above a threshold No automatic public hearing even for larger facilities Council ordinance Medium term Longer review; litigation exposure Moderate
Require financial assurances for possibility of abandonment No such obligation exists Council ordinance Medium term Legal review; formula development Limited
Build a reusable model for assessing fiscal impact No transparent, replicable basis for assessing City Finance with County Assessor Medium term Analyst time Moderate
Adopt broadly-applicable community investment requirements Colorado law preempts ad hoc mandates Council ordinance Medium term Legal review; policy development Moderate
Community Benefit Commitments Across Reviewed Jurisdictions
01

Neighborhood Investment

  • Parks
  • Trails
  • Open space
How obtained in jurisdictions reviewed
Case-by-case negotiation
02

Infrastructure Cost Recovery

  • Transmission
  • Substation
  • Water connections
  • Road connections
How obtained in jurisdictions reviewed
Published tariff, above threshold

Colorado Springs is already positioned here.

03

Workforce

  • Local hiring
  • Apprenticeships
  • Local procurement
How obtained in jurisdictions reviewed
Case-by-case negotiation
04

Resource Commitments

  • Cooling technology
  • Water reuse
  • Renewable energy
  • Waste heat capture
  • Noise mitigation
How obtained in jurisdictions reviewed
Case-by-case negotiation
How obtained in jurisdictions reviewed

Recommended approach

Convert categories 01, 03, and 04 to published standards applying above a defined threshold, adopted before a site application and before service commitments are made.

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