Santa Clara officials are moving forward with plans to update the city's policies governing data center development, following a unanimous decision by the City Council on October 6. The council approved prioritizing new water and air quality standards for data centers and directed staff to conduct a more comprehensive policy review. This broader review, examining health, safety, siting, and community benefits, was initially anticipated for completion by the end of 2027, though city officials stated that water and air standards could be introduced sooner.
The council’s decision came without considering a moratorium on new data center projects during the October 6 meeting, which adjourned at 1 a.m. However, District 3 Councilmember Karen Hardy expressed frustration that the moratorium item was not heard. Hardy plans to reintroduce the discussion at the October 20 meeting, specifically focusing on new standalone data centers.
Current city regulations require new developments to maximize the use of recycled water, but these rules do not establish a specific amount a data center must use. The city will now consider whether to establish numerical standards for recycled water use and if newer, more water-efficient cooling systems should be mandated for future facilities. Officials noted that approximately 65% of data centers in Santa Clara currently utilize recycled water, accounting for 26% of the city’s total recycled water consumption.
City Attorney Glenn Googins clarified at the meeting that most new data center developments in Santa Clara would require discretionary conditional use permits and City Council approval. Googins added that the city could potentially include conditions requiring projects to comply with future water regulations, though the specific details would need further development.
Santa Clara is currently home to 56 active data centers, with an additional two approved projects that have not yet commenced construction. According to the city, 55 data centers were in operation with three more in the pipeline in 2025. These facilities contribute significantly to the city's revenue, providing $40.9 million annually through property and sales taxes, as well as payments from Silicon Valley Power, the city-owned power utility.
Despite ongoing development, Silicon Valley Power, the city’s utility, ceased accepting new large-load applications in 2023 due to capacity constraints. However, this has not entirely halted all data center projects from moving through the city’s development process. Nico Procos, director of Silicon Valley Power, explained that eight entities have completed their system impact studies, having progressed through a portion of the development process.
Eric Crutchlow, a Santa Clara planning commissioner, emphasized the importance of first examining water use and air quality across data centers. Crutchlow cited instances where the Planning Commission rejected data center projects only for the City Council to approve them on appeal. He indicated this situation highlights a need for clearer, shared standards between the two bodies. These standards, Crutchlow noted, also extend to concerns about the substantial electricity requirements of data centers.
Mayor Lisa Gillmor acknowledged the difficult position developers face when pursuing costly land use entitlements without a firm commitment for electricity from Silicon Valley Power. This distinction raised concerns from District 4 Councilmember Kevin Park, who argued that developers could continue advancing portions of their projects, such as land entitlements, while awaiting power commitments. Park suggested this could leave the city in a similar predicament to the Related Santa Clara project, which has been stalled for a decade due to a statutory development agreement and vested rights under state law, leaving the city with limited leverage. Given these concerns, Councilmember Park stated, "I would like to do a moratorium."
The comprehensive policy review and the discussions around potential moratoriums signal a critical juncture for how Santa Clara will manage future data center expansion and its associated resource demands.
