Moratoriums, a mugshot and tax breaks. Catch up on Kentucky data center news.

Plenty of news is happening and new details are emerging about hyperscale data center proposals around the state, and the Lantern has those stories from last week and more in this round-up. 

The Lantern is also keeping track of where data center developers are looking to build in Kentucky. See an interactive map the Lantern has created of where those proposals are. 

Louisville’s moratorium and new data center proposal

On August 13, Louisville Metro Council overwhelmingly passed a six-month moratorium or temporary ban on data center construction, preventing Kentucky’s largest city from approving new plans for data center developments during that timeframe or until new planning and zoning rules are adopted. 

Louisville Public Media reported the group No Data Center 502 had filled the city council’s chambers urging the council to extend the moratorium to 12 months, voicing concerns over impacts to the environment and utility rates. 

The new moratorium comes as Louisville officials have received plans from developer Dermody Properties who wants to turn a warehouse in the industrial area of Rubbertown into a data center, according to Louisville’s public media station. 

Louisville Public Media reported the real estate investment firm wants to turn a 350,000 square-foot warehouse into a data center. It would be located next to another hyperscale data center under construction by Poe Companies and PowerHouse Data Centers. 

This is as the city is considering new planning and zoning rules that would ban the construction of data centers larger than 500,000 square feet and implement restrictions on smaller data centers. 

In Kentucky’s second largest city of Lexington, which has already passed a data center moratorium, the city council heard feedback from residents in late July urging them to go further with restrictions on data centers in Fayette County or outright ban them, according to the Lexington Herald-Leader. The newspaper reported the city is considering planning and zoning changes that would ban data centers that are 40,000 square feet or larger. 

A small school district eyes a massive tax windfall

Mercer County also passed a data center construction moratorium on August 11, but the moratorium doesn’t include the bounds of a small city that’s considering a potentially massive hyperscale data center project. 

The Lantern reported that emails and text messages sent by the Burgin Independent School superintendent and school board detail months of efforts by the small school district to advocate for a proposed hyperscale data center project because of the potential for huge tax revenue. 

The Burgin city council unsuccessfully tried to advance an ordinance that would annex property from the county into city limits. While the county is considering an ordinance to regulate the siting of data centers, Burgin doesn’t have a planning and zoning body. 

The dispute over the proposed data center between activists concerned by its impacts and developers also got personal earlier this month. A founder for a company involved in the proposed data center threatened to post a mugshot from a past arrest of a Mercer County data center protestor; the developer subsequently apologized and said his intention was not intimidation.

How much could data centers reap in tax breaks? A lot, says one think tank.

The progressive think tank Kentucky Center for Economic Policy in analyses published in late July and early August argue that the state could give away more than $1 billion in state sales tax breaks if a few hyperscale data centers are realized. 

This is in addition to the potential of data center developers arguing they are exempt from a significant share of local property taxes as well, according to the think tank. 

Jason Bailey, the executive director of the think tank, told the Louisville Courier-Journal in an August 11 report that “there needs to be a real conversation about scaling them (tax breaks) back or even eliminating them.” 

The newspaper reported an open records request to the Cabinet for Economic Development indicated the state has received application materials from developers for state tax breaks.