Pause or Playbook? How Bay Area Cities Are Responding to Data Center Developments

A recent Holland & Knight alert reported on the seven new data center laws that California Gov. Gavin Newsom signed on September 21, 2026. These laws will change how new data centers are reviewed, powered and supplied with water and at what stage of the approval process information must be made available. Rather than imposing a ban or moratorium on data centers, these laws largely codified and built on the "buy, bring or build" commitments around which the data center industry is coalescing.

As of the date of this publication, several Bay Area cities are taking steps to establish substantive standards that data centers will need to meet and the specific processes they will need to follow. Whether these new standards and processes will create an efficient and orderly data center application and development pathway will play out over the next several years. However, the Bay Area cities' actions demonstrate an openness to data center development in principle. The cities' actions also underscore the importance of understanding each municipality's respective requirements in detail, shifting currents of data center development within each municipality and how a proposed data center may affect the existing dynamics.

At a Glance

• San Francisco: Issued a 45-day urgency moratorium; uses the Senate Bill (SB) 887 definition of "data center" with no megawatts (MW) threshold; carves out accessory uses as well as the repair and maintenance of data centers as long as there is no increase size or capacity; passed on first reading October 6, 2026, and is awaiting mayoral action
• Oakland: Issued a 45-day urgency moratorium; uses the city's own "data center" definition, which is broader than San Francisco's, although the legislation excludes server rooms incidental to a permitted principal use; approved for final passage October 6, 2026, and a consultant report is due within six months
• San Jose: No moratorium, but the city released draft standards for data centers and research and development (R&D) facilities drawing 20 MW or more, which are being finalized; City Council readings are scheduled for December 8 and December 15, 2026
• Santa Clara: No moratorium, but a comprehensive policy update is expected by the end of 2027

Cities That Have Hit Pause: San Francisco and Oakland

San Francisco

San Francisco currently regulates data centers under the Planning Code definition of "Internet Service Exchange" and requires a Conditional Use Authorization with specific findings. The Board of Supervisors found that these controls "were adopted more than 20 years ago and need to be revisited in the context of the current AI revolution."¹ For this reason, on October 6, 2026, the Board of Supervisors voted 11-0 to immediately pass on first reading an urgency ordinance imposing a 45-day citywide moratorium on data centers under California Government Code Section 65858. The ordinance corresponds to File No. 261021.²

Scope

San Francisco borrows SB 887's definition of "data center" but adds clarification. A "data center" is "a facility, or part of a facility, that houses computing infrastructure, including graphics and central processing units, servers, storage devices, networking equipment, and associated power and cooling systems, for the primary purpose of processing, storing, or distributing electronic data." A "facility" means "physical property, a plant, a building, a structure, or stationary equipment, located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or public right-of-way and under common ownership or common control." The ordinance sets no MW or square-footage trigger.

Unlike SB 887, however, the city's ordinance provides narrowing sidewall, excluding from the definition 1) data centers that are accessory uses to other principally or conditionally permitted uses and 2) repair and maintenance work on an existing data center that "does not increase the size or capacity" of the facility.³

The Board of Supervisors found that server rooms, network closets and on-premises equipment rooms differ from large-scale data centers in size, power demand and function and should not be regulated as facilities that house computing capacity for outside customers.⁴ On-site computing that qualifies as an accessory use is therefore not affected.⁵

Key Dates

• Effective Date: Immediately upon enactment, which occurs when the mayor signs, returns it unsigned or does not sign within 10 days or when the Board overrides the mayor's veto.⁶ The Board of Supervisors' legislative record for File No. 261021 lists the ordinance's status as "Mayor's Office" and shows no enactment date or enactment number.
• Duration: 45 days, unless extended under Section 65858 or permanent controls are adopted. Extensions can run up to 22 months and 15 days.
• Within 25 Days of Enactment: The Planning Department must report on measures taken to address the conditions that led to the moratorium. The Board must hear and act on the report within 35 days after the ordinance takes effect.

Developer Takeaways

Expansions and capacity upgrades at existing San Francisco data centers are not exempt because the repair-and-maintenance exemption applies only where size or capacity does not increase. The prohibition covers any approval or authorization.

Oakland

Oakland's Planning Code currently does not define "data center" and has no siting, noise, generator, water-efficiency or other standards for these uses, and the City has not yet evaluated whether its grid, water system and emergency services can serve them.⁷ For this reason, at its concurrent meeting with the Oakland Redevelopment Successor Agency on October 6, 2026, the Oakland City Council voted 7-0, with one member excused, to approve for final passage an urgency ordinance imposing a 45-day citywide moratorium on data center approvals under California Government Code Section 65858. The ordinance corresponds to File 27-0050 and has not yet been assigned an ordinance number.

Scope

Oakland wrote its own definition of a "data center," which is "a building, facility or structure used for the storage, management, processing, and transmission of digital data which houses computer or network equipment, systems, servers, appliances, other associated components," including "associated power and accessory infrastructure such as cooling systems, power generators, backup generators or electrical substations."⁸ Because the definition expressly includes generators and substations, Oakland's pause could reach supporting energy infrastructure for a data center, not just the server building itself.

The Operative Prohibition and Exemptions

Oakland's prohibition is more detailed and expressly reaches pending applications. The city "shall not process any pending application for a data center" or issue any building permit, occupancy permit, conditional use permit, variance, subdivision map, land use entitlement, plan amendment (General or Specific), zone change, agreement or "permit or regulatory license" for the "construction, operation or development of a data center by any private or public entity."⁹

The definition of "data center" under the ordinance excludes server rooms and accessory server rooms,¹⁰ and prohibits operating a server room "for purposes unrelated to the permitted principal use."¹¹

What Comes Next: The Consultant Study

Section 4 of Oakland's ordinance sets the path to permanent rules. City Administration must return to the City Council with a preferred consultant within 45 days, with the consultant's report to follow no later than six months from enactment. The study will identify local impacts of data centers and their generators, including energy and water rates, air and noise pollution, and public health, along with regulatory options, including a permanent moratorium. The study will distinguish traditional data centers from artificial intelligence data centers.

Key Dates

• Effective Date: The City Council approved the ordinance for final passage on October 6, 2026, by a 7-0 vote. Section 11 requires the city clerk to certify the ordinance's passage and adoption and post it, after which it "shall thereafter be in full force and effect." The city clerk has not yet posted the certified ordinance.¹²
• Duration: 45 days "from the date of its adoption" extendable only by the City Council under Section 65858.¹³

Developer Takeaways

Because the ordinance covers "operation" and "regulatory license[s]," existing operators that need new or renewed City permits should review their status. The ordinance provides that it "must be broadly construed to achieve the purposes of the ordinance and the City Administrator may issue interpretations and implementing regulations."¹⁴

Cities Writing the Rulebook

San Jose

San Jose is preparing a "Large Energy Projects Uniform Development Standards Council Policy" (the Policy) and accompanying ordinances, which the mayor has characterized as being "some of the strictest standards in the country."¹⁵ The Policy will set "the baseline of what the City will require of every [applicable data center] project."¹⁶

The city noted that data centers are allowed with a Special Use Permit in the Combined Industrial/Commercial, Heavy Industrial, Industrial Park and Light Industrial districts and that most data center sites do not need a rezoning or other legislative approval. For those projects, the city "can require measures directly tied to a project's impacts."¹⁷

Scope: A 20 MW Threshold and a Backup-Generation Test

San Jose is the only city in this group whose new rules are triggered by a MW threshold. A Large Load Data Center is "a facility with a Power Demand of twenty (20) megawatts or greater that is used primarily to house networked computer servers for the remote storage, remote computing, or distribution of data." It includes facilities with "backup generation capacity, excluding battery energy storage systems, greater than forty percent (40%) of its Power Demand."¹⁸

A separate Large Load R&D Facility category covers 20 MW-plus server facilities that support the operator's own research and development, are "not used to sell computing, storage, or data services to others," and have backup generation of 40 percent or less of power demand.

Key Draft Requirements

• Water for Cooling Systems: Cooling systems must use 100 percent recycled water or low-water cooling technology such as closed-loop or air-cooled systems, with a limited percentage of annual water loss. Open-loop potable cooling is prohibited.¹⁹
• Sanitary Sewer Discharge Monitoring: Projects must monitor the quality of their sanitary sewer discharge and submit an annual monitoring report to the Environmental Services Department, which will develop further reporting requirements. A project may be subject to additional conditions depending on the data center's specific impacts on the discharge.²⁰
• Energy and Water Audits: Large Energy Projects would no longer be exempt from San Jose's Building Performance Ordinance because they sit in industrial zones. Operators would be required to track and report their energy and water use to the city every year. Every five years, a third party would compare actual use to the levels assumed in the project's environmental review; if use exceeds those levels by a set percentage, the operator must complete an audit and make the improvements needed.²¹
• Clean Energy: Projects must use "100% carbon-neutral electricity." Enrollment in the City's community-choice clean energy program satisfies this requirement. Projects not so enrolled must report annually on compliance with the carbon neutrality requirement, with the first report due within two years after occupancy.²²
• Backup Generators and Air Quality: U.S. Environmental Protection Agency (EPA) Tier 4 only; testing and maintenance capped at 25 hours a year (half the 50 hours state rules allow); use limited to outages, never demand response; compliance certified before the certificate of occupancy is issued.²³
• Noise and Design: Structural noise reduction, such as baffles and acoustic louvers, are required regardless of whether the project meets applicable noise standards. Annual noise monitoring applies where residential use is within a set distance or after a written request following a complaint.²⁴
• Fees: A Commercial Linkage Fee (impact fee levied on commercial development for the provision of affordable housing) of an anticipated $4 to $5 per square foot would apply to the entire building. For example, on a 500,000-square-foot facility, that is $2 million to $2.5 million.²⁵ A one-time Energy Reliability Fee of about $50,000 per MW (study underway) would be paid half at building permit and half at certificate of occupancy.²⁶
• Process and Community Engagement: Both land use appeals and California Environmental Quality Act (CEQA) appeals would go to the City Council. Land use appeals may be filed by owners of property within 1,000 feet.²⁷ Projects would be subject to Council Policy 6-30.

Key Dates

• October 15, 2026: Final large-format community meeting ²⁸
• November 18, 2026: Planning Commission review of the Title 20 Municipal Code changes
• December 8 and 15, 2026: City Council first and second readings; the ordinance takes effect 30 days after the second reading (on or about January 14, 2027, if the schedule holds)
• Mid-2027: Expected completion of the update to Council Policy 6-30

Developer Takeaways

The standards are expected to "apply to all Planning Applications still under review by the time the ordinance goes into effect."²⁹ Projects now in the San Jose pipeline should be designed with these standards in mind.

Santa Clara

On October 6, 2026, Santa Clara staff presented for City Council input a report on a proposed comprehensive update of city data center policies. The staff report (Report to Council 26-1037) was prepared in response to a City Council member's prior request that staff "create a policy that limits the type and quantity of water used by data centers."³⁰ The update is expected to be completed toward the end of 2027.

At the same meeting, the City Council considered whether to schedule two proposals for future agendas: a staff update within 30 days on how the city approves and allocates power to new large electrical loads, "with Option of Moratorium on New Stand Alone Data Centers" (Item 8, 26-1016), and a policy barring city nondisclosure agreements with stand-alone data centers and requiring applicants to submit a "Transparency Compliance Affidavit" (Item 9, 26-1042).³¹

Since 2024, stand-alone data centers need a Conditional Use Permit from the Planning Commission and an Architectural Review Permit. They are conditionally permitted in Low-Intensity Office/Research and Development (LO-RD), Light Industrial (LI) and Heavy Industrial (HI) zoning districts. In High-Intensity Office/Research and Development (HO-RD), ancillary data centers are "limited to 20% of the building square footage on a site and a maximum power draw of 9 MW."³²

What the Staff Report Proposes to Study

• Water: Staff is considering quantitative standards for when a new data center must extend the city's recycled water system to its site based on distance to existing recycled water lines, extension cost relative to total project cost and annual water use, plus efficiency standards favoring low-water cooling.³³
• Siting: Apart from a 25-foot rear or side yard setback, no minimum distance currently separates data centers from residential uses. In response to noise and visual concerns, staff is evaluating residential buffer requirements.³⁴
• Other Topics: Staff will also evaluate a community benefits program; formal coordination between planning review and Silicon Valley Power's (SVP) power allocation, so applicants learn early about power availability and timing; participation in the State's Demand Side Grid Support program, whose funding was not renewed; and technologies that reduce reliance on diesel backup generators or capture waste heat.³⁵

The report also documents the industry's local significance. Santa Clara has 56 stand-alone data centers active or under construction, two approved but not built, and eight more in the pipeline.³⁶ Data centers contributed an estimated $35.2 million to the General Fund in fiscal year 2025-2026, or about 9 percent.³⁷

Key Dates

• End of 2027: Comprehensive policy work expected to be complete.

Developer Takeaways

Santa Clara has no formal moratorium, but new data center projects are effectively on hold until SVP resumes accepting applications, with major grid upgrades expected to come online beginning in 2028³⁸. A planning entitlement does not guarantee power: SVP can require a system impact study for loads over 2.5 MW.³⁹ Developers should expect any new projects to face stricter recycled water, siting and community benefits requirements once the policy update concludes and should track whether the City Council schedules a moratorium hearing on Council Member Kevin Hardy's request.

Conclusions

The Bay Area's local response to data center development appears to be aligned with the state-level actions. These local measures do not establish permanent bans but are designed to establish uniform standards and regulatory processes. Whether these standards and processes ultimately result in an efficient, predictable development pathway for data centers will be determined over a term of years. In the intervening time, the success of a data center application will, in part, be based on a nuanced understanding the municipality's requirements, how these requirements may change and the flashpoints around which to exercise caution.

Given the state of flux, Holland & Knight recommends 1) coming to the table with solutions, including being proactive in preparing and presenting data center designs that anticipate points of concern, 2) considering whether smaller data centers that do not trigger new requirements or redevelopment of existing data centers with increased computing capacity, but smaller water and power demands may fast track the project, and 3) maintaining a deep understanding of the host city's requirements, processes, potential changes and how your data center may affect existing dynamics.

For more information or questions about how these evolving requirements may affect data center development projects in the Bay Area, please contact the authors.

Notes

¹ Interim Zoning Moratorium for Data Centers, Ordinance amended in Committee 10/5/2026 ("SF Interim Zoning Moratorium Ordinance") Section 2(i)-(l).

² City and County of San Francisco Board of Supervisors (October 6, 2026). File # 261021.

³ Id. Section 3(c)

⁴ Id. Section 2(q).

⁵ Id. Section 2(r).

⁶ Id. Section 5.

⁷ Interim Ordinance Establishing a Temporary Moratorium on the Approval of Any Land Use Entitlements and/or Agreements to Allow the Development or Operation of Data Centers in the City Of Oakland (Oakland Interim Moratorium on Data Centers).

⁸ Oakland Interim Moratorium on Data Centers, Section 3.

⁹ Id. Section 5.

¹⁰ Id. See also Section 6. Exemptions.

¹¹ Id. Section 6.

¹² Id. Section 11.

¹³ Id. Section 5.

¹⁴ Id. Section 8 and 7.

¹⁵ News Release: City of San José Shares Most Comprehensive Set of Standards for Data Centers and Large Energy Projects – Community Meeting (Oct. 9, 2026)

¹⁶ Data Centers and Large Energy Project Proposed Uniform Standards, p. 7.

¹⁷ Id.

¹⁸ Id. p. 11.

¹⁹ Id. p. 16.

²⁰ Id. p. 19 and 20.

²¹ Id. p. 22.

²² Id. p. 17.

²³ Id. p. 18.

²⁴ Id. pp. 12 and 21.

²⁵ Id. p. 24.

²⁶ Id. p. 25.

²⁷ Id. p. 13.

²⁸ Id. p. 6.

²⁹ Id. p.6.

³⁰ City of Santa Clara. Report to Council 26-1037 (Report to Council) (Oct. 6, 2026), p. 1.

³¹ See Joint Meeting Agenda of the City Council and Parks & Recreation Commission followed by the City Council and Authorities Concurrent & Santa Clara Stadium Authority Board (Oct. 6, 2026).

³² Report to Council p. 3.

³³ Id. p. 6.

³⁴ Id.

³⁵ Id. pp. 6-7.

³⁶ Id. p. 1.

³⁷ Id. p. 5.

³⁸ Id. p. 2.

³⁹ Id. p. 4.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.