How a change buried in NC Helene relief bill makes it harder to block data centers
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- Law requires written approval of all affected owners for down-zonings.
- Chatham enacted a one-year moratorium on new data centers.
- Senators approved a bill to restore initiation power, but it’s stalled in House.
In a unanimous vote last week, Chatham County commissioners approved a one-year moratorium on new data centers, time they plan to spend reviewing how to regulate these in-demand, yet divisive, facilities.
Complicating their efforts — and the efforts of many North Carolina local governments seeking to manage growth through zoning — is a provision at the very end of a 131-page disaster relief bill passed shortly after Helene battered the state. This wide-ranging legislation, which Republicans passed over the veto of Democratic Gov. Roy Cooper in late 2024, limits local governments from “down-zoning” properties without the written approval of all affected property owners.
Under the law, municipalities no longer can initiate down-zonings, like reducing the density or uses of land, without owners’ permission. It also broadened the definition of down-zoning in nonresidential areas to include any rule that creates “nonconformity” — zoning which opposes certain future uses (like data centers) or building characteristics (like height) while grandfathering in existing properties.
Proponents have called these changes a win for property rights and predictable planning that encourages investments. Local leaders, however, say the new down-zoning rules aren’t tenable.
“It’s safe to say that it’s caused a lot of problems in a lot of municipalities,” said Scott Mooneyham, director of political communication at the North Carolina League of Municipalities.
North Carolina governments have historically adjusted zoning districts to accommodate growth and emerging uses. For example, cryptocurrency mines (which the Chatham moratorium also covers) didn’t even exist to be regulated 20 years ago.
The down-zoning law has disrupted these routine processes, local leaders say. Getting owners’ written approvals is sometimes a logistical, let alone ideological, barrier as municipal staffs must track down all affected parties. Southern Pines Mayor Taylor Clement said her Moore County town has stopped amending its unified development ordinance due to the new law.
“It’s overly restrictive on zoning,” she said in a phone interview Tuesday.
“You and I both have land property rights,” she added. “But if there’s an overarching town design and a plan that makes your and my property work better together, it actually increases the value of both of our properties.”
Mooneyham said other municipalities are postponing zoning changes as they hope for adjustments to the law. North Carolina leaders have shown an appetite to do this; last spring, seven Republican state senators sponsored a bill that would give governments back the power to initiate down-zoning without owner approvals. The Senate in May passed it in a bipartisan, unanimous vote, but the legislation has not advanced out of committee in the House.
Chatham site owner wants a data center
While the down-zoning law applies to all developments, few uses have attracted as much attention and furor across North Carolina as data centers. These warehouse-like facilities consume considerable amounts of water and electricity while employing relatively few people among rows of server racks. On the other side, supporters see hyperscale data centers as rich property tax sources that don’t draw in new residents for local governments to support. Plus, developers have argued the facilities are inevitable as artificial intelligence technologies spread.
Still, grassroots efforts to stymie these projects continue, including in Southwest Wake County over a proposed 300-megawatt campus near Apex.
“We have received significant responses from our residents,” Apex Mayor Jacques Gilbert said in a phone interview Tuesday. “More so opposition to any type of data center in our community. That’s what I’ve heard the most.”
How local leaders can stop data centers may hinge on the future of the down-zoning law. During public comments ahead of Chatham County’s data center moratorium vote, Patrick Bradshaw, a Pittsboro attorney representing the owners of the 339-acre Triangle Innovation Point West site in the unincorporated community of Moncure, told commissioners he would consider any move to decrease the land’s uses without his client’s consent to be unenforceable given the current rule.
“The owner of TIP West has spent approximately $11.3 million to prepare the site for development of a data center,” Bradshaw told the commissioners. TIP West is part of the Moncure megasite, about 30 miles southwest of Raleigh, which also contains the dormant VinFast campus.
Under the moratorium, Chatham officials have given themselves 12 months to figure out their next data center move.
“What can we legally do regularly to manage how (data centers) are developed?” Chatham County Commissioner Franklin Gomez Flores told The News & Observer in an interview the next day. “Because clearly, with the prohibition on down-zoning, we can’t battle.”
Chatham leaders could consider getting creative to bypass the new limits, said Michael Thelen, a Raleigh real estate attorney at Womble Bond Dickinson. For example, the law defines down-zoning as reducing the number of uses on a property. But what if a municipality adds a usage while excluding data centers? Given the slow pace of updating zoning ordinances, few if any court cases have arisen thus far from the late 2024 law change.
“That is something that Chatham County is going to have to consider,” Thelen said. “By virtue of this Hurricane Helene relief bill change.”
