Gilroy is taking more time to decide how it wants data centers built. The City Council on Monday unanimously extended a temporary ban on new data center projects by more than 10 months, San José Spotlight reported. The moratorium now runs to Sept. 3, 2027, and can be extended once more for another 12 months.
How it started
The council approved an initial 45-day moratorium on Sept. 14, set to expire Oct. 29. It came after an Amazon data center was allowed to move ahead without public input, according to San José Spotlight. City staff said the work to write standards couldn't be finished in 45 days, which led to the extension.
City Administrator Matt Morley said the extra time lets staff study best practices and talk with residents. "The goal is to further enhance protections to public health, infrastructure and neighborhood quality of life by addressing issues such as electricity demand, water use, generator emissions, noise and traffic," he told San José Spotlight.
What the moratorium covers
The ban does not apply to the Amazon data center already under construction on a 56-acre site at 8050 Camino Arroyo. But it does halt a second data center project proposed at Highway 152 and Camino Arroyo, which is in the pre-application process. Because the city hasn't received a formal application for that one, it falls under the moratorium, San José Spotlight reported.
Gilroy currently doesn't define data centers as a distinct land use, and its code doesn't have standards for impacts like water consumption, grid capacity and demand, or backup generator emissions. Staff plans to use the moratorium to write and adopt data center-specific zoning and development standards. Those rules are being coordinated with the city's broader zoning code update and could come forward before or alongside it, with the goal of having draft standards ready before the moratorium expires next September.
Local reaction
Residents urged the council to extend the ban, and while they're glad it passed, some remain concerned about how the city will handle future projects, according to San José Spotlight.
Mayor Greg Bozzo said the moratorium is in line with other nearby cities and cities across California and the U.S. "By tapping the brakes and slowing the process of future data center applications, we'll be better tasked to do that," he said previously. San José Spotlight noted neighboring San Jose is working on uniform standards but a moratorium there appears off the table.
Amazon representatives have said the company is investing in local land conservation and water replenishment, using 100% carbon-free energy for its data center, committing to 100% recycled water by 2030 and covering all infrastructure costs so residents don't pay, according to San José Spotlight.
Why it matters for contractors
For South Bay contractors, the takeaway is split. Work on the Amazon data center at 8050 Camino Arroyo continues, so crews already on that job aren't affected. But new data center work in Gilroy, including the second project at Highway 152 and Camino Arroyo, is on hold until at least September 2027, and possibly a year beyond that if the council extends the ban again.
When standards do arrive, expect them to address the same issues Morley listed: electricity demand, water use, generator emissions, noise and traffic. Those rules can change a project's scope in ways that matter to bidders, such as enclosures and sound walls for generators, different cooling approaches to cut water use, and more traffic mitigation during construction. Electrical and mechanical contractors in particular should follow the draft standards, since power and cooling are the biggest pieces of a data center budget.
The broader message is that data center rules are being written city by city. Gilroy, Morristown, Tenn., and others are each setting their own standards, so contractors who pursue this market need to read local rules carefully before pricing a job.