Data centers, TIF concerns heard Friday

RAPID CITY, SD – Concerns over data centers and the people of the community being heard by their elected officials took center stage Friday as Jeff Shelton called for a one-year moratorium on data center development in Rapid City.

Shelton, a former legislative candidate, spoke at a West River Alliance for Democracy (WRAD) press conference held outside City Hall Friday afternoon.

Shelton said, despite community opposition to data centers, the Rapid City Common Council has ignored the citizens. Supporting his claim, Shelton cited a 2023 lease proposal for the Hope Center that was rejected by the council, a 2024 vote against community wishes concerning citizen seats on the Vision Fund board, and the 2025 TIF for the LibertyLand project that was ultimately rejected by voters.

Currently, Shelton said, a “misapplication of the TIF process” was creating opportunity for a data center development.

“There are currently efforts by local developers to acquire Tax Increment Financing for a 49.9-megawatt data center, which, if constructed, would only have construction limits of 1,000 feet from residential homes,” Shelton said. “The power demands are damningly precise and are a tenth of a megawatt below what would be prohibited under currently proposed ordinances. Under the outdated 2024 ordinance, there is little to be done to prevent this development.”

According to the City, “Dream Design International Inc. secured a TIF for the Black Hills Industrial Center development for public infrastructure improvement. This TIF was secured before a data center was considering this site. To date, the City has not received and/or approved a building permit for a data center.”

Additional information about this TIF can be found on the City Tax Increment District History page, and scrolling down to TID #86 - Black Hills Industrial Center.

“In light of this continued disregard for the will of the people, I'm calling for an immediate moratorium against new data center development in Rapid City. This would ideally extend for up to one year, or until such time as the new proposed guardrails are in place,” Shelton said. “Unfortunately, it's our understanding that there is currently minimal support for a moratorium among our council members, and at least six votes would be necessary to enact a pause.”

On Thursday, Rapid City Mayor Jason Salamun laid out two measures he would introduce at the Planning Commission to address possible data center development while the City develops a data center ordinance addressing noise, water, power and other concerns.

The first measure Salamun introduced would impose a six-month moratorium or ‘pause’ on issuance of any permits for data center operations pending Planning Commission and City Council actions on Ordinance 6746.

The second measure to be introduced by Salamun is an alternate ordinance that would provide additional protections to existing City regulations related to data center operations should the Council not agree to a pause or moratorium.

“I'm grateful for the mayor for speaking out. I'm glad that he recognizes that this is an issue, and at the same time, unless we can put a moratorium in place before these ordinances get updated, then I think that we're still at risk,” Shelton said. “I think that the process does take time, and I understand that. And so that's why I'm saying one year or until ordinances (are in place).”

Shelton said concerns about data center development, include:

·       Water resources: The use of gray water and the potential demands on local water infrastructure.

·       Energy consumption: The significant energy requirements associated with data center operations and their potential impact on the community.

·       Noise: The potential effects of ongoing operational noise on surrounding neighborhoods.

·       Long-term community impact: Whether the economic benefits justify the infrastructure demands and lasting consequences for Rapid City.