Gilroy City Council Extends Ten-Month Moratorium on New Commercial Data Centers

The Gilroy City Council enacted an emergency ordinance extension on Tuesday night, voting unanimously to prolong a temporary development moratorium on new commercial data center construction across the South Bay corridor south of San Jose for an additional ten months. Municipal leaders stated that the extended pause is necessary to enable planning commissioners and environmental analysts to draft robust zoning regulations governing industrial water consumption, acoustic dampening, and high-voltage grid impact.

City planning staff presented regional development data showing that tech real estate syndicates have increasingly targeted South Santa Clara County for hyperscale computing server campuses due to available open land and proximity to high-voltage transmission lines. Councilmembers voiced deep concerns that unrestrained data center expansion could overwhelm municipal electrical substations and strain local groundwater aquifers critical to Gilroy's agricultural packing houses and residential neighborhoods.

The extended moratorium halts the acceptance and processing of all new conditional use permits, architectural site reviews, and zoning amendments for facilities exceeding 50,000 square feet. During the ten-month study period, the Gilroy Community Development Department will collaborate with PG&E and the Santa Clara Valley Water District to formulate objective architectural design standards, mandatory closed-loop cooling mandates, and strict decibel limits along residential property lines.

Regional technology trade associations expressed disappointment with the prolonged development freeze but agreed to participate in upcoming municipal stakeholder roundtables to help craft equitable infrastructure standards. The Gilroy City Council will review preliminary draft zoning language during a public study session scheduled for March 2027. Property owners and developers seeking updates on the moratorium ordinance can contact the Gilroy Planning Division at (408) 846-0440 or visit cityofgilroy.org.