Cities Vary Responses to Data Center Interest

Data centers have boomed over the past few years. Due to Kentucky’s rural nature with vast swaths of land served by local utilities that charge relatively low utility rates, state incentives provided since 2025, lack of regulation, and relatively mild climate, the state is a hot locale for data center expansion. Cities are now trying to figure out how to address this new technology interested in Kentucky properties.

As a new technology, data centers are not contemplated by city planning and zoning regulations, leaving many local governments in a difficult position when approached by a data center interested in local property. KLC, in conjunction with the Kentucky Association of Counties and Kentucky Association for Economic Development, hosted an informational webinar to provide local governments with basic information about data centers.

Brian Davis, director of the Louisville Metro Office of Planning, and Brian Howard, executive director of the Owensboro Metropolitan Planning Commission, presented “Data Centers 101” in June 2026. This webinar provided unbiased, basic information about data center operations, including types, companies, resource consumption, safety needs, proponent and opponent messaging, and current regulations. The webinar can be viewed here.

Many local governments decided to hit pause on data centers by imposing moratoriums on approval, construction, or business incentivization for data centers seeking to locate in their territory. Allen County, Daviess County, Lexington, and Louisville, to name a few, have passed moratoriums with little pushback from data centers. But Cave City is now in a lawsuit regarding the legality of moratoriums on land use.

On May 20, 2026, the city of Cave City implemented a 12-month moratorium on data center projects in the city in response to public outcry. Kentucky Industrial Alliance, LLC had engaged in discussions with city leaders, subject to a complete nondisclosure agreement, to locate a large data center on 380 acres of property. At a special-called meeting on May 18, 2026, citizens of Cave City voiced overwhelming opposition to the data center’s location, resulting in a proposed moratorium that had its second reading on May 20, 2026.

Kentucky Alliance, LLC filed a lawsuit on June 8, 2026, challenging the city’s moratorium. Contrary to the allegations in the lawsuit, it is vital that cities have the discretion to impose moratoriums on unforeseen land use proposals to give city leaders time to adopt regulations that protect the public health, safety, and welfare. Given the statewide importance to all member cities presented by the lawsuit, KLC is providing financial support to the city of Cave City in defense of the lawsuit.

Other local governments have acted to regulate data center locations within their territory. In February 2026, Mason County Fiscal Court adopted data center zoning text amendments upon the recommendation of the Mason County Joint Planning Commission. The city of Bowling Green passed more restrictive regulations on June 16, 2026, to protect public health, safety, and welfare.

The city of Bowling Green was able to avoid the need for a moratorium and moved to immediately enact prohibitive regulations to strictly limit development of data centers within the city.  The city’s data center regulations authorize location only in light industrial zones with a conditional use permit and heavy industrial zones as a permitted use. Even when authorized, the regulations contain restrictive setback requirements that all structures and transmission and distribution lines shall be located at least 1,500 feet from (1) any residential district, structure, or use, (2) schools, (3) religious institutions, (4) hospitals, and (5) nursing homes. Emission points and exhaust stacks must be at least 2,000 feet from the property line of a residential district, structure, or use.

A few of the public protection aspects of the Bowling Green regulation are that data center facilities must be constructed to minimize glare and reflection on adjacent properties, waste heat cannot raise ambient temperature above naturally occurring conditions measured at four feet above ground, outdoor equipment and energy systems must be equipped with shielding insulation or dispersion devices to minimize radiant heat, and generators are preferably gas or battery storage with testing only to occur during the hours of 12 p.m. to 5 p.m. Monday through Friday. To safeguard public utility resources, the regulation requires a data center application to include written verification from utilities indicating that adequate services can be provided without any adverse effect on the availability, reliability, quality, or safety to other customers. Furthermore, all needed infrastructure, water and wastewater treatment, stormwater run-on and run-off, must be explained in the application.