While San Francisco and Oakland voted the same night to pause new data centers, Santa Clara chose a different path: keep the facilities that already buoy its budget, but write tougher rules for what comes next.

In a meeting that began Tuesday night, Oct. 6, and ran nearly to 1 a.m. Wednesday, the City Council unanimously told staff to prioritize stricter water-use and air-quality standards for new data centers, KQED and the Mercury News reported. A broader policy rewrite is still planned for late 2027, but council members asked that the water and air pieces come back sooner.

California's data-center capital

Santa Clara, a city of about 130,000, has become California's data-center capital with help from its municipal utility, Silicon Valley Power, which sells power well below PG&E rates, KQED reported. City Manager Jōvan Grogan told the council the city now has 56 data centers built or under construction, plus two more approved but not yet built, according to the Mercury News. None exceeds a 100-megawatt electric load, the city staff report said.

Those sites are expected to put about $35.2 million into the general fund this fiscal year through electricity transfers, property and sales taxes and business licenses. KQED reported that is nearly 10% of the general fund.

Power freeze, not a land-use ban

Silicon Valley Power stopped taking data-center power applications in 2023 and is midway through a $450 million upgrade due around 2030. Two approved centers are under construction, and eight more that locked in power before the cutoff are waiting for electricity. Staff stressed developers can still seek land-use entitlements. About 54% of city power goes to data centers, KQED reported.

Guardrails first

Councilmember Suds Jain pressed for water limits so new applicants cannot grandfather into today's rules. "We need to have these guardrails in place to protect our residents," he said, according to KQED and the Silicon Valley Voice. Councilmember Karen Hardy called the city's approach "loosey-goosey" and wants a temporary moratorium; votes on a moratorium and on banning nondisclosure deals were postponed as the meeting ran late. Santa Clara already requires post-2022 centers to use carbon-neutral power equivalents and encourages recycled water. For now, City Hall is studying first and tightening water and air rules soon.