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HomeMy WebLinkAboutNeighborhoods First Framework for Data Centers South Bend’s Neighborhoods-First Framework for Data Centers PROTECTION STANDARDS AND NEIGHBORHOOD INVESTMENT Data center investment can strengthen South Bend, but only when neighborhoods come first. Because modern hyperscale data centers can place significant demands on natural resources, South Bend expects every project to limit its environmental impact, to pay its own way and to deliver measurable long-term benefits to residents. These standards establish transparent conditions for how South Bend will evaluate a data center proposal. They apply to hyperscale projects with a power capacity of over 70 megawatts or over 15 acres of land. They include requirements the City sets and state, federal, and utility protections that the City reinforces. The following framework has two parts: • Protection standards: what every project must meet • Neighborhood investment: how project and public revenue will deliver real returns to residents. City of South Bend South Bend Mayor’s Office DRAFT 2 PROTECTION STANDARDS: WHAT PROJECTS MUST MEET Every hyperscale project must meet these minimum requirements to protect residents, ratepayers, neighborhoods, and natural resources. Operators must pay their own way, operate transparently, be a good neighbor, and steward our natural resources. 1. PAY THEIR OWN WAY Data centers must pay their full share of local public and utility costs and generate real revenue for city residents over the life of the project. Full property taxes, no abatements: • Operators must pay full local property taxes. No local abatements, exemptions or City subsidy of any kind. No Payments in Lieu of Taxes (PILOTs) below full anticipated tax revenues. State-level incentives, exemptions, and credits are set by the Indiana legislature and are not affected by these standards. • The project must commit to maintaining a taxable property value consistent with the facility's continued operation and investment level, protecting projected revenue against unreasonable assessment reductions or disputes. • How South Bend would use its share of tax revenue is outlined under Neighborhood Investment below. Full cost of utility infrastructure: • Operators must pay the full cost of all utility infrastructure upgrades required to uniquely serve the facility — including electric, water, wastewater, and stormwater, generation, transmission and distribution. • There shall be no cost shifts to existing residential or commercial ratepayers. Local payments on state sales tax exemption for electricity: City collects one percent of the state gross retail and use taxes not paid on the data center's electricity bill each calendar quarter as outlined in IC 6-2.5-15-15.5 State ratepayer protections: • City standards work alongside developing state and federal regulations for large-load electricity customers. The City will continue to engage state, federal and utility processes as regulations evolve. • The Indiana Utility Regulatory Commission (IURC) has approved multiple orders requiring data centers and other large-load customers to bear the costs for the City of South Bend South Bend Mayor’s Office DRAFT 3 infrastructure needed to serve them and make long-term financial commitments proportional to their investment (e.g. Cause No. 46097). • The City participated in IURC Cause No. 46301 on the generation plan order that establishes no costs to residents during construction of new generation sources, mandatory public disclosure of residential bill impacts for every new resource, and a new residential program to lower energy costs. • Indiana Michigan Power filed one of the largest rate reduction plans in the nation in August 2026 that was made possible by load and revenue growth from large data center customers. Special public safety response equipment: Operators provide or reimburse any special response equipment the facility uniquely requires. 2. OPERATE TRANSPARENTLY Residents should be able to see what's proposed, what's promised, and whether promises are kept. Agreements must be public, and important information on impacts like resource use must be reported at least annually. No NDAs: City officials and staff will not sign non-disclosure agreements with data center operators, developers, or their representatives. Terms of any agreement between the City and an operator are public. Mayor Mueller issued Executive Order 01-2026 prohibiting all NDAs related to data centers. Public engagement: • Data center projects should include meaningful opportunities for public input before and during vertical construction. • Community meetings at least semiannually during vertical construction to keep the community updated. • Project owner will provide the City a point of contact for community concerns that may arise. • City will perform regular inspections during construction. • Project owner shall develop a response protocol for complaints. Fit-out and decommissioning plan: Every project shall disclose its anticipated operating lifespan, as well as a decommissioning plan for personal and real property. Personal property must be recycled whenever possible. City of South Bend South Bend Mayor’s Office DRAFT 4 Utility reporting: Utilities should provide annual public reporting of usage and share available utility analyses regarding customer or ratepayer impacts associated with the facility. Environmental impact reporting: Once the facility is operational for a year, the operator shall provide annual public reporting of its carbon footprint and water footprint, both gross (before offsets or renewable energy credits) and net (with offsets and credits) to the extent such information is maintained by the operator. Reports must include actual on- site emissions and consumption values, as well as net values. Nothing in these reports requires the unreasonable disclosure of trade secrets forbidden by state law. Jobs and workforce reporting: Public reporting of construction jobs (with local hire percentage), permanent operations jobs (with wage bands and residency data), workforce training placements, and apprenticeship utilization. 3. BE A GOOD NEIGHBOR Data centers must meet enforceable siting limits and operating standards that protect the homes and businesses around them. Zoning standards: All City industrial zoning ordinance standards for setbacks, screening, buffering, and height restrictions apply. Additionally, data center buildings must be a minimum of 400 feet from any occupied residential structure and 100 feet from agricultural property or offer at least fair market value to any property owner within those areas as an option for a voluntary sale. Noise limits: The operator shall conduct both pre and post construction noise studies to determine the net change in noise levels at the property lines. Noise producing equipment must be enclosed and oriented away from residences whenever feasible. Enforceable noise limits at the property line apply to both construction and operations as set forth in the municipal code based on sound frequency, zoning district classification, and time of day. In addition to longstanding noise level limits, maximum low frequency noise levels on the dBC scale shall not exceed dBA noise levels by more than 15 dB at the property line. Light pollution standards: Shall fully comply with existing zoning ordinance standards for lighting that include cutoff lighting, dark sky compliance, and no spillover onto neighboring properties. City of South Bend South Bend Mayor’s Office DRAFT 5 Traffic and access management: Traffic impact studies shall be completed during permit review process for both construction traffic and operations traffic and traffic management plans for both to be provided to the City during permit review process. Property maintenance: Landscaping, buffering, and site maintenance standards for the life of the facility. Operator will maintain safety and security protocols. Emergency Power Systems: Backup generation and associated fuel storage shall comply with all applicable air quality, noise, fire safety, and emergency management requirements. Testing schedules disclosed publicly. Generators must meet US EPA Tier 4 Compliant Standards. Public Safety: • Annual emergency management plan identifying every local agency that would respond. • Annual training for fire and EMS, beginning within six months of operations. Grid Reliability: Existing customers must not lose reliability of services. Indiana Michigan Power (I&M) should demonstrate that anticipated electric demand can be accommodated without degrading reliability for existing residential, commercial, institutional, or industrial customers. I&M will consult with the City Departments of Public Works and Community Investment when considering locations for new high voltage transmission lines. 4. STEWARD OUR NATURAL RESOURCES Data centers must use water and energy efficiently, protect our wastewater system, reduce environmental impacts, and support South Bend’s long-term climate and sustainability goals. Energy and water efficiency standards: Facilities must use closed-loop, air cooling systems or systems of equivalent or greater efficiency. Water Use Effectiveness (WUE) and Power Use Effectiveness (PUE) targets must meet or exceed industry’s best practices. The operator shall report efficiency metrics annually as available. Wastewater: • Facilities shall comply with all applicable wastewater pretreatment requirements and industrial discharge standards under local, state and federal regulations. City of South Bend South Bend Mayor’s Office DRAFT 6 • The project owner and utility must demonstrate that anticipated wastewater flows can be accommodated without degrading service, regulatory compliance, or planned capacity for existing residential, commercial, or industrial customers. Sustainability and waste heat: • Direct operator contribution to community sustainability infrastructure (e.g. watershed restoration, urban tree canopy, energy efficiency programs) beyond on-site operational efficiency that are scaled to facility size and water and energy footprints. • Operators evaluate opportunities for waste heat recovery and beneficial reuse for nearby industrial, institutional or public purposes. Clean energy and climate goals: • South Bend's expectations and climate goals are broadly consistent with clean energy commitments already made by leading hyperscale data center operators. • Operators join the City in encouraging Indiana Michigan Power to develop new clean energy generation in accordance with these climate goals. • To meet climate goals, almost all new generation capacity must be clean energy. Indiana Michigan Power’s (I&M) Expedited Generation Resource Plan (EGR) targets 1500 MW of new clean energy resources. • I&M’s Integrated Resource Plan (IRP) filed with the Indiana Utility Regulatory Commission in March 2025 proposed nearly 90% of new generation capacity to be clean energy over the next 20 years. NEIGHBORHOOD INVESTMENT: HOW PROJECTS DELIVER RETURNS TO RESIDENTS Meeting the protection standards is the minimum. The return to residents is the larger purpose. This section sets out two sets of commitments: • The City will use its share of data center tax revenue to invest in neighborhoods, divided equally between Neighborhood Infrastructure & Housing Affordability and Neighborhood Climate Action & Utility Relief. • The operator will use local labor, advance neighborhood priorities, and build local talent. City of South Bend South Bend Mayor’s Office DRAFT 7 1. DELIVER FAIR RETURN Hyperscale data centers must pay their own way and generate measurable returns for the people who live here. Substantial tax revenue would flow to all taxing units, such as the City, South Bend Schools, St. Joseph County, St. Joseph County Library, Townships, and Transpo. The City commits 100% of tax revenue that it receives from hyperscale facilities exclusively to neighborhood improvements, divided evenly (50/50) between two areas. Neighborhood Infrastructure & Housing Affordability (50%): • Dedicated funding for basic neighborhood infrastructure and resident stability. • Eligible uses include: o Street paving, curb and sidewalk repairs, lights, traffic calming. o Long-term housing affordability by filling financing gaps for infill homes, supporting rent-to-own pathways, and assisting with home repairs for neighbors in need. o Neighborhood park and public space upgrades outside downtown core. Neighborhood Climate Action & Utility Relief (50%): • Dedicated funding for meeting South Bend’s Climate Action Plan by permanently reducing metered energy consumption and lowering utility costs for families, schools, and other community anchors. • Eligible uses include: o Residential weatherization and efficiency grants that lower monthly heating and electric bills. o Energy Assistance and Solar Savings Initiative (EASSI) financing for local nonprofits, small businesses, and other community anchors looking to deploy solar and efficiency measures. o Urban tree canopy and other carbon reduction measures. Annual Audit: The City will provide an annual public report identifying revenue generated by data center facilities and the neighborhood investments and outcomes supported by those revenues. 2. USE LOCAL LABOR • Project labor agreement or community workforce agreement (or equivalent) covering construction. • Minimum local hire targets for construction workforce. City of South Bend South Bend Mayor’s Office DRAFT 8 • Prevailing wage. • Apprenticeship utilization requirements meeting or exceeding state standards. • Inclusive procurement to ensure opportunities are extended to all groups and meet M/WBE participation goals based on local availability to a commercially reasonable standard. 3. ADVANCE NEIGHBORHOOD PRIORITIES • Operators must be an invested member of the community and fund neighborhood priorities and partnerships with local nonprofits and community organizations. • Operators must disclose the list of funded priorities and partnerships publicly. 4. BUILD LOCAL TALENT AND WORKFORCE • The operator shall make a direct annual investment in workforce training and education partnerships with designated local institutions. • The annual investment shall be scaled to facility size and directed toward training slots, scholarships, and workforce pipeline programs. • The operator shall publicly report on program outcomes.