Fernley officials have begun developing regulations for data centers before formal applications reach City Hall, but questions remain about how restrictive the rules should be and whether they would apply to the city’s largest industrial development.
The Fernley Planning Commission reviewed two preliminary versions of a proposed data-center ordinance during its July 8 meeting. No ordinance was approved, and commissioners did not choose between the two versions.
Planning Director Michelle Rambo emphasized that the drafts are only a starting point in a longer process that will include additional research, meetings with industry representatives and regulators, and opportunities for public participation.
“We are not here tonight to approve anything,” Rambo said. “This is a very preliminary rough draft.”
Rambo said city officials know data-center developers are looking at Fernley, although the city has not yet received a formal application.
“We have several that are on the horizon,” she said. “However, we do not actually have any submitted applications yet.”
The city is attempting to establish its requirements before those applications arrive rather than revisiting its development code after projects are already underway. Rambo said staff hopes to have an ordinance ready for possible approval by the end of the year but does not intend to rush the process.
The two drafts contain many of the same operating and development standards but differ in where data centers could be considered.
Under the first version, a data center could be proposed on industrially zoned property through a conditional use permit and development agreement.
The second would create a data-center overlay district. A developer would first have to obtain a zoning-map amendment placing the overlay on the property before seeking a conditional use permit and development agreement.
The overlay process would give the City Council an additional opportunity to decide whether a particular property is appropriate for a data center, rather than allowing the use to be considered throughout the city’s industrial zones.
Rambo said that distinction may be important because Fernley has industrially zoned land near downtown and the railroad tracks that may not be suitable for a large data center.
The preliminary ordinance would apply to data centers with a total electrical design capacity greater than 20 megawatts or water use exceeding 50 gallons per minute on an annualized basis at full buildout.
A covered project would be required to submit detailed information about its water demand, electrical needs, backup power, noise, lighting, utilities, grading, landscaping and emergency-response plans.
The draft proposes at least 1,000 feet between a data center and residentially zoned property, but Chairwoman Garvin and Vice Chair McCullar both called for a greater separation.
Garvin said the setback should at least match standards applied to casinos near residential property and that data centers should be located “as far away as possible.” McCullar said the distance should be pushed “as far as humanly possible” to protect residents.
Commissioners also called for broader public notification. Garvin said information about proposed data centers should be distributed citywide rather than only to property owners within the mailed-notice radius. Commissioner White suggested allowing residents outside the immediate area to sign up to receive mailed notices because not everyone relies on social media for city information.
The ordinance could require closed-loop cooling or another water-efficient cooling system. It could also require noise-dampening equipment, landscaping and screening, and the placement of taller buildings toward the center of a site.
Commissioner Susan White said the city should not write the ordinance so narrowly that it prevents developers from using a future technology that is more efficient than today’s closed-loop systems.
White also asked the city to consider noise and air-quality standards for backup generators. She said developers should be responsible for specialized emergency-response training if a project creates hazards that Fernley firefighters are not currently equipped to handle, such as fires involving large battery systems.
Commissioner Robert Flores asked staff to examine how many permanent jobs data centers create after construction is complete and how their economic contribution compares with warehouses or other industrial development.
Data centers can occupy substantial amounts of industrial land, Flores said, and the city should understand what it receives in return.
He also raised questions about whether the buildings could be converted to other uses if changing technology makes a data center obsolete.
Commissioner Cody Wagner called the issue one of the most significant matters to come before the commission during his tenure.
Wagner suggested requiring annual reports showing each facility’s actual water and power use, noise levels, emissions, wastewater impacts and chemical use. He also questioned whether a developer could avoid the ordinance by splitting one large project into several facilities falling below the proposed power or water thresholds.
Other ideas raised during the discussion included requiring dedicated power generation, limiting the amount of data-center capacity approved in a single year, capturing waste heat for other uses, requiring renewable-energy systems, prohibiting private wells and establishing a community-benefit fund.
Rambo said many of those ideas will require additional legal and technical research.
During public comment before the discussion began, Scott Barnes, vice president for entitlements for Mark IV Capital and the Victory Logistics project, told commissioners that the proposed ordinance would not apply to Victory.
Barnes said the project has vested rights under a development agreement and planned-development handbook approved by the city in April 2024.
He also said the preliminary drafts contain technical and substantive errors and urged the city to conduct further review and public outreach before advancing an ordinance.
During the commission’s later discussion, Rambo confirmed that Victory has its own development agreement and planned-development handbook containing project-specific standards.
“They have their own zoning code, basically,” she said.
Rambo said Victory is the city’s only existing industrial planned development that could potentially accommodate a data center under its current handbook.
That means Fernley could adopt a detailed ordinance governing future data-center applications while a data center within Victory may be evaluated under standards negotiated before the new ordinance was written.
Commissioners expressed concern about that possibility and asked whether the city could expect Victory and other future data centers to meet similar requirements, including providing their own power supplies.
Rambo said additional research is needed to determine what the city can require.
The draft ordinance itself does not address how its provisions would interact with previously approved development agreements.
Amanda Berry-Jones, director of business development for the Economic Development Authority of Western Nevada, urged the city to protect water resources and residents’ quality of life without making Fernley less competitive than surrounding communities.
She said newer data centers may use considerably less water than older facilities and encouraged the city to require demonstrated water efficiency rather than mandate one particular cooling technology.
Berry-Jones also said Nevada’s large-load electrical requirements are intended to prevent the costs of serving major power users from being shifted to existing ratepayers.
She recommended that the city hold a dedicated workshop involving NV Energy, water providers, data-center operators, environmental regulators and other stakeholders before selecting one of the two regulatory approaches. EDAWN offered to help organize the workshop.
Fernley resident Justina Yellowhair urged the commission to independently investigate potential health and environmental impacts, including chemicals, air emissions and contamination risks.
She said financial benefits should not outweigh protections for residents and natural resources.
Rambo said she expects to meet with Storey County representatives and data-center operators in August and tour an operating facility. She also plans separate discussions with regulators and others involved in overseeing the industry.
Commissioners gave staff numerous issues to research but did not formally endorse either the industrial-zone approach or the overlay district.
The drafts will return for additional review after staff completes more research and incorporates direction previously provided by the City Council.
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