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HomeMy WebLinkAboutPD Recommendation Report (PL-CCI-2026-000018)1 RBill170 – 7.1.2026 COUNTY OF HAWAI‘I PLANNING DEPARTMENT RECOMMENDATION REPORT COUNTY COUNCIL INITIATED BILL NO. 170 (PL-CCI-2026-000018) AMENDMENT TO CHAPTER 25 OF THE HAWAI‘I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO ZONING PLANNING ANALYSIS In 1996, the Hawaiʻi County Council adopted Ordinance 96-160, which substantially amended Chapter 25 (Zoning) of the Hawaiʻi County Code 1983. Among those amendments was the establishment of the Industrial-Commercial Mixed Use (MCX) zoning district. In creating the district, the Council adopted a list of permitted uses, most of which were derived from the existing Limited Industrial (ML) zoning district set forth in the existing Hawaiʻi County Code at the time. In addition, the Council also added uses reflecting emerging technologies and business activities at the time, including “data processing facilities.” The term “data processing facilities” generally referred to office-oriented businesses that used computers to process information, maintain electronic records, or provide related administrative and technical services. Such activities were consistent with the purpose and intent of the MCX district: to accommodate a mix of commercial and light industrial uses, promote diversified businesses and employment opportunities, and avoid exposing nonindustrial uses to unsafe or unhealthy environments. The district was therefore intended to accommodate uses generally compatible with nearby commercial development and other nonindustrial land uses. Since 1996, internet-based services, artificial intelligence, cloud computing, and digital storage have changed the scale and physical characteristics of data-processing operations. Modern data centers may be standalone or accessory facilities housing computer servers, networking equipment, and supporting infrastructure used to process, store, and transmit digital information. Standalone data centers may have infrastructure demands and operational characteristics that differ substantially from the office-oriented data processing facilities contemplated when the MCX district was established. 2 Recognizing that these facilities differ substantially from the traditional data processing facilities contemplated when the MCX district was established, the County Council introduced Bill 170, which proposes defining "data center" as a separate land use within the Zoning Code while amending the definition of "data processing facility" to expressly exclude data centers. As defined in the proposed bill, a data center is an industrial-scale operation dedicated to the processing, computing, transmission, or dissemination of digital data that requires supporting infrastructure beyond that typically accessory or incidental to office, commercial, or public institutional uses. Unlike office- based businesses where computer processing is performed as part of administrative or professional services, modern data centers are commonly developed as standalone principal uses with distinct infrastructure and operational requirements. As proposed in Bill 170, data centers would not be permitted in any zoning district. Data centers vary substantially in building area, equipment density, power demand, cooling technology, and campus configuration. Potential land use and infrastructure considerations include electricity demand; water demand associated with cooling; noise from mechanical equipment and emergency generators; access to electrical and telecommunications infrastructure; emergency response; cumulative development; and compatibility with residential, agricultural, rural, and other sensitive uses. Building area is a measurable zoning threshold that helps regulate the scale of development, although it does not by itself capture every potential operational impact. To evaluate how these considerations may be addressed through zoning, the Planning Director reviewed selected regulatory approaches in other jurisdictions. Several of these approaches were adopted, amended, or under active reconsideration during 2024 through 2026, reflecting the rapidly evolving nature of the industry and local regulation. Table 1 provides a comparison as of the date of this report; the cited approaches should not be read as uniform national standards. 3 Table 1. Regulatory Approaches for Modern Data Centers Jurisdiction Where Permitted Approval Process Notable Features Loudoun County, Virginia (1) Industrial Park, General Industry, and Mineral Resources–Heavy Industry districts Special Exception (Planning Commission/Board Approval) Standard 500-foot buffer to residential structures. Fairfax County, Virginia (2) Specified commercial and industrial districts. Permitted by right up to size limits; larger facilities require a Special Exception Commercial districts limited to 40,000 sq. ft. and industrial districts to 80,000 sq. ft. unless a Special Exception is approved. Requires a 200- to 300-foot separation from residential districts or uses and a noise study. Albemarle County, Virginia (3) Designated commercial and industrial districts. Accessory data centers are also permitted when serving a primary use. By right for facilities up to 40,000 sq. ft.; Special Use Permit required for facilities exceeding 40,000 sq. ft. Public water and sewer required; closed-loop or recycled water cooling; 200-foot setbacks from property lines; 500-foot setback from Rural Areas zoning; generator operating and noise standards. Prince William County, Virginia (4) Mapped Data Center Opportunity Zone Overlay District in designated office and industrial areas near high-voltage transmission infrastructure. Permitted by right within the overlay and eligible underlying zoning districts; overlay established by ordinance. Directs data centers to infrastructure-rich areas while requiring enhanced design standards, screening of mechanical equipment, landscaped buffers adjacent to residential uses, fencing standards, and allowing increased floor area ratio (FAR) within the overlay. Tippecanoe County, Indiana (5) Industrial districts (Data Centers and Large Data Centers). Special Exception required for Large Data Centers exceeding 10,000 square feet in Industrial districts. Distinguishes large data centers from conventional programming and data-processing services by 4 establishing them as a separate land use. Hancock County, Indiana (6) Limited to Industrial General (IG) zoning within a Data Center Overlay District. Site-specific overlay approval. Requires discretionary approval through an overlay district that combines industrial zoning with additional development and design standards. Boone County, Indiana (7) New applications temporarily restricted while regulations are developed. Temporary moratorium. Allows evaluation of utility, infrastructure, land-use, and community impacts before authorization. References: (1) SIGNED-Data-Center-CPAM-ZOAM-Grandfathering-Resolution; (2) ZO 112.1-2024-9 (3) SECTION 5 - SUPPLEMENTARY REGULATIONS | Code of Ordinances | Albemarle County, VA | Municode Library (4) PART 509. - DATA CENTER OPPORTUNITY ZONE OVERLAY DISTRICT | Code of Ordinances | Prince William County, VA | Municode Library (5) Unified-Zoning-Ordinance-UZO-Third-Edition-PDF (6) Ordinance-2026-6E-Data-Center-Sitingpdf (7) Boone County Commissioners Approve Moratorium on Data Centers. - Boone County, Indiana The above jurisdictions generally direct standalone data centers to industrial districts or designated overlay districts and frequently require discretionary review for larger or more intensive facilities. These approaches provide examples, not binding standards, for evaluating infrastructure capacity, noise, traffic, buffering, screening, emergency power, water use, and compatibility. Because several jurisdictions are actively revising their regulations, the table reflects a point-in-time comparison and should be periodically verified against the applicable jurisdiction’s current code. A review of the zoning regulations of the other Hawaiʻi counties did not identify a comprehensive, mapped regulatory framework specifically governing modern standalone data centers. Honolulu references data processing or data storage uses in existing use classifications, while Maui and Kauaʻi do not appear to maintain a separate data center overlay or comparable comprehensive framework. The out-of-state examples are therefore useful as comparative approaches, but Hawaiʻi County’s island setting, utility 5 systems, water resources, industrial land supply, and community context warrant a locally tailored framework. Smaller office-oriented data processing businesses remain consistent with the purpose of the MCX district. Computer servers, server rooms, telecommunications equipment, and related infrastructure that are accessory and subordinate to an otherwise permitted principal use should also remain allowable as part of that principal use. To avoid an unintended exemption for a separately operated data center, the accessory exclusion should apply only when the equipment primarily supports the onsite principal use and does not constitute the principal use of the property itself. PLANNING DIRECTOR’S RECOMMENDATION The Planning Director supports Bill 170’s distinction between modern data centers and traditional data processing facilities. The legislative history of the MCX district, the evolution of data center development, the purposes of the County’s industrial districts, and the comparative approaches reviewed support treating standalone data centers as a distinct land use. The Planning Director also finds that complete exclusion of data centers as a permitted use in the Zoning Code may have unintended consequences and drive these uses to the State Land Use Agricultural district where they may apply for a Special Permit. Additionally, the complete exclusion of data centers as a permitted use in the Zoning Code may also unnecessarily preclude appropriately scaled facilities that could be accommodated in the General Industrial (MG) district. Standalone data centers are more appropriately accommodated in the General Industrial (MG) district, subject to a size limitation and discretionary review. A data center having no more than 10,000 square feet of gross floor area devoted to data center use should be permitted as a principal use in MG. A data center exceeding this threshold should require a Use Permit. For threshold purposes, the gross floor area of all data center buildings and portions of buildings on the same building site, contiguous sites under common ownership or control, or a unified development plan should be aggregated. This prevents phased or multi-building development from avoiding discretionary review. 6 The recommended approach therefore preserves Bill 170’s definitional distinction while establishing a permitting path in the MG zoning district based on facility size and discretionary review. The Planning Director recommends modifying Bill 170 to permit data centers in the General Industrial (MG) district, with facilities having more than 10,000 square feet of gross floor area devoted to data center use subject to a Use Permit. Accessory and subordinate server rooms and similar equipment supporting an otherwise permitted onsite principal use should be excluded from the definition, subject to clear limitations. Planning Director Recommendation No. 1: Amend the General Industrial (MG) district regulations to permit a data center as a principal use when the aggregate gross floor area devoted to data center use does not exceed 10,000 square feet. Add the following use to Section 25-5-152(a): “Data centers having an aggregate gross floor area of ten thousand square feet or less devoted to data center use, subject to section 25-4-19.” Planning Director Recommendation No. 2: Amend Sections 25-2-61 and 25-5-152(b) of the Zoning Code to require a Use Permit for a data center when the aggregate gross floor area devoted to data center use exceeds 10,000 square feet, as follows: • Amend Section 25-2-61, Applicability; Use Permit required, to add data centers having an aggregate gross floor area greater than 10,000 square feet devoted to data center use. • Add the following use to Section 25-5-152(b): “Data centers having an aggregate gross floor area greater than ten thousand square feet devoted to data center use, subject to Section 25-4-19.” Reasons: The 10,000-square-foot threshold provides a clear and measurable distinction between smaller facilities and those warranting site-specific review. Building area does not independently measure electricity demand, water use, noise, cooling technology, or generator capacity; therefore, facilities above the threshold should undergo Use Permit review addressing their actual infrastructure requirements and land use effects. 7 Specifically identifying data centers as a use within the MG district establishes a clear and appropriate regulatory location for the use and avoids unintended interpretations that could allow standalone data centers in agricultural districts. The MG district is more appropriate for the infrastructure and operational characteristics of data centers, while the Use Permit process allows larger facilities to be evaluated for compatibility, infrastructure capacity, and site-specific impacts. Planning Director Recommendation No. 3: Amend the proposed definition of “data center” to read as follows: ““Data center” means a building, portion of a building, or group of buildings used principally for an industrial-scale operation that houses computer systems, servers, networking equipment, or similar equipment for the processing, computing, storage, transmission, hosting, or dissemination of digital data, together with supporting electrical, cooling, ventilation, security, fire-suppression, backup-power, and telecommunications equipment or facilities. The term does not include computer servers, server rooms, telecommunications equipment, or similar data-processing equipment that: (1) is located on the same building site as an otherwise permitted principal use; (2) is accessory and subordinate in area, function, and operation to that principal use; (3) primarily supports the operation of that onsite principal use; and (4) is not separately leased, licensed, or operated as a data center or as a data-processing, hosting, storage, or transmission service for unrelated offsite users.” Reasons: Commercial, industrial, governmental, telecommunications, medical, educational, and institutional uses commonly rely on onsite servers and related equipment. These facilities differ from standalone data centers because they are accessory and subordinate to, and primarily support, the principal onsite use. The accessory-use exclusion avoids unintentionally regulating customary information- technology infrastructure while preventing a separately operated or tenant-occupied data center from being characterized as an accessory use. 8 Planning Director Recommendation No. 4: Add a new Section 25-4-19, under Use Regulations, to establish standards for data centers, as follows: “Section 25-4-19. Data centers (1) For purposes of this section, “gross floor area devoted to data center use” includes floor area containing computer systems, servers, networking equipment, or supporting electrical, cooling, ventilation, security, fire- suppression, backup-power, and telecommunications equipment principally serving the data center use. (2) The gross floor area of all data center buildings and portions of buildings shall be aggregated when located on the same building site, on contiguous building sites under common ownership or control, or as part of a unified or phased plan of development. (3) A data center development shall not be divided among separate buildings, building sites, ownership entities, tenants, applications, or phases for the purpose of avoiding the Use Permit threshold. (4) Any change or expansion that causes the aggregate gross floor area devoted to data center use to exceed 10,000 square feet shall require approval of a Use Permit prior to construction or establishment of such change or expansion. (5) For a data center requiring a Use Permit, the following matters may be considered, as applicable, through the Use Permit review process and conditions of approval: (A) Electrical demand and capacity, generation source, necessary transmission or distribution improvements, and cumulative effects on the electrical system; (B) Water source and demand, cooling technology, wastewater generation, and water-conservation measures; (C) Operational and emergency-generator noise, including preconstruction modeling and post-occupancy verification, as appropriate; 9 (D) Emergency access and response, fire suppression, hazardous materials, battery energy storage systems, and emergency- response planning; (E) Building mass and setbacks, landscaping, equipment screening, exterior lighting, and compatibility with surrounding land uses; and (F) Construction and operational traffic, solid and electronic waste, heat rejection, air emissions, and greenhouse-gas considerations.” Reasons: These standards provide a consistent method for applying the 10,000-square- foot threshold and ensure that the overall scale of a data center development is considered, including related buildings, sites, and phases. The aggregation provisions prevent larger projects from being divided to avoid discretionary review and clarify when an expansion requires a Use Permit. Because data centers can vary substantially in their energy and water demands, cooling systems, noise, emergency systems, and other operational impacts, the identified considerations allow these matters to be evaluated on a site-specific basis and addressed through appropriate conditions of approval. Based on the foregoing analysis, the Planning Director recommends that the Windward and Leeward Planning Commissions forward a favorable recommendation on Bill 170 to the County Council, subject to the amendments described in this report. PLANNING COMMISSION ACTION: The Windward and Leeward Planning Commissions are required to act on Bill 170 as provided by Section 25-2-43(b) of the Zoning Code. The County Council referred the bill on July 7, 2026; therefore, the Commissions must transmit their recommendations by November 4, 2026. Each Commission may recommend approval in whole or in part, approval with modifications, or rejection. The recommendations will be forwarded separately and concurrently to the County Council. Failure to act within the 120-day period constitutes an unfavorable recommendation.