Community Corner
Chicago's Data Center Fight Is Really a Zoning Fight
Northbrook zoning attorney Katarina Karac on what Chicago's competing data center proposals mean for property owners and businesses.
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On September 23, the Chicago City Council received four separate data center measures in a single meeting. Mayor Brandon Johnson introduced a 12-month moratorium on new and expanded facilities. Ald. Nicholas Sposato (38th Ward) filed a shorter, narrower pause. Ald. Bill Conway (34th Ward) filed a zoning rewrite that would end automatic approval for data centers altogether. A fourth item, a resolution from Ald. Andre Vasquez (40th Ward), proposes a ward-level advisory question.
All four were sent to the Committee on Committees and Rules, a referral that often slows or stalls legislation. At the same meeting, the Council voted to remove data center exemptions from the city's Energy Benchmarking Ordinance, so buildings with data centers will now report energy use to the city.
For Katarina Karac, founding attorney of Birchwood Law in Northbrook, the headline question of whether Chicago will regulate data centers matters less than three details in the text: how each proposal defines a data center, which projects it exempts, and what approval path it creates. Those details decide which properties are affected, and they differ from one proposal to the next.
"Every one of these proposals says it regulates data centers, but they do not reach the same buildings," Karac said. "The definition decides who is covered, and the exemption language decides who gets to keep moving. Those two provisions will matter more to a developer than any headline about a pause."
The starting point is how Chicago classifies the use today. The city's zoning ordinance calls it an "Electronic Data Storage Center" and classifies it under the general Office category. As a result, data centers are currently permitted by right in most commercial areas of the city and in the manufacturing districts, meaning they can be approved without a public hearing, a zoning map amendment, or a City Council vote.
That baseline is what City Hall now wants to change. On August 11, Mayor Johnson signed Executive Order 2026-5, which tightened city review of data center projects, created an interdepartmental task force, and called on the Council to pass a temporary moratorium. The task force is due to deliver long-term regulations by March 15, 2027. City planning officials have said that data centers already allowed by right are not subject to the executive order, which is part of why the moratorium proposals followed.
The proposals that followed draw their lines in very different places. The mayor's ordinance would pause city permits, approvals, and licenses for new or expanded data centers for one year, including zoning approvals and building permits. A pending project would be exempt only if it already holds an issued building permit, and facilities owned and used exclusively by government or medical institutions are excluded.
Sposato's version would run six months and stop the city from accepting new applications for zoning map amendments, planned developments, and business licenses for data centers. Building permits fall outside it. A project that submitted any permit application before September 23 would be exempt, and a hardship process would allow case-by-case relief.
Conway's ordinance skips the pause and changes the zoning code directly. It would bar new data centers from the core downtown DC, DX, and DR districts and require planned development approval in the districts where they remain allowed. That process involves a community meeting, Chicago Plan Commission review, and a City Council vote. In practice, planned development approvals also turn heavily on the position of the local Alderman, a custom known as aldermanic prerogative.
Conway has argued that a moratorium could be challenged in court, leaving the city with no added oversight while the litigation plays out. The Data Center Coalition, an industry group, opposes the moratorium and has told WTTW that a pause signals to investors that Chicago may not be the place for a major project.
Most of the public debate has focused on large facilities. The mayor's text, however, defines a data center by floor area rather than power demand: a use occupying at least 1,000 square feet and at least 20 percent of a business's enclosed floor space, primarily for storing and processing electronic data. There is no megawatt threshold. Angela Tovar, the city's Chief Sustainability Officer, told WTTW that in a dense city, data centers of every size matter, including those operating in mixed-use areas next to homes.
That definition puts more properties in the conversation than the term "data center" might suggest. Owners of commercial and industrial buildings marketing space to technology tenants, buyers evaluating sites under contract, and businesses planning server-heavy build-outs all have reason to read the final language closely.
"A thousand square feet is not a hyperscale campus. It is a suite in a multi-tenant building or a section of a warehouse," Karac said. "Anyone leasing space to a technology tenant, or buying a building with that use in mind, should be reading the definition in the final ordinance rather than relying on how the debate is described."
The exemption lines are where pending projects could be won or lost. Under the mayor's version, a project without an issued building permit on the effective date would wait out the full year. Under Sposato's, a project that filed any permit application before September 23 would proceed. Neither moratorium can reach a floor vote until the Rules Committee acts or the Council discharges the committee, and Council rules allow a discharge motion only after a matter has been pending more than 60 days. That places the earliest opportunity in late November.
Karac said that when an exemption turns on a filing date, the project file becomes the evidence. Application receipts, pre-application meeting notes, and written correspondence with city staff are often what show whether a project was already underway when the rules changed.
"Nobody wants to reconstruct a timeline after the fact," she said. "If a date is going to decide whether a project proceeds, the record of that date needs to exist before anyone asks for it."
Chicago's proposals stop at the city limits, and across Cook, Lake, and DuPage counties, each county and municipality is setting its own approach. The Lake County Board approved an eight-month moratorium on data centers in unincorporated areas, running through May 11, 2027, with a possible four-month extension. That pause does not reach land inside municipal boundaries. The planned T5 data center in Grayslake, for example, was approved by the Village, not the County.
In DuPage County, the West Chicago City Council unanimously approved a 180-day moratorium on July 20 covering new data centers and battery energy storage systems in all zoning districts. In Hoffman Estates, a developer withdrew its rezoning request for a data center on a 186-acre site at Higgins Road and Route 59 on July 1, following community opposition. In many suburbs, a data center that the code does not expressly address may still require a special use permit or a text amendment before it can operate, and each community applies its own standards.
Karac, who worked as a public sector attorney before entering private practice, said the suburban moratoriums reflect a familiar pattern.
"From the municipal side, a moratorium is a way to buy time when the code never anticipated a new use," she said. "For a property owner, it means the answer can change from one town to the next, and sometimes from one month to the next. A site analysis in one village does not carry across the municipal boundary."
Her guidance for developers and property owners weighing a site while these rules are in motion is straightforward. Confirm the zoning district and whether the use is allowed by right, by special use, or not at all. Review the zoning contingencies in any lease or purchase agreement. Keep a dated file of every permit application, pre-application meeting, and written approval. Track the agendas for the City Council's Rules and Zoning committees, or the local plan commission in the suburbs. And talk to zoning counsel before filing, since the first application sets the record a project will be measured against.
"The rules are moving in Chicago and in the suburbs at the same time," Karac said. "The owners in the best position will be the ones who confirmed the zoning before signing a lease or closing on a purchase, and who kept a clear record from the first filing forward."
About Birchwood Law
Birchwood Law is a Northbrook-based boutique firm focused exclusively on land use, zoning, and municipal law. The firm represents businesses, developers, and property owners with regard to special use permits, variations, planned developments, text and map amendments, municipal licensing and permitting, administrative appeals, and zoning litigation across Chicago and the suburbs of Cook, Lake, and DuPage counties. Founding attorney Katarina Karac has been recognized by Super Lawyers as a Rising Star for land use and zoning in Illinois.
To learn more, visit birchwood.law.
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