A temporary pause on data centre development in Hamilton is another step closer to becoming a reality following a Wednesday afternoon vote at city council.

City staff will report back to councillors at their next meeting, on July 15, with a bylaw imposing a moratorium on the construction of the facilities that securely store, process and distribute digital information.

The growth of artificial intelligence (AI) has accelerated the development of data centres, which has in turn sparked protests across Canada, including over the amount of water and energy needed to run these sites.

Currently, Hamilton has no rules specifically governing the building of data centres. Instead, they’re governed by rules that apply generally to industry. On June 16, the city’s planning committee unanimously supported a motion by Coun. Nrinder Nann (Ward 3) that called for a moratorium. 

Nann said based on a scan she did of more than 90 municipal councils, she believes this motion is the first of its kind in Canada. She said she sent copies of her motion to members of 21 different councils across the country who requested one.

The idea, Nann said, is to make space for leaders to assess current city rules and possibly make recommendations to improve them, with data centre development in mind.

The review would consider factors including energy and water use, noise and heat impacts, the motion said.

A background report noted the pause would be for a year, with the possibility of extension not exceeding two years.

Unclear exactly how moratorium could affect proposed projects

City staff said Wednesday that there are not currently any site plan applications for data centre developments before the city.

However, there are at least two proposed projects in the works:

• A pitch to the federal government by the Digital Research Alliance of Canada (DRAC) “to build, own and operate a National AI Compute Facility” at a waterfront development called Steelport. The former steel mill site is owned by real estate and infrastructure investment company Slate Asset Management. Hamilton West-Ancaster-Dundas MP John-Paul Danko has said the successful candidate to the government’s AI Sovereign Compute Infrastructure Program will likely be announced this fall.
• A proposal by s2e, an Ontario company that’s pitching a data centre and “innovation hub” to McMaster University for the former Hamilton Spectator building. The west-end building is owned by McMaster Innovation Park, which supports business startups. McMaster has said its board of governors will decide whether to support the proposal.

DRAC told CBC Hamilton it could not schedule an interview about the proposed moratorium this week. 

S2e CEO Milfred Hammerbacher said it’s too soon to tell what a moratorium on development could mean for the proposal, other than that “it would not have a positive impact.”

McMaster University has declined to comment on the proposal, saying it won’t have more to share about the project until its due diligence phase ends on June 30.

Amendment to exempt McMaster data centre failed

Hammerbacher co-signed a June 15 letter to the city planning committee with Gailene Tobin Vandenheuvel, CEO of McMaster Innovation Park. In the letter, they proposed an exemption for “smaller scale data centres that make use of existing structural footprints established primarily to support research activities.”

Coun. Brad Clark moved an amendment with that language on Wednesday but it was voted down 14-2.

The Ward 9 councillor said a moratorium will “kill this investment” at McMaster and prevent researchers from being able to store their data locally. 

Clark also said he understands concerns about data centres but worries Hamilton is overstepping its authority. He said the city is responsible for ensuring developments are properly serviced by infrastructure, but not to regulate how they use water and energy.

A moratorium on data centre development interferes with the rights of companies to do what they want with their land, and opens the city up to litigation, he said, predicting it will be appealed before the Ontario Land Tribunal.

WATCH | Explaining what’s in the DRAC proposal:

National group still going ahead with Hamilton data centre proposal

The organization behind a data centre proposal for Hamilton’s waterfront says its proposal to the federal government is still going ahead. The Digital Research Alliance of Canada is proposing to build, own and operate a “National AI Compute Facility” on former industrial land owned by Slate Asset Management. Slate recently applied to section off a portion of that land to begin development of a larger project but was denied after hundreds protested the potential data centre.

Moratorium would have 50-day appeal period

The staff background report described interim control bylaws as: “the only tool available in the Planning Act to pause a use that is already permitted by a zoning by-law and freezes development while the use is further studied to understand the use properly.”

Chief planner Anita Fabac said a bylaw would have a 20-days notice period then 50 days for appeal before taking effect.

City solicitor Lisa Shields said as described, the bylaw would not allow developers to ask for exemptions. 

Data centre debate could affect investments

Norm Schleehahn, Hamilton’s acting general manager of planning and economic development, said Wednesday that he thinks the data centre debate in Hamilton has caused the city “some reputational damage” from the perspective of tech-related companies.

Schleehahn was responding to a question from Coun. Tammy Hwang (Ward 4). He added that generally, the city is “very open for business” and looking forward to upcoming investments in sectors including manufacturing.

Nann made slight amendments to her June 16 planning committee motion Wednesday to reflect that staff will report back to council with the bylaw next month, and to clarify further what they will study.

That motion carried 15-1, with Clark voting no.