Gibraltar faces data center developer lawsuit after city passes moratorium
Developers Raeden and Cal Realty are suing the city of Gibraltar, Michigan, over its one-year data center moratorium, arguing it unlawfully blocks their 100-megawatt project application submitted before the ban. The lawsuit challenges the legal viability of such moratoriums, while residents express concerns about the data center's impact on the power grid and Humbug Marsh. The property's zoning permits a data center, but the city's moratorium prevents review.
Developers Raeden and Cal Realty have filed a lawsuit against the city of Gibraltar, Michigan, challenging its recently enacted one-year data center moratorium. The lawsuit, currently pending in U.S. District Court and assigned to Judge Robert White, alleges that the moratorium unfairly targets their proposed 100-megawatt data center project on the former McLouth Steel property by blocking the review of their site plan application, which was submitted before the moratorium passed in March.
Raeden, which has a purchase agreement with Cal Realty contingent upon project approval, contends the moratorium is unlawful and that their application should be reviewed under existing ordinances, as the property's zoning permits a data center. The legal challenge is seen as a test case for data center moratoriums increasingly adopted by communities across Michigan. University of Michigan real estate researcher Brian Connolly suggests the lawsuit could be a strategic move to prompt negotiations, noting that municipalities risk paying damages and attorney fees if they lose in court, although moratoriums generally hold up if not indefinite.
Residents speaking at a recent city council meeting voiced concerns about the data center's potential strain on Gibraltar's power grid and its proximity to the Humbug Marsh, part of the Detroit River International Wildlife Refuge. Raeden spokesperson Kenyatta Mitchell affirmed the company's commitment to addressing community concerns, clarifying that the lawsuit targets a process issue rather than the community itself. Other Michigan communities, including Wixom and Saline Township, have also faced similar legal battles over data center development and zoning.
The proposed inference data center plans to redevelop an industrial site, utilize an existing building, and potentially place a utility substation on an adjacent Superfund property. Developers claim the facility will largely generate its own power and use a closed-loop cooling system, minimizing environmental impact. However, residents like Nick Manolias question the city's ability to supply 100 MW of power to a single facility in an area already prone to power outages. Cal Realty's ultimate parent company is Ferragon Corp., which acquired the former McLouth Steel property in 2015.