REPORT TO COUNCIL
SUBJECT
Title
PUBLIC HEARING: Action on Environmental Impact Report, General Plan Amendment from High Intensity Office / Research and Development (R&D) to Light Industrial, Use Permit, and Architectural Review to Allow the Construction of a New Four-Story, 244,068 Square Foot Data Center with a Substation at 2805 Bowers Avenue
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
On August 4, 2021, HMH Engineers submitted an application, on behalf of GI Partners (Property Owner), for a General Plan Amendment, Use Permit, and Architectural Review to allow for the demolition of the existing 104,000 square-foot, two-story office building and construct a new four-story, 244,068 square foot data center with rooftop mechanical equipment, a substation, landscaping, and site improvements. Pursuant to the City’s adopted Climate Action Plan, adopted by the City Council on June 7, 2022, the proposed data center is required to operate on 100% carbon-neutral energy, with offsets as needed.
The subject property was zoned Light Industrial at the time of application submittal, but is currently zoned High-Intensity Office/R&D (HO-RD) and has, and had at time of application, a General Plan land use designation of High-Intensity Office / Research and Development (HI O/R&D). Pursuant to the “classic” zoning code (18.48.030), as it was in effect on the date the application was deemed complete, a data center was not listed as a permitted use within this zoning district but could be allowed with the approval of a Use Permit. In addition, in accordance with the classic zoning code, the installation of the associated backup generators requires a Use Permit. The General Plan HI O/R&D designation does not support the development of a data center as a primary use, so the applicant filed an application for a General Plan Amendment to change the General Plan land use designation to Light Industrial, which would bring the General Plan and Zoning into conformance and support the proposed data center development.
During the processing of this application, on July 16, 2024, the City Council adopted an Updated Zoning Map that brought the zoning designation of properties into conformance with their General Plan Land Use Designation, and as such this site was rezoned to High-Intensity Office/R&D (HO-RD) consistent with the property’s General Plan land use designation. Therefore, should the proposed General Plan Amendment be approved by the City Council, staff will return to the City Council with a Zoning Map Clean Up, which will include returning the subject property back to the Light Industrial zoning district, consistent with the requested Light Industrial General Plan land use designation.
As part of the proposal, the applicant plans to install 32 3-Megawatt (MW) Tier 4-compliant renewable diesel-fired emergency backup generators to provide electrical
power to support the data center in case of a loss of utility power. All thermal Power Plants and related facilities generating 50 megawatts (MW) or greater, including backup generators such as the 32 generators proposed here, require review by the California Energy Commission (CEC) for certification as a power plant or issuance of a small power plant exemption. Per the California Environmental Quality Act (CEQA) guidelines, an Environmental Impact Report (EIR) was prepared by the CEC as the lead agency.
The Planning Commission, at a publicly noticed meeting on January 31, 2024, reviewed the project and after deliberation continued the item to the Planning Commission meeting on March 6, 2024, for further review and discussion. The Commission requested more outreach and to notify all properties within a 2,000-foot radius of the project site, including any schools/daycare centers in the vicinity.
On February 22, 2024, the applicant conducted a virtual community meeting to address any public concerns about the proposed project. The Community Meeting was attended by 15 members of the public. There were questions pertaining to the security of the premises, the number of employees, water usage, noise concerns, and the revenue the data centers generate for the City. The March 6, 2024 Planning Commission Staff Report provides more details about the Community meeting and is provided with this report as Attachment 1. The recording of the Community Meeting is available on the project page on the City of Santa Clara’s website.
At the publicly noticed meeting on March 6, 2024, the Planning Commission reviewed the project. A majority of the Planning Commission was unable to support the project, given concerns about General Plan consistency, noise, and electricity use. As discussed further below, the lack of an affirmative vote by the Planning Commission results in the project being forwarded to the Council with a recommendation of denial.
DISCUSSION
At the March 6, 2024 Planning Commission meeting, staff provided a presentation and shared that the project location is a transition area adjacent to both office and industrially developed properties. This property also abuts other properties with Light Industrial General Plan designations, and thus light industrial uses allowed in the proposed Light Industrial General Plan designation are consistent with the character of the current and future potential build-out of the area. The nearest residential use is located more than 500 feet away, on the southwest corner of Bowers Avenue on the opposite side of the Caltrain railroad right of way.
The applicant team answered Planning Commission questions, which included questions about potential noise. The applicant shared a map from the noise study noting the ambient noise levels at various locations in the vicinity including the southwest of the property, close to the residential uses, and the project’s impact at these locations. The noise levels measured at these locations were well below the maximum permissible levels of 50-55 decibels for residential area. Primarily the noise sources are the generators and rooftop air chillers that are enclosed within a fence with an attenuation blanket to address the noise impacts. Some of the
Planning Commission also focused their comments about concerns regarding data centers’ electrical power usage. One member of the public spoke at the Planning Commission meeting, indicating support of the project. A letter of support was received from the Santa Clara Unified School District, which is included in Attachment #2.
Five Commissioners were present at the Planning Commission Hearing on March 6, 2024. Motions to approve the Conditional Use Permit and recommend approval of the General Plan Amendment did not receive the sufficient four votes necessary to pass and no alternate motions were made. Under the City Code, this constituted a denial of the Use Permit and a recommendation of denial of the GPA. As a result, the Planning Commission was not required to take any action on the environmental document pursuant to CEQA guidelines 15270 (“Projects Which Are Disapproved”).
In the event the Planning Commission is unable to reach an agreement on the Conditional Use Permit, it is considered a denial. If the Planning Commission is unable to reach an agreement on the recommendation for the General Plan Amendment, it shall be forwarded to the Council with a recommendation of denial. Further, pursuant to the Zoning Code, when the Planning Commission makes a recommendation to the Council on a legislative matter (such as the General Plan Amendment), any concurrent companion decision(s) by the Planning Commission on an approval, permit, or variance, or other non-legislative land use permit application concerning, in whole or in part, the same property shall automatically be deemed to be timely and called up for review by the Council. Therefore, both the request for General Plan Amendment from High Intensity Office / Research and Development (R&D) to Light Industrial and the application for a Use Permit to allow a data center use, and associated EIR, are now before the Council for review and action.
Some of the Planning Commission’s concerns were related to the quantity of electricity utilized by data centers, and the proliferation of data centers in the City. The EIR conservatively assumed that the project could consume up to 630,720 megawatt hours of electricity per year after full buildout, but actual electricity demand would likely be lower. And, as conditioned, the data center would not be able to connect to the power grid until Silicon Valley Power prepared a System Impact Study demonstrating that the system had capacity to serve the project, as well as a number of other regulatory approvals. The data center has also been designed with a Power Usage Effectiveness (PUE) rating of 1.25, which is considered “very efficient”. The electricity used to power the data center is conditioned to be 100-percent carbon neutral under the conditions of approval and the City’s Climate Action Plan. Based on these requirements, the project cannot go into service until SVP determines that its electrical system capacity is adequate to support project operations.
Under the Zoning Code (both the classic and updated versions), architectural review for this type of project is customarily conducted at a Development Review Hearing (DRH) following the Council decision. However, the Community Development Director also has the discretion to refer any architectural decision to the City Council, rather than holding a separate DRH. In this case, the Director has referred the architectural review of the application to the City Council for consideration. The proposed project is consistent with the city’s non-residential design guidelines and uses a mix of materials to develop an aesthetically pleasing building.
Although appreciating the concerns of the Planning Commission, Staff continues to support the proposal because it is consistent with the goals and policies of the General Plan, most specifically Policy 5.3.5-P12, which promotes development, such as manufacturing, auto services, and data centers, in the Heavy Industrial and Light Industrial classifications to complement employment areas, and the subject site and use are consistent and compatible with the character and uses of the current and future potential build-out of the area. Staff recommends that the Council accept the EIR and adopt the MMRP prepared by the California Energy Commission (CEC); approve the General Plan Amendment from High Intensity Office / Research and Development (R&D) to Light Industrial; approve the Use Permit for the demolition of the existing building and construction of a new four-story, 244,068 square foot data center, and approve the architectural review.
ENVIRONMENTAL REVIEW
An Environmental Impact Report and Mitigation Monitoring Reporting Program (MMRP) were prepared in accordance with the California Environmental Quality Act by the California Energy Commission, as the Lead Agency for the Project. Pursuant to Public Resources Code § 25519(c), the CEC is the lead agency for any development projects involving a power plant with capacity to generate 50 megawatts (MW) or more of electricity. Depending on the size and details of an individual project, the CEC may either provide formal certification to the power plant or issue a “Small Power Plant Exemption” (SPPE). Because the data center will utilize backup generators with a generating capacity of 72 MW, CEC review was required for this project and the CEC prepared the EIR as the lead agency.
The EIR examined potential environmental impacts associated with project development and identified air quality, biological, cultural resources, geology and soils, greenhouse gases, hazards and hazardous materials, and noise impacts. With implementation of mitigation measures those identified impacts would be reduced to less than significant. A detailed discussion of the potential impacts and mitigation measures to be applied to the project are specified in the EIR and MMRP and shall be implemented through project conditions of approval for the project. The links to the EIR and MMRP are included in Attachment 3 for access and review.
At a publicly noticed Business Meeting on November 8, 2023, the CEC granted the SPPE, certified the EIR, and adopted the MMRP. Because the City also has discretionary authority over the Project, the City is a “Responsible Agency” under CEQA, and if the City Council approves the project, must first accept the EIR and adopt the MMRP prepared by the CEC, or must either challenge the EIR in court or adopt its own Supplemental or Subsequent EIR for the Project. Staff believes that the CEC EIR is complete and fully analyzes the potential environmental impacts and includes appropriate mitigation measures. As such, if Council desires to approve the Project, staff recommends that the Council also take the required action to accept the EIR and adopt the MMRP.
FISCAL IMPACT
There is no fiscal impact on the City from processing the requested application other than administrative staff time and expenses typically covered by processing fees paid by the applicant.
COORDINATION
This report was coordinated with the City Attorney’s Office.
PUBLIC CONTACT
On August 17, 2024, a notice of public hearing was published in The Mercury News, a newspaper of general circulation, and on August 15, 2024, a notice of this item was mailed to property owners within 2,000 feet of the project site and to the schools located within the vicinity, including Bracher Elementary School, Wilcox High School, Eliana’s Daycare, and Little Starfish Bilingual Daycare. Public comments received at the time of this staff report are available in Attachment 2 of this report.
Public contact was also made by posting the Commission agenda on the City’s official notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
ALTERNATIVES
Staff’s Recommendation:
1. Adopt the Resolution accepting the Environmental Impact Report prepared by the California Energy Commission (CEC) and adopting the Mitigation Monitoring and Reporting Program;
2. Adopt the Resolution approving the General Plan Amendment from High Intensity Office / Research and Development to Light Industrial to allow the construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, subject to findings and conditions of approval; and
3. Adopt the Resolution approving the Use Permit for the demolition of the existing building and construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, subject to findings and conditions of approval.
4. Adopt the Resolution approving the Architectural review for the demolition of the existing building and construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, subject to findings and conditions of approval.
OR:
5. Do not accept the Environmental Impact Report prepared by the California Energy Commission (CEC);
6. Deny the General Plan Amendment from High Intensity Office / Research and Development to Light Industrial to allow the construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue;
7. Deny the Use Permit for the demolition of the existing building and construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, and direct staff to bring back a resolution of denial at a future meeting.
8. Deny the Architectural Review for the demolition of the existing building and construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, and direct staff to bring back a resolution of denial at a future meeting.
RECOMMENDATION
Recommendation
1. Adopt the Resolution accepting the Environmental Impact Report prepared by the California Energy Commission (CEC) and adopting the Mitigation Monitoring and Reporting Program;
2. Adopt the Resolution approving the General Plan Amendment from High Intensity Office / Research and Development to Light Industrial to allow the construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, subject to findings and conditions of approval; and
3. Adopt the Resolution approving the Use Permit for the demolition of the existing building and construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, subject to findings and conditions of approval.
4. Adopt the Resolution approving the Architectural review for the demolition of the existing building and construction of a new four-story 244,068 square foot data center with a substation and site improvements at 2805 Bowers Avenue, subject to findings and conditions of approval.
Staff
Reviewed by: Reena Brilliot, Acting Community Development Director
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Planning Commission Staff report March 6, 2024
2. Public Comments Received
3. Links to Environmental Impact Report and Mitigation Monitoring and Reporting Program
4. Resolution Accepting the Environmental Impact Report and Adopting the Mitigation Monitoring and Reporting Program
5. Resolution Approving the General Plan Amendment
6. Resolution Approving the Use Permit
7. Resolution Approving the Architectural Review
8. Conditions of Approval
9. Applicant’s Statement of Justification
10. Development Plans