Santa Clara officials want stronger water and air-pollution rules for future data centers, as the city weighs the economic benefits of the facilities against their demands on local resources and infrastructure. After a lengthy, sometimes tense City Council meeting that ran from Tuesday night into early Wednesday, councilmembers directed city staff to prioritize proposals on water use and air pollution. A wider review of the city’s data center policies is expected to return to the council by summer or fall of next year; the council asked staff to bring back the water and air proposals sooner. The debate carries particular weight in Santa Clara, a city of about 130,000 that has become California’s largest concentration of data centers. The city has nearly 60 facilities, which generated about $35 million in revenue last year through electricity payments and property and sales taxes. That amounts to nearly 10% of the city’s general fund, according to staff. The city requires data centers built after December 2022 to use the equivalent of carbon-neutral electricity through offsets. It also encourages developers to use recycled water and expand recycled-water infrastructure as projects are built. Councilmember Karen Hardy, who is running for mayor, said she now favors a temporary halt to new development while the city strengthens its rules. She described the city’s past approach as “loosey-goosey” and said residents need assurance that their air and water are protected. Santa Clara has already stopped accepting electricity hookup applications from data center developers. Silicon Valley Power, the city-owned utility, said in 2023 it could not supply additional large users. Its $450 million infrastructure upgrade, including receiving-station work and battery storage, is not expected to be fully finished until 2030. That limit on new power connections does not prevent developers from seeking land-use approvals in the meantime, city staff told the council. Two previously approved data centers are under construction, and eight others received approval for power hookups before the 2023 cutoff but are still waiting for electricity. Councilmember Kevin Park, also a mayoral candidate, argued that data center developers should bear the costs of infrastructure expansion rather than residents. He said residents should have a say in whether the city pursues more projects, and questioned the public benefit of the roughly $4 million in affordable-housing funds developers have provided since 2019. The discussion also focused on electricity use and rising rates. Data centers consume about 54% of Santa Clara’s power, while commercial and industrial customers together use about 95%, city figures show. Park said power costs have risen nearly 60% in recent years. City Manager Jōvan Grogan said Santa Clara’s rates remain 58% below PG&E’s. The city’s relatively low electricity prices, made possible by its municipal utility, have helped attract data center development. But the grid is already constrained, and councilmembers raised questions about the costs and environmental impacts of expanding it to serve more facilities, including those supporting generative artificial intelligence.