Sioux Falls Debates Data Center Proposal

City Council members express concerns over water, energy, and AI use at proposed site.

Feb. 3, 2026 at 8:07pm

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Sioux Falls city councilors recently voted to rezone land between the city and Brandon for a potential data center project, but a petition to put the rezoning to a public vote has failed. While the project is not guaranteed, city officials and state lawmakers are debating the merits and potential impacts of such a data center, including issues around water, energy, and artificial intelligence usage.

Why it matters

The proposed data center has sparked debate at the local and state level over the appropriate role of government in regulating and supporting such large-scale technology projects, with concerns raised about the potential impact on residents and the environment.

The details

The Sioux Falls City Council voted 7-0 in favor of rezoning land for a potential data center, but a petition to put that rezoning to a public vote has failed. City Council member Vernon Brown says there are still many steps before a data center could be built, and the public should understand it is not a guaranteed project. Residents at a recent city council meeting expressed concerns about water, energy, and AI use at the proposed site. Republican state Rep. Jon Hansen has proposed a "Data Center Bill of Rights" to ensure citizens don't subsidize data centers through higher utility rates or tax breaks, but other lawmakers disagree with the bill's approach.

  • In early January 2026, the Sioux Falls City Council voted 7-0 to rezone land for a potential data center project.
  • A petition to put the rezoning to a public vote has recently failed.

The players

Vernon Brown

A Sioux Falls City Council member who says there are many more steps before a data center could be built and that the public should understand it is not a guaranteed project.

Jon Hansen

A Republican state Representative who is running for governor and has proposed a "Data Center Bill of Rights" to ensure citizens don't subsidize data centers.

Jim Mehlhaff

A Republican state Senator who says Hansen's bill starts pushing into the area of responsibility of the Public Utilities Commission.

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What they’re saying

“I think it's important the public understands there are many, many more steps. This is not a guaranteed project.”

— Vernon Brown, Sioux Falls City Council member

“They need to pay their own way. And that's exactly what our Data Center Bill of Rights for Citizens is providing, that citizens aren't subsidizing data centers through higher utility rates or, you know, in tax giveaways.”

— Jon Hansen, Republican state Representative

“I think that bill starts pushing into the area of responsibility of the Public Utilities Commission.”

— Jim Mehlhaff, Republican state Senator

What’s next

A bill that would provide tax breaks for data centers in South Dakota will receive its first hearing in the state House of Representatives on Wednesday morning.

The takeaway

The proposed data center project in Sioux Falls has sparked a debate over the appropriate role of government in regulating and supporting large technology projects, with concerns raised about the potential impact on residents and the environment. The outcome of this debate could have implications for future data center development in the state.