San Francisco Mayor Daniel Lurie signed a 45-day citywide moratorium on data center development on Friday. The measure directs the San Francisco Planning Department to assess data centers' effects and develop regulatory controls. Officials are examining how AI infrastructure expansion could affect electricity costs, water resources and surrounding communities.
The Board of Supervisors unanimously approved the measure introduced by Supervisor Shamann Walton last week. The San Francisco Standard reported that Board President Rafael Mandelman expedited consideration of the measure. The signing deadline was Friday. The ordinance would have taken effect even without the mayor's signature.
Lurie said San Francisco is the national leader in innovation and that innovation is an important driver of the city's recovery. Lurie said the city must not take that position for granted. Lurie said the city would spend the next 45 days developing a data center framework supporting technology infrastructure used by hospitals, office buildings, academic institutions and government. Lurie said the framework would prioritize community needs, keep electricity rates low and protect clean water and air.
Data Center Map says San Francisco has at least six data centers, including two in Bayview-Hunters Point. The southeastern neighborhood has more industrial zoning than any other part of the city. Walton argues that the city's zoning rules lack a clear definition of data centers. Walton has emphasized the need to understand how data centers affect local communities. Data centers power AI systems and cloud computing services but can require substantial electricity and water, intensifying concerns about infrastructure capacity, utility bills and environmental impacts.
Investor Michael Burry earlier criticized major technology companies for aggressively funding data center expansion. Burry argued that the companies expect to become an oligopoly too important to fail. JPMorgan projects that AI capital expenditure could reach $1 trillion in 2027.
New York Gov. Kathy Hochul signed an executive order in July pausing construction of new data centers requiring at least 50 megawatts of power. The pause applies for up to one year. President Donald Trump criticized the move as a "terrible decision" that could shift investment, tax revenue and jobs elsewhere. Trump described data centers as "Money Machines" for states that welcome development.
Growing opposition to data centers is emerging as an issue ahead of the U.S. midterm elections. The Senate blocked the Ratepayer Protection Act last month in a 57-43 vote that fell short of the 60-vote threshold. Rep. Ro Khanna, a California Democrat, has warned that AI data center expansion is straining local infrastructure and the environment. Khanna's proposed Data Center Bill of Rights would give communities more power to oppose projects and restrict development in residential areas and farmland. Morgan Stanley expects AI infrastructure investment to continue under tighter conditions, with state and local governments playing a bigger role in data center policy. Morgan Stanley calls that trend a "conditional buildout."
San Francisco Halts Data Center Development for 45 Days Amid AI Infrastructure Concerns
BenzingaShare
Summary
San Francisco Mayor Daniel Lurie signed a 45-day moratorium on data center development on October 17, 2026, as part of a citywide review of AI infrastructure impacts. The Board of Supervisors approved the measure introduced by Supervisor Shamann Walton, which will assess electricity costs, water use, and community effects. Lurie stressed the need to balance innovation with environmental and community concerns. With inflation data influencing energy policies, similar actions are emerging nationwide, including New York’s pause on large data centers. The move comes amid rising AI + crypto news, as energy demands grow.
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