Court fight begins over Cave City data center moratorium
The dispute stems from a series of zoning discussions this spring over how data centers should be regulated within city limits.
CAVE CITY — A Barren County developer has sued the City of Cave City, its city council and the Joint City-County Planning Commission of Barren County, arguing a recently adopted moratorium on data center projects unlawfully blocked consideration of a proposed development on hundreds of acres near Interstate 65.
Kentucky Industrial Alliance LLC filed the lawsuit Monday in Barren Circuit Court, seeking to invalidate the city’s 12-month moratorium on data centers and require local officials to consider a development plan the company says was submitted before the moratorium took effect.
According to the complaint, Kentucky Industrial Alliance submitted a development plan on May 11 for approximately 381 acres at 2001 Doyle Ave. in Cave City. The company argues the application should be reviewed under the zoning regulations that existed at the time it was filed.
The lawsuit names the City of Cave City, the Cave City Council and the Joint City-County Planning Commission as defendants.
The dispute stems from a series of zoning discussions this spring over how data centers should be regulated within city limits.
According to the filing, the Joint City-County Planning Commission had been working on amendments that would formally recognize data centers in Cave City’s zoning ordinance and limit them to Heavy Industrial, or I-2, districts.
The proposed regulations would have required facilities to generate at least 50% of their own power, use self-contained cooling systems, maintain setbacks from residential districts and submit decommissioning plans when applicable.
The planning commission unanimously approved the proposed regulations during an April 30 public hearing and forwarded them to the Cave City Council for consideration.
During that meeting, Planning Director Kevin Myatt told commissioners that data centers were not specifically addressed in Cave City’s existing zoning code and therefore were currently permitted in commercial and industrial districts.
“Myatt stated that currently, because data centers are not acknowledged, and that they are not referenced in Cave City’s zoning code, they are permitted,” according to the meeting minutes cited in the lawsuit.
The complaint states Kentucky Industrial Alliance submitted its development plan on May 11, the same day the city council was scheduled to consider the proposed zoning amendment.
According to the lawsuit, the council rejected the planning commission’s recommendation by a 4-1 vote and instead moved forward with a moratorium on data center development.
The city later approved the moratorium during special meetings in May.
Brennan Crain
The adopted ordinance imposes a temporary halt on accepting, reviewing, processing or approving applications related to data centers and other high-impact infrastructure facilities for up to 12 months while officials study potential impacts and consider future regulations.
The ordinance states that Cave City’s zoning ordinance and comprehensive plan “do not specifically address data center development” and that additional review is needed to ensure such facilities are properly regulated.
Kentucky Industrial Alliance argues the moratorium was adopted in violation of Kentucky planning and zoning laws.
The company contends the city council failed to refer the proposal to the planning commission for review and did not provide the public notice and hearings required under Kentucky Revised Statutes Chapter 100.
The lawsuit argues the moratorium “constitutes a ‘text amendment’” to the city’s zoning regulations and therefore should have been subject to statutory notice and hearing requirements.
The company further alleges the city acted arbitrarily by rejecting the planning commission’s proposed regulations and replacing them with a complete moratorium.
In the filing, Kentucky Industrial Alliance says it had already invested heavily in the project before the moratorium was adopted.
The company states it purchased an additional 75.8 acres adjoining the property for $2 million as part of a potential data center development project. The lawsuit also states the company spent $2,655 in filing fees and undertook planning and engineering work associated with the proposal.
The complaint further alleges Kentucky Industrial Alliance had entered into an option agreement with an unnamed developer interested in constructing a data center on the site.
According to the filing, acquiring the additional acreage was necessary to finalize that agreement. The lawsuit does not identify the prospective developer.
According to the complaint, those investments created vested development rights that should not be affected by the city’s subsequent actions.
The lawsuit asks the court to declare the moratorium invalid, issue an injunction preventing its enforcement and order local officials to review the company’s development plan under the zoning regulations that existed before the moratorium was adopted.
Kentucky Industrial Alliance v. City of Cave City et al. by brennan.crain
Court records show the case was filed Monday in Barren Circuit Court. No hearing date had been scheduled as of Monday evening.
The Cave City Council voted Monday evening to hire outside legal counsel to handle the case. The move comes as City Attorney Bobby Richardson prepares to retire at the end of the year.
