Lexington has no regulations for data centers. Could one come to Fayette County?

Despite strong opposition from neighbors, a Louisville planning body approved a revised development plan for a 1.6 million-square-foot data center in West Louisville earlier this month.

The new data center, proposed by developers Poe Companies and PowerHouse Data Centers, will have seven buildings in total on land near Shively in West Louisville.

The city’s land use regulations, which guide what types of development can go where, are vague when it comes to large-scale data server farms, which are being proposed across Kentucky and the country as the move to artificial intelligence has spurred the need for hyperscale data centers to feed those AI systems.

Many Kentucky cities and counties are now scrambling to update land use and zoning ordinances to address data centers as opposition and questions about data centers grow. Louisville is currently updating its land use regulations to address data centers.

The Louisville data center project has moved forward under a peculiar land use — a “telecommunications hotel,” according to Louisville Public Media.

Lexington’s comprehensive plan, which guides development, and zoning ordinances are silent on where a data center can go, city officials said. Zoning ordinances codify and define where certain types of businesses can be located. For example, after Kentucky passed a law allowing medical marijuana use, the city updated its ordinances to include definitions for new medical marijuana businesses and where those businesses can go.

Susan Straub, a spokeswoman for the city, said Lexington officials are not aware of any pending data center applications in Fayette County.

“At this time, the zoning ordinance does not define data centers in their current understanding of them,” said Straub. “ In addition, there has been no application made to the division of planning for a data center nor are we aware of any discussion about one.”

So what would happen if a data center were to apply in Fayette County?

“If we receive an application, we expect that it would need to be in an I-1 or I-2 zone (industrial zones),” Straub said.

Lexington Fayette Urban County Councilwoman Liz Sheehan said she plans to propose changes to the city’s zoning ordinances to define data centers and where they can be located.

“I have serious concerns about the negative environmental impacts associated with large data centers,” Sheehan said. “This is a case where technology is moving faster than municipalities with regard to zoning — so proposals are coming in under outdated ordinances.”

Concerns raised about data centers include the amount of energy and water needed to run the server farms and the potential impacts on area residents’ utility bills.

Sheehan pointed to the Louisville and Poe Companies data center proposal approved under the definition of a “telecommunications hotel” as an example of an outdated and puzzling land use definition.

Lexington is currently revamping plans for the Blue Sky Industrial area, located at the intersection of Interstate 75 and Richmond Road. Much of that area is zoned as industrial.

“Based on some other work regarding our industrial zones that is taking place with the Blue Sky Master Plan, I am expecting to discuss this in the fall,” Sheehan said.

Any proposed changes to the zoning ordinance would have to go to the Urban County Planning Commission for approval, a process that can take months.

Lawsuits filed challenging some Kentucky data center ordinances

Meanwhile, some data center companies have filed lawsuits after Kentucky local governments enacted ordinances while applications for data centers were pending.

Simpson County, where a controversial data center was proposed in 2025, passed an ordinance restricting data centers to industrial zones and requiring those advanced technology centers to get a conditional use permit. It was an additional hurdle that would require planning body signoffs, but also allow counties and cities to set additional restrictions or guidelines for a data center, according to Louisville Public Media.

TenKey Land Co LLC sued the Simpson Fiscal Court in January over the legality of those new zoning ordinances. A hearing in the case was held March 16, according to WNKY in Bowling Green.

Beth Musgrave

Lexington Herald-Leader

Beth Musgrave has covered government and politics for the Herald-Leader for more than a decade. A graduate of Northwestern University, she has worked as a reporter in Kentucky, Indiana, Mississippi, Illinois and Washington D.C. Support my work with a digital subscription