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MINNEAPOLIMEDIA NEWS | Inver Grove Heights Exempts Proposed Data Center From Moratorium After Developer’s $20 Million Legal Threat
INVER GROVE HEIGHTS, MN (September 16, 2026). A proposed 55,000-square-foot data center may continue through the development process in Inver Grove Heights after the City Council exempted the project from a one-year moratorium adopted amid growing public concern about data centers.
The council approved the exemption Monday while facing a lawsuit from Florida-based developer QLevr and the property owner.
City officials said Inver Grove Heights could face at least $20 million in damages if it continued defending the moratorium and ultimately lost the case.
The proposed development would be constructed on Carmen Avenue East. Planning for the project began before the council adopted its data-center moratorium in June on a 3-2 vote.
QLevr filed suit in Dakota County District Court in July. The developer alleged that it had complied with the applicable zoning requirements before the city changed course and imposed a moratorium that effectively stopped the project.
The company and property owner described the city’s action as unlawful and argued that the moratorium was directed at their proposal after residents objected.
Those allegations had not been resolved by a court when the City Council approved the exemption.
City officials said the developer offered to dismiss the lawsuit without seeking damages if the project was allowed to proceed outside the moratorium. The council’s decision appears to clear the way for that resolution, although dismissal of the lawsuit must still be formally completed.
Council Member Tony Scales supported the original moratorium but also voted for the exemption. He said continuing the legal fight could leave taxpayers responsible for substantial damages without necessarily preventing the data center from being built.
The exemption is not final approval for construction. The council is expected to consider the project’s site-plan application later in September.
The one-year moratorium remains in effect for other proposed data centers in Inver Grove Heights while the city examines land-use rules and the broader consequences of such developments.
Data centers have become a growing source of controversy across Minnesota. Residents and public officials have raised questions about electricity consumption, backup generators, water use, noise, tax incentives and the number of permanent jobs created after construction is completed.
Supporters argue that the facilities can increase investment, expand the tax base and support the digital infrastructure used by businesses, governments and consumers.
The Inver Grove Heights case also demonstrates the legal difficulty cities can encounter when changing development rules after a company has already invested in a project under an existing zoning framework.
The September site-plan review will provide the next major decision point. Approval of the exemption means the proposal can continue, but it does not eliminate the council’s responsibility to evaluate whether the submitted site plan meets applicable city requirements.
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