Missoula city officials proposed a tweak to the city's zoning rules last week that would make it more difficult to build data centers as a second use in offices or other businesses.

The proposal would limit 10% of any new construction for use as a data center without a rezone of a property.

Kristen Spadafore, an associate planner for the city, said the proposal would replace an existing rule that allows data centers to operate as a secondary use as long as they do not exceed the majority of a business's square footage. 

"The proposed language would clearly differentiate when a data center is a primary use versus an accessory use on a parcel," Spadafore told the city's planning commission last week.

The change comes as a local artificial intelligence development company is seeking to build a new 4,200-square-foot research facility near the Missoula Montana Airport.

CubCloud, a Missoula-based company that offers AI tools to local businesses, recently applied for a permit to build out a property in the Missoula Development Park with offices and server rooms. 

Joshua Rhines, one of the co-founders of CubCloud, said the company is seeking to build a research facility that would be roughly one-quarter data center and three-fourths office space.  

"What we are doing is very different than what people see as a data center," Rhines said. "Really I would classify this more as a research center."

According to Rhines, the research center would use about 0.5 megawatts per hour, or approximately the same energy use as a large box store like Walmart or Target. 

Unlike larger data centers operated by Google or Meta, Rhines said CubCloud is focused on improving local AI use at Montana businesses.

City staff told the planning commission CubCloud's application in part sparked the review of data center rules. The city is also still reviewing the initial permit.

Eran Pehan, the city's director of Community, Planning, Development and Innovation, told the Missoulian the changes around data centers are needed because of implementation issues with the existing code. 

The rules currently do not allow the city to get detailed information on how much space would be dedicated to a data center, and existing definitions do not have exemptions for business or institutions that maintain server equipment for their own operations, Pehan said. 

"I would characterize this less as changing the code in response to a particular applicant and more as identifying an ambiguity through real-world implementation of a new code and clarifying it," Pehan said in an email. 

Data centers are technically permitted in the city, but any application would require a rezone process. That would require an extensive public review and City Council approval, Pehan said. 

There is a one-year moratorium for all new data centers in Missoula County outside of city limits that went into effect in July.

Rhines told the Missoulian that he was alarmed by the proposal to limit secondary data center space because of the growing use of server rooms and other technology. 

"In the next few years, libraries, hospitals, schools and other operations will probably have on-premise computer rooms or data centers," Rhines said. 

He said he understands the backlash for larger, resource-intensive data center proposals, like the former plan to build a data center in Bonner that was eventually withdrawn in July.

City planners are currently tweaking the new Missoula Unified Development Code, which was approved by the City Council in February. The rules became the law of the land earlier this summer. 

The data center change is one of several proposed tweaks city planners have submitted amid the first review of the plan. The council could sign off on the change later this fall. 

Members of the city's planning commission also questioned how the new rules could affect existing data centers. 

"I am not an expert at this all, it just seems a little restrictive and might have some unintended consequences," planning commission member Tung Pham said. 

Senior planner Lauren Stevens said the change could be short-lived, as the Montana Legislature could make sweeping rule changes regarding data centers in 2027. 

"This is kind of a bit of a Band-Aid," Stevens said "We have been looking and there are already dozens of draft bills in the (Legislature) regarding data centers. So we know we are going to have changes to make."

Griffen Smith is the local government reporter for the Missoulian. He is a 2023 graduate of the University of Montana School of Journalism and previously served as the editor of the Seeley Swan Pathfinder.