Denver just added a new layer to an already hostile environment for data centers. This week, Mayor Mike Johnston and members of the Denver City Council announced that they intend to file a moratorium on new data center construction in the city. The moratorium is expected to last for “several months,” or perhaps longer, while the city reviews its regulations and considers tougher environmental standards.
The timing is striking given Denver’s fiscal reality. Downtown Denver’s office vacancy rate ended in 2025 at 38.2 percent, with several submarkets north and east of downtown already above 40 percent. A city in this situation might be excited for any commercial occupant willing to pay property taxes and put underutilized land and commercial zoning to productive use, but not Denver.
The moratorium seems to have grown out of a single neighborhood dispute over a 590,000 square foot, three-building campus being built by Denver-based CoreSite. Construction is already underway on the first building, but the city hasn’t approved the other two buildings yet. It isn’t clear how the moratorium will affect the CoreSite project that is already underway, but it’s enough to send an unambiguous point to every future data center developer in Denver.
A citywide moratorium that may not even stop the project that prompted it is a strange way to attract the next one. Treating data centers as a threat to be regulated away suggests the city is more interested in making a political statement than in working toward a solution to its fiscal problem.
Denver’s inhospitable welcome is being mirrored at the Capitol, where state lawmakers are weighing how to handle a booming industry worth billions of dollars in investments while neighboring states compete aggressively for the same projects. Two bills are vying to define Colorado’s approach to data centers for decades to come, and neither is good news.
The worse option is SB26-102, or “Large-Load Data Centers.” In a world of carrots and sticks, this bill opts exclusively for the sticks. It requires 100% hourly renewable matching starting in 2031 but gives the PUC until 2030 to determine if that’s even technically feasible. This “hourly matching” requirement would force data centers to massively overbuild wind, solar, and battery capacity.
It also requires data centers, while complying with operational restrictions on backup generation and water use, to pay for all infrastructure costs. Utilities can’t even offer lower economic development rates, but data centers would need to lock into 15-year minimum contracts. And existing data centers could have to comply with these requirements after the fact, if they add 30 megawatts or more of peak load.
If passed, SB26-102 would be one of the most restrictive approaches to data centers in the U.S. Welcome to the Wyoming Economic Development Plan.
The current alternative, HB26-1030, “Data Center & Utility Modernization,” isn’t much better, though it does attempt to offer a carrot: a 100 percent sales and use tax exemption. But the bill imposes onerous new clean energy requirements as well as labor and workforce requirements on data centers, enforced by a new nine-member bureaucracy. The companies most likely to navigate that compliance headache are the tech giants, like Amazon, Google, and Meta, for whom the tax break might be worth it in part because the regulatory overhead tends to squeeze out smaller competitors. It’s a bill that looks like it favors data centers while actually favoring only the largest ones.
Neither bill has been scheduled for its first committee hearing, which suggests a behind-the-scenes compromise is underway. It now appears that HB26-1030 was pulled from the original schedule over concerns about the Taxpayer’s Bill of Rights (TABOR). Legislative staff estimate that the sales tax exemption would reduce general fund revenue subject to the TABOR cap by $29 million, which would shrink the TABOR surplus that has been earmarked for other uses.
That’s a real fiscal constraint, but the same dynamic applies to virtually every other tax expenditure bill the legislature is considering this session and to the many such bills passed in prior sessions. It’s hard to imagine that Colorado Democrats will have the same noble concerns about TABOR when they introduce a bill that the New York Times reports will provide a $2,000 tax credit toward new electric vehicles, up from the current $750.
The eventual compromise will probably trim the carrots in HB26-1030 further to address TABOR concerns and absorb some of the sticks from SB26-102. The result will be a bill that fails to protect consumers, dissuades the industry, and is complicated enough to be navigated only by companies with armies of lawyers and lobbyists.
Between Denver’s moratorium and whatever the legislature produces, Colorado may as well put up a sign: “Data Centers: Head to Wyoming.”
