Rapid City SD – Wednesday evening, city planners will stand in the Council Chambers and walk residents through the rules for a kind of building most of them have never set foot in.
The City of Rapid City is holding a public open house on its proposed data center ordinance from 5 to 7:30 p.m. Oct. 14. The draft would sort data centers into three size tiers, ban the largest outright, and add limits on water, power, noise and distance from homes.
This piece is a primer. It lays out what the city allows today, what the draft would change, the one project already announced, what the Legislature decided in March, and how the cooling technology behind the water debate actually works. It builds on the Sentinel’s May explainer, South Dakota Got Ahead of This, and its September preview of the ordinance.
The Open House
- When: Wednesday, Oct. 14, 5 to 7:30 p.m.
- Where: Council Chambers and the Circle of Friends Community Room, Rapid City City Hall
- Who: Community Development Department staff
- What it covers: distance from residential areas, power, water and sewer use, and noise and vibration standards
Arrive by 5 p.m. In an Oct. 13 update, the city said the event will be a presentation with an interactive survey, not a drop-in. Feedback is collected through the survey.
Can’t make it? The presentation and an online version of the survey will be posted on the city’s website after the open house.
It is not a hearing, and no vote happens Wednesday.
The Planning Commission took up the draft Sept. 10 and continued it to its Nov. 5 meeting at 7 a.m. A City Council working session on the proposal has also been floated.
Any ordinance change still needs City Council approval after the Planning Commission acts.
Data Center Basics
Data centers are sized in megawatts, not square feet.
A megawatt measures how much electricity a facility can draw, which tells you how many servers it can run and how hard it leans on the grid.
That is why both Rapid City’s ordinance draft and the state law draw their lines in megawatts.
Square footage says little on its own. Newer facilities pack more computing into the same space, so two buildings of the same size can draw very different amounts of power.
Not every data center is the same kind of building:
| Type | What it is | Example |
|---|---|---|
| Enterprise | Owned and run by one organization for its own operations | A bank’s in-house data center |
| Colocation | Rents space, power, cooling and connections to many tenants, who bring their own servers | Equinix, Digital Realty |
| Cloud | Run by a provider that sells computing and storage over the internet | Amazon Web Services, Microsoft Azure, Google Cloud |
| Edge | Small and placed near the people and devices it serves, to cut delay | AWS Wavelength sites near 5G towers |
| Hyperscale | Massive campuses with thousands of servers, built by the largest tech companies | Meta, Google, Microsoft and Amazon facilities |
Sequitor Edge’s planned Rapid City facility is edge and colocation, with tenants leasing space inside.
Its Rapid City handouts say those tenants will include national cloud, technology and AI firms as well as local organizations. Hyperscale is the category the city’s draft would ban.
What The Rules Say Today
Rapid City already has a data center ordinance. Council adopted Ordinance 6644 on Dec. 16, 2024. It added a definition of “data center” to city code and made data centers a permitted use in light and heavy industrial zones.
The one real condition: at the building permit stage, a developer has to show it can get enough electricity, water and sewer capacity, backed by agreements with the utility providers.
“Permitted use” is the key phrase. On land already zoned industrial, a data center that meets those requirements goes through a building permit. There is no conditional use hearing and no Council vote on the project itself.
That is why residents asked this summer for a conditional use permit process and public hearings for data centers. Under the 2024 rules, neither exists.
What the Ordinance Would Change
The proposal, file 26OA006 (Ordinance 6746), sorts data centers by how much power and water they draw at peak. Water limits exclude the initial system fill and irrigation.
| Tier | Peak power | Daily water | How it gets approved |
|---|---|---|---|
| Micro | Up to 10 megawatts | Up to 4,000 gallons | Allowed outright if at least 500 feet from a residential zone. Closer, or more than one on a lot, needs a conditional use permit. |
| Large | More than 10, less than 50 megawatts | Up to 10,000 gallons | Conditional use permit: public hearing and a Planning Commission decision. Requires a 1,000-foot buffer from residential property. |
| Hyperscale | 50 megawatts or more, or more than 10,000 gallons | — | Prohibited inside city limits |
The conditional use permit is the piece residents asked for. For large facilities, it would mean public notice, a hearing and a recorded decision instead of a building permit alone.
Every tier would also have to meet these rules:
- No evaporative cooling. Only air-cooled or closed-loop systems. Staff’s memo says evaporative systems use significantly more water.
- Noise limits. Sound studies before and after construction, and no more than 65 decibels by day and 60 at night, measured at the property line.
- Backup generators for emergencies only, meeting EPA Tier 4 emissions standards.
- Utility authority. The city and its utilities could demand usage data at any time, and restrict or shut off a facility’s domestic water if it exceeds its limit.
City staff’s Sept. 4 memo says the 2024 rules were written before the industry’s water, sewer, noise and vibration impacts were well researched. The Development Review Team recommended approval as written.
Why it was continued. The Sept. 10 hearing ran more than two hours. As the Sentinel reported at the time, industry speakers pushed back on the permit requirement:
- Mike Stanley, Dream Design International, the developer of the Black Hills Industrial Center, asked that large-scale data centers be allowed by right in heavy industrial zones, without a conditional use permit.
- Eric Wolff, Black Hills Energy’s business development manager, made the same request.
- Garth Wadsworth, Elevate Rapid City’s public policy director, argued the fiscal benefits and warned against over-regulation.
Ward 4 Councilman John Roberts, the council’s liaison to the commission, questioned whether the noise limits were realistic.
Commissioner Haven Stuck moved to continue the item to Nov. 5, saying he didn’t want to “pass this on at this point to the city council.” Commissioner Vince Vidal seconded, and it passed on a unanimous voice vote.
During the continuance, staff said they would hold roundtables with developers and utilities, compare the noise standards against peer cities, meet jointly with the City Council, and hold a public open house.
Wednesday’s event is that open house. The version that returns Nov. 5 may not match the one discussed in September.
The Project Already on the Table
One data center has been announced for Rapid City.
Here is what was said in February; the company’s newer figures follow below. Sequitor Edge, a Nebraska company founded in 2024, unveiled it Feb. 11 at Elevate Rapid City. Elevate connected the company with Dream Design International for the site.
- Where: a 10-acre site in Dream Design’s Black Hills Industrial Center, south of Old Folsom Road and east of Highway 79, near the city landfill
- What: a Tier III “edge” colocation center, where multiple local businesses lease server space
- Size: a 30,000-square-foot first building on about one acre, expandable to five data halls on roughly seven acres
- Power: 2 megawatts at start, 10 megawatts at full build-out
- Water: a closed-loop cooling system with a one-time fill of roughly 19,000 to 20,000 gallons
- Jobs: three full-time positions averaging $100,000 a year
- Timeline: groundbreaking by late summer 2026, about 14 months of construction
An “edge” center is small by design. It sits close to the businesses it serves so data travels a shorter distance. That is the opposite of a hyperscale campus built for one tech giant. A Black Hills Energy business development manager compared its power draw to a grocery store or big-box store.
Industry definitions are loose. At the February announcement, Sequitor’s Victoria Blatchford put “moderate scale” data centers at roughly 25 to 100 megawatts and hyperscale at 100 to 500. Rapid City’s draft would ban anything at 50 megawatts or more.
Dakota Rural Action, a grassroots nonprofit, said at the time that it is “not anti-data center” but wants decisions made locally, with transparency. “There are too many NDAs (nondisclosure agreements) on projects,” organizer Lisa Tiger told the Rapid City Journal. She said she was encouraged by the closed-loop plan.
What the company is telling the city now
Sequitor Edge is reaching out to every member of the City Council, according to an Oct. 8 post on Councilmember Laura Armstrong’s public “Armstrong for Rapid City” Facebook page.
Armstrong wrote that she met that morning with two company representatives and another council member, and she posted the handouts they gave her: a flyer titled “The Digital Neighborhood” and a two-page FAQ.
Per her post, the company told them it chose Rapid City after a 2025 market study and is drafting a Community Benefits Plan that could include support for schools and scholarships.
She wrote that much of the meeting focused on water, noise, power use and electricity costs, and that she “pushed back and played devil’s advocate.”
Several of the numbers differ from what the company said in February.
| Feb. 11 announcement | Rapid City handouts | |
|---|---|---|
| Power, first phase | 2 MW, up to 10 MW at full build-out | “Roughly 14.5 MW”; later phases “based on available power and customer demand” |
| Building | 30,000 sq ft to start | Campus of “more than 50,000 square feet on one story,” plus an equipment courtyard |
| One-time water fill | About 19,000 to 20,000 gallons | 65,000 gallons |
| Ongoing water | None beyond the fill | 110,000 gallons a year, compared to a typical household |
| Cooling | Closed loop | Air-cooled chillers and a closed-loop chilled-water system, “rather than evaporative cooling towers” |
| Customers | Local businesses within about 100 miles | “National and regional cloud, technology and AI firms in addition to local organizations” |
| Jobs | Three full-time, averaging $100,000 | “45 permanent jobs created locally” in fields like HVAC, electrical and security |
| Investment | About $52 million (Rapid City Journal) | $150 million, per Armstrong’s post; the flyer lists $55 million in facility construction, and the FAQ says total investment “will easily reach hundreds of millions” |
| Timeline | Break ground by late summer 2026, about 14 months to build | Move forward by the end of 2026, operations in the second quarter of 2028 (per Armstrong’s post) |
The handouts also project $600,000 a year in property tax, $3.4 million in sales tax on equipment and supplies ($1.1 million of it to Rapid City), $1.1 million in contractor’s excise tax, and $17 million in construction payroll over 20 months. The flyer labels these “preliminary estimates.”
The FAQ says Sequitor will provide its own backup generation and anticipates “new high-voltage service and dedicated on-site substation infrastructure.”
Why 14.5 megawatts matters. It is above the draft’s 10-megawatt ceiling for a “micro” data center.
Under the September draft, a 14.5-megawatt facility would be “large-scale,” needing a conditional use permit, a public hearing, and a 1,000-foot buffer from residential zoning.
That is the permit requirement Dream Design and Black Hills Energy asked the commission to drop in heavy industrial zones.
It also crosses SB 135’s 10-megawatt threshold, which brings in the state’s cost-recovery and water-reporting rules.
The water figures sit well under the draft’s caps. At 110,000 gallons a year, the facility would average about 300 gallons a day, against a 4,000-gallon daily limit for the smallest tier.
Noise. The flyer cites an “EPA noise standard” of 55 decibels and places its own compute center at 55. Rapid City’s draft would set 65 by day and 60 at night, measured at the property line.
What Pierre Already Decided
Rapid City is not writing on a blank page. On March 24, Gov. Larry Rhoden signed Senate Bill 135, which its backers called the “Data Center Bill of Rights for Citizens,” along with a companion bill, House Bill 1038, that lets the Public Utilities Commission bill data center companies for regulatory review costs. It passed the Senate 34-0 on its first floor vote.
What it does:
- Defines a data center as a facility with peak demand of 10 megawatts or more. Smaller operations fall outside the law.
- Makes data centers pay their own way on power. Electric utilities must set separate terms for data centers, and the data center must reimburse costs fairly tied to serving it, including if it later leaves or cuts its load.
- Requires water notice before opening. The operator must tell each local water provider its projected consumption, and the provider decides whether that fits the local supply.
- Requires ongoing water reports. Operators file semi-annual water-use reports with the state Water Management Board.
- Leaves local rules standing. The state does not preempt city or county data center ordinances.
Bills to impose a statewide moratorium, and bills to lure data centers with tax breaks, both failed this session.
The practical effect for Rapid City: state law handles the utility bill and water reporting for facilities 10 megawatts and up.
Zoning, setbacks, noise, and whether a facility belongs in a given spot are left to the city.
In May, the Sentinel noted that Sequitor Edge’s announced 2-megawatt first phase fell below that threshold. The company’s Rapid City handouts now put the first phase at about 14.5 megawatts, above it.
Why Water is the Fight, and What’s Changing
Servers turn electricity into heat.
Nearly every data center fight about water is really a fight about how that heat gets removed.
| Method | How it works | Water | Under Rapid City’s draft |
|---|---|---|---|
| Evaporative cooling towers | Water carries heat outside and evaporates into the air | Consumed every day | Banned |
| Closed-loop water | Sealed pipes recirculate the same water | One-time fill, plus maintenance top-offs | Allowed |
| Air-cooled and free air | Fans, chillers or cold outside air carry heat away | Little or none | Allowed |
| Direct-to-chip liquid | Coolant piped straight to plates on the hottest chips | Sealed loop; some designs use none | Not named |
| Immersion | Servers submerged in a non-water fluid; in “two-phase” systems the fluid boils off the chips and condenses back | None for cooling | Not named |
Evaporative cooling is the traditional method and still the most common. It is energy-efficient, but the evaporated water is gone for good. The World Resources Institute estimates mid-sized data centers can use up to 300,000 gallons a day and large ones up to 5 million.
Closed-loop cooling is what Sequitor Edge says it will use. One operator, Vantage Data Centers, says its closed-loop Wisconsin campus will peak around 22,000 gallons a day, compared with roughly 5 million for a similar campus using evaporative cooling. Those figures come from the company. For scale, the draft’s 10,000-gallon daily cap for a “large” facility is less than half the Vantage figure.
The trade-off is electricity. Without evaporation doing the work, machines have to chill the water, and that takes power. Climate helps. A University of Utah computing professor noted closed-loop systems work especially well in cold months, and Microsoft cools its Dublin data center largely with outside air. Rapid City’s winters fall on the right side of that equation.
Liquid and immersion cooling are growing because AI chips run hotter than air can handle. Microsoft says it was the first cloud provider to run two-phase immersion cooling in production, and that it is adopting chip-level cooling that uses no water.
Other ideas in use elsewhere:
- Reusing waste heat. Meta’s data center in Odense, Denmark, sends server heat into the local district heating network to warm nearby homes.
- Non-drinking water. Amazon Web Services cools some Virginia and California sites with treated wastewater instead of drinking water.
- Rainwater. Microsoft’s Sweden facility captures and treats rainwater for cooling, humidity control and landscaping.
- AI-managed cooling. Software predicts hot spots and adjusts cooling before temperatures climb.
- Safer fluids. Biodegradable coolants limit the damage to soil and water if a system leaks.
- Recycling old hardware. Servers are replaced every few years. Amazon Web Services says its refurbishing hubs keep more than 99% of retired equipment out of landfills.
What waterless cooling doesn’t fix. It does not reduce a facility’s appetite for electricity. Power plants can use significant water themselves, so a data center’s true water footprint includes the grid behind it.
One efficiency term worth knowing before Wednesday: PUE, or power usage effectiveness. It compares a building’s total energy use to what the computers alone use. A score of 1.0 would mean every watt goes to computing. The closer to 1.0, the less is spent on cooling and overhead, and it is a fair number to ask any operator for.
For scale: Sioux Falls
On the other side of the state, the Sioux Falls City Council in January rezoned 164 acres next to Xcel Energy’s Split Rock Substation from agricultural to light industrial for a data center campus. The developer is Gemini Data Center SD LLC.
The site is planned for up to 500 megawatts, using closed-loop cooling, with the developer covering substation and utility upgrades.
Set those numbers against Rapid City’s draft. Sequitor’s site is 10 acres, with a first phase of about 14.5 megawatts. The Sioux Falls campus is planned at more than 30 times that power, and 10 times Rapid City’s proposed hyperscale line. A project that size could not be built inside Rapid City limits under the draft.
Questions worth bringing Wednesday
- What’s different now? Staff planned roundtables with developers and utilities during the continuance. What changed as a result, and what did residents get to weigh in on?
- Does the new ordinance apply to Sequitor Edge? Or is the project already locked in under the 2024 rules? Has a building permit been issued, and has ground been broken?
- Which tier is Sequitor in? Its Rapid City handouts put the first phase at 14.5 megawatts, which would make it “large-scale” under the September draft. Is the site zoned light or heavy industrial, and would it need a conditional use permit? Do its backup generators meet Tier 4?
- Which two? Armstrong wrote that two data centers were “approved” while she was off the council. Only one, Sequitor Edge, has been publicly announced. Is there a second project, and has it actually been approved or only proposed?
- What’s in the Community Benefits Plan? Sequitor says it is drafting one. Would it be a binding agreement with the city, or a voluntary pledge?
- What happens below 10 megawatts? State cost and water-reporting protections start at 10 megawatts. The city’s “micro” tier ends at 10. Who tracks the power and water use of the facilities under that line?
- How will water limits be verified? The draft sets daily caps. Who meters it, how often is it reported, and what happens when a facility goes over?
- Who enforces the noise limit? The draft sets 65 decibels by day and 60 at night at the property line. Who measures it after opening, and who answers a complaint at 2 a.m.?
- What is in the cooling system? If a facility uses immersion or chip-level liquid cooling, what fluid is it, and what happens to soil and groundwater if it leaks? The draft does not name these systems.
- Where does the heat go? Could waste heat be reused, as some European data centers do, or is it simply vented?
- Can operators drill around the cap? Could a facility drill a private well and sidestep the city’s water limits?
- What goes down the drain? Closed-loop systems often use glycol. What discharge standards apply when that fluid is flushed into wastewater?
- What happens when one closes? Is there a decommissioning requirement or bond if a facility is abandoned?
- Will the conditional use permit survive? It is the one change that gives residents a hearing, and the one Dream Design and Black Hills Energy pushed back on in September. Did staff agree to let large-scale data centers into heavy industrial zones by right?
In July, Mayor Jason Salamun said no data center is worth the city’s water. Wednesday is a chance to ask whether the draft holds to that, and what it costs to get there.
Sourcing
- Current rules: Ordinance No. 6644, Rapid City Municipal Code; Planning Commission and Council discussion via Citizen Portal
- Draft provisions: File 26OA006, Ordinance 6746, and the Sept. 4, 2026 staff memo from Current Planning Division Manager Jessica Olson, as reported in the Sentinel’s Sept. 9 preview; draft tier summary cross-checked against Council President Stephen Tamang’s Ward 1 Report
- Sept. 10 meeting: Sentinel observation of the Planning Commission livestream and the Sentinel’s Sept. 11 recap
- Sequitor Edge, February: Elevate Rapid City release; Mike Brownlee, Rapid City Journal, Feb. 11, 2026, as republished on Sequitor Edge’s site; Rapid City Journal; Data Center Dynamics
- Sequitor Edge, October: Sequitor Edge Rapid City handouts (“The Digital Neighborhood” flyer and FAQ) and Councilmember Laura Armstrong’s Oct. 8, 2026 post on her public “Armstrong for Rapid City” Facebook page
- SB 135: 2026 session law text; SDPB; LegiScan roll calls
- Cooling: World Resources Institute figures via WKYT; Vantage Data Centers; KSL; Capacity
- Data center types, megawatt sizing, cooling and sustainability examples: Microsoft Learn training modules Understand the purpose and evolution of datacenters and Describe sustainability practices in datacenters. Microsoft’s descriptions of its own facilities are self-reported.
- Sioux Falls: Dakota News Now; Baxtel project listing
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