Data center developers are effectively challenging moratoriums. A county in central Texas recently lifted its year-long ban on new data center construction following a $100 million lawsuit from RCM Hill LLC. The company argued that the county had no legal authority to impose a blanket development ban and alleged violations of the U.S. Constitution regarding its right to develop a purchased site. In response, the county replaced the moratorium with a developer checklist.
Meanwhile, Eagan, Minnesota, faces a $50,000 lawsuit from Eagan Capital over a one-year moratorium prohibiting new data centers near homes or those consuming more than 20 megawatts of electricity. Eagan Capital claims the city lacks authority over electricity regulation and that the city’s actions are unlawful. A trial is set for September 2027.
These lawsuits raise important questions about local government authority to impose moratoriums, especially as all state public utilities commissions oversee electricity regulation.
The trend of moratoriums is expanding, with New York recently imposing one and several other states considering similar actions. Many local governments, including others in Texas and Minnesota, have already enacted their own bans.
In a different context, a buckled beam at MetroLoft and David Werner’s 1,600-unit conversion of Pfizer’s former Manhattan headquarters has raised concerns about conversion costs. NYC is dismissing this as an isolated incident, but lenders and insurers are reassessing risks. Parkview Financial indicates possible increases in capital costs due to these developments, impacting the 90,300 conversion apartments currently in the pipeline across the U.S.
In commercial real estate financing, UBS is packaging stakes in private credit funds for investment-grade ratings, despite skepticism from industry leaders like Peachtree Group’s CEO regarding the actual risk involved. Additionally, LXP Industrial Trust is being acquired by Brookfield and CPP Investments for $5.2 billion, reflecting a trend of industrial REITs going private this year.
Lastly, one hotel developer plans to save $850,000 annually in interest after an AI-driven marketplace helped him secure a loan at 6.3% from Bank of America’s high net worth group, showcasing AI’s growing influence in commercial real estate lending.
Source: Bisnow.com
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