Progress and Pitfalls: Inside Hillsboro’s Redrafted Data Center Ordinance To Be Heard This Wednesday

The Real Story – A Column

The Hillsboro Planning Commission will hold a hearing this Wednesday on updating the Community Development Codes regarding data centers, AI Computing, BESS battery systems, and related matters.  This is the second hearing, requested after the first hearing (August 26th) did not provide sufficient answers to the Commission’s questions. We have reviewed the hundreds of pages prepared by the Planning Staff, including the proposed modifications, and the new Code against the previous version.  There are some major improvements, several, in fact.

That said, there are some additions not in the last proposal, as well as some changes that seem to open the door to issues or alter how our City may enforce Data Centers and AI Computing in the future. All of this work is being done as a result of months and months of public outcry, and the fact that Hillsboro, as a community, has been run over by Data Centers with no codes to defend ourselves.  When people ask what can be done to stop them from slowing them down, this is it. Land Use Codes mean everything and will work to limit these uses and their wealthy developers, not just in Hillsboro, but everywhere.

So Pay Attention because the Code means everything.  This is where Communities are won and lost.  Here is an open letter to the Hillsboro Planning Commission and Planning Staff, which we are sharing with you all on the public record for your review and historical purposes.

1. The Meeting is September 9th, 2026, at 6 PM at Hillsboro City Hall.
2. The Meeting is also available on Zoom –
3. The Meeting Information can be found right here including the updated Code and Staff Report
4. You can email your thoughts to: [email protected]
5. This matter is known as Community Development Code Amendment-004-26

DIRK KNUDSEN – Hillsboro Resident -Hillsboro, Oregon – Editor, The Hillsboro HeraldSeptember 8, 2026TO: Commission President Gabriel Jones-Gallardo and Members of the Hillsboro Planning CommissionCC: Rachel Marble, Code and Policy Project Manager; Community Development Department StaffOutside our current boundary, thousands of acres of rural and urban reserves are being actively lobbied for future industrial expansion and additions to the Urban Growth Boundary.

I. What We Strongly Support in Revised Order No. 8502

1. Mandatory Type III Public Hearings (CDC 12.70.020 & 12.80.040.B.9):
2. Revising the approval procedure to require a Type III Development Review before the Planning and Zoning Hearings Board (PZHB), with local appeals heard by the City Council, is a major safeguard. It permanently eliminates administrative rubber-stamping for both new data centers and conversions of existing industrial buildings.
3. Immediate Phase 1 School Buffers (CDC 12.40.145.C & 12.40.155.C):
4. Staff complied with your direction by introducing binding proximity restrictions from schools directly into Phase 1 rather than postponing them to Phase 2.
5. Closing the Unregulated “Continuous Backup” Generator Exemption (CDC 12.10.570.D.3):
6. Clarifying that emergency power generation must be used “intermittently as a backup during loss of power” establishes an essential legal boundary against continuous, behind-the-meter fossil generation operating under the guise of an accessory use.
7. Modernized Definitions for AI, Edge Compute, and ESS (CDC 12.01.500 & 12.10.370):
8. Formally defining Energy Storage Systems (ESS) consistent with the 2025 International Fire Code (IFC § 202) and codifying AI Data Centers and Edge Data Centers ensures the code acknowledges contemporary technology rather than treating modern high-density compute as passive warehouse storage.

II. Remaining Pitfalls, Backdoors, and 40-Acre Impact Analyses

1. The Accessory Footprint Math and “Gross Acreage” vs. “Net Developable Acreage”

• The Code Vulnerability (CDC 12.40.145.D.1.c & CDC 12.40.155.C.4):
• Staff’s bracketed revision allows an accessory data center to occupy “[25% of the gross acreage of the site or 30% of the gross floor area, whichever is less. If using the gross acreage, the gross acreage is converted to square footage, which is then used to calculate allowable building square footage for data center accessory use.]” Furthermore, accessory BESS (CDC 12.40.155.C.4.a) allows up to “30% of the gross acreage” with the prior 6-acre ceiling completely removed.
• The Conceptual Pitfall:
• Throughout the code, staff relies on “gross acreage”—a calculation that includes unbuildable natural features such as 100-year floodplains, wetlands, wetland buffers, steep slopes, and the Significant Natural Resources Overlay District (SNROD).
• The 40-Acre Real-World Scenario:
  • Suppose an applicant acquires a 40-acre parcel in North Hillsboro. Due to local creeks and drainage corridors, 15 acres consist of protected wetlands and floodplain, leaving only 25 net buildable acres.
  • Under Staff’s “Gross Acreage” Formula:
  • The 25% acreage ceiling is calculated against the entire legal boundary:
  • That means 10 acres of land can be used as an Accessory Use.
  • On a corporate campus with a 1.5-million-square-foot primary advanced manufacturing facility, 30% of Gross Floor Area (GFA) equals 450,000 sq ft. The “lesser” acreage cap governs, allowing 435,600 sq ft of accessory data compute!
  • On a site with only 25 net buildable acres, placing a 10-acre computing facility means the supposed “accessory” would consume 40% of the usable land. Unbuildable wetland acreage is effectively converted into dry computing development rights.
• The Solution:
  1. Add a formal definition for “Net Developable Acreage” in CDC 12.01.500 that excludes floodplains, wetlands, conservation easements, and SNROD lands.
  2. Adopt staff’s alternative recommendation noted in Staff Report No. 3: strike the acreage calculation entirely from CDC 12.40.145.D.1.c. Cap accessory data compute strictly as a percentage of the primary building’s floor area with a hard square-foot ceiling:
  3. We suggest: “The data storage and processing accessory use shall not exceed 15% of the primary building’s Gross Floor Area, up to a maximum ceiling of 30,000 square feet.”

2. The Unregulated Off-Site Capacity Transfer Loophole

• The Code Vulnerability (CDC 12.40.145.D.2):
• The draft retains a provision permitting accessory computing capacity to be transferred off-site , requiring only that it serve the enterprise, be transferred to an “affiliated location,” and be located within “an industrial zone.”
• The Legal and Practical Flaw:
  • Under Oregon land-use law, an “accessory use” must be located on the same lot or parcel as the primary use to which it is subordinate. Moving it off-site turns it into an independent primary use.
  • The term “affiliated location” is not legally defined by the CDC. Any corporate subsidiary, joint venture, or third-party colocation partner may qualify as an “affiliate.”
  • Most dangerously, allowing off-site transfers into any industrial zone permits operators to bypass the primary data center bans in I-G (General Industrial), SCI (Station Community Industrial), and SC-BP (Station Community Business Park).
• The 40-Acre Real-World Scenario :
  • An operator on a 40-acre campus generates an accessory capacity allowance of 100,000 square feet.
  • Rather than constructing that space on-site, the operator utilizes Section 12.40.145.D.2 to transfer that 100,000-square-foot server hall off-site into an I-G or SCI parcel located immediately adjacent to a light rail station or residential neighborhood—zones where this Commission explicitly prohibited primary data centers!
• The Solution:
  • Strike CDC 12.40.145.D.2 in its entirety. A transferable development rights (TDR) scheme has no place in Phase 1 without extensive safeguards and geographic firewalls.
  • At no time, confirmed by an exhaustive review of the transcript, did the City Council direct Planning Staff to draft language regarding the transfer of rights.  I am not sure who came up with this or at whose direction staff was acting, but it was not at the behest of the council or the mayor. Trust with the people of Hillsboro is thin right now. Adding code provisions that provide special rights to Data Center and AI Compute developers will not help unless they are at the direction of our Council.  The appearance of a back-door deal or undue influence can never be permitted, and this transfer language risks creating such an appearance.

3. Removal of the 6-Acre Cap on Accessory Energy Storage (ESS/BESS)

• The Code Vulnerability (CDC 12.40.155.C.4.a):
• In the August 26 draft Concept 2, accessory BESS was capped at 30% of gross site acreage, not to exceed 6 gross acres total. In Staff Report No. 4, staff quietly deleted the 6-acre ceiling.
• The Flaw:
• Staff justified this removal by stating that larger campuses may have storage exceeding 6 acres. But without an acreage cap, utility-scale battery installations can circumvent the 12-acre primary conditional-use limits under the label of “accessory.”
• The 40-Acre Real-World Scenario :
  • On a 40-acre site, a 30% gross acreage allowance permits a 12-acre standalone battery yard.
  • Because the definition of “Accessory BESS” explicitly allows facilities that “export energy to the electric grid, or participate in utility demand-response… or other grid-service programs” (CDC 12.01.500), a developer can construct a 50-to-100-megawatt utility-scale, grid-exporting battery farm on 12 acres of prime industrial land as a permitted accessory use without being subject to primary BESS restrictions.
  • Here again, we see Staff altering the code provisions already provided to the Planning Commission, and those alterations surely appear to benefit developers and owners of BESS battery systems and arrays.  And why? What changed that made staff want to open up the acreage? Again, trust with the community is at stake here.
• The Solution:
  • Reinstate the 6-acre cap in CDC 12.40.155.C.4.a, tied strictly to net developable acreage: “The maximum size allowed per site is 30% of the net developable acreage, not to exceed 6 gross acres total.”

4. The School Buffer Decision: 500 Feet vs. 1,000 Feet

• The Code Decision (CDC 12.40.145.C & 12.40.155.C):
• Staff has bracketed both 500 feet and 1,000 feet for Commission selection.
• The Map Analysis (Staff Report Attachment A):
• Attachment A demonstrates that a 500-foot buffer is practically meaningless. It barely extends beyond the right-of-way of major arterial roads and provides virtually no separation from the boundaries of industrial parcels. A 1,000-foot buffer, by contrast, establishes a defensible safety and acoustic buffer around educational facilities and student populations.
• The Solution:
• Formally adopt the 1,000-foot proximity restriction measured from property line to property line.

5. Small Modular Reactors (SMRs) and On-Site Nuclear Generation

• The Emerging Vulnerability (CDC 12.10.570):
• Hyperscale tech operators are actively seeking dedicated on-site power solutions—specifically Small Modular Reactors (SMRs) and microreactors—to bypass utility transmission delays.
• The Regulatory Gap:
  • Under Oregon Revised Statutes (ORS 469.300), the Energy Facility Siting Council (EFSC) automatically regulates thermal power plants of 25 Megawatts or larger. However, a small modular or microreactor facility under 25 MW could theoretically seek local land-use approval. Hillsboro’s draft code currently fails to define or explicitly address nuclear energy generation in CDC 12.10.570 or base industrial zone use tables. This silence invites future applicants to seek an administrative Director’s Interpretation under CDC 12.80.050, arguing that micro-nuclear units are an unlisted accessory utility.
• The Solution:
  • Define Small Modular Reactors in CDC 12.01.500 and explicitly clarify in CDC 12.10.570 that nuclear energy generation, including modular fission units, is prohibited in all municipal zones, requiring state EFSC certification, compliance with ORS Chapter 469, and explicit legislative City Council approval.

III. Specific Motions for Commission Action on September 9

adopt the following motions during its deliberations, or something along these lines,

Motion on School Buffers:…

Story continues