A proposed municipal pause on AI data centres in Hamilton, Ont., seemed like a done deal.
“We were all telling ourselves: this is it. This is the last one – after this we’re done,” said local data centre opposition organizer Nick Tsergas.
All but one of the 16 elected officials in the city had voted in favour of a bylaw that would put a pause on new data centres in the city for a year, giving them time to review the impacts — both positive and negative — before opening the door to the industry.
Then, suddenly, the majority of council flipped. At a council meeting the following month when the bylaw was expected to pass, 10 councillors voted against the bylaw, while six voted in favour. At the mid-July meeting, Mayor Andrea Horwath said the bylaw would “hold back Hamilton and reduce opportunity for many, many Hamiltonians and for generations to come.”
Coun. Cameron Kroetsch describes it differently. “Basically, what happened here is we gave up the only card we could play in this discussion,” he said. Interim control bylaws are one of the only mechanisms a city has to manage this type of development, since the provincial energy regulator decides whether to give data centres a power grid connection.
Despite the reversal in Hamilton, its opposition movement has inspired copycat groups across Canada. Tsergas told Canada’s National Observer that his Hamilton-based organization Stop the Datacentres is now a “federated” advocacy organization, with municipal chapters in Ontario, BC, Newfoundland and Alberta.
“I think I’ve had close to 20 [chapters] reach out,” said Tsergas. “They’re using the blueprint that we developed in Hamilton, but they’re customizing it according to where they are,” he added.
Coun. Nrinder Nann, who brought the motion to propose the bylaw forward, said she has shared it with nearly 50 municipal representatives in Ontario and other parts of Canada, who are also grappling with what tools local governments have to regulate the industry. She said she doesn’t want what happened in Hamilton “to be a trend-setting scenario.”
But the sudden reversal has left other municipalities worried about the legal risks of implementing their own interim control bylaws — and wondering what convinced Hamilton’s elected officials to flip their votes.
What caused the reversal?
A key concern councillors have pointed out is that developers can appeal interim control bylaws at the Ontario Land Tribunal, resulting in costly legal fees.
Two weeks before the Hamilton vote, Slate Asset Management submitted an appeal against the Committee of Adjustment’s decision to refuse an application for its Steelport Industrial Park, where it plans to build a 20-megawatt data centre. The company has applied for an additional 200 megawatts from Ontario’s electricity grid, but its plans could be blocked by an interim control bylaw.
Canada’s National Observer watched city meetings and interviewed multiple elected officials in Hamilton to determine what swung the vote away from a moratorium. We got conflicting answers.
Multiple councillors pointed to an hours-long, closed-door legal advice session with the city solicitor.
“We had a lot of information in private and confidential, legal-wise,” said Coun. Tammy Hwang, who flipped her vote after initially supporting a moratorium. “I think that where I struggle with this is where is our purview, our jurisdiction, where is our opportunity to actually affect that change?”
Speaking at council, Coun. Jeff Beattie said he came out of the legal session with the impression that the proposed moratorium bylaw “does not achieve the outcome, and it won’t hold up.”
However, Kroetsch explained that the city solicitor “did not come out of the closed session and say the interim control bylaw wasn’t going to work.”
“What she said was, ‘Here’s something we discovered during a legal analysis that we think it’s important to report publicly.’ … We feel that McMaster may be exempt and here’s why.” She was referring specifically to a project led by McMaster University, which she said would be exempt as a post-secondary institution — not to any data centre.
Kroetsch is skeptical that this convinced his fellow councillors to change their votes.
‘Lobbying was effective’
The day before the July 15 vote, Hamilton Mayor Andrea Horwath organized a public special council meeting where representatives of two data centre projects spoke, alongside an independent academic expert.
One was Michael Schull, CEO of the Digital Research Alliance of Canada (DRAC) — a federally funded non-profit — which is applying with Slate Asset Management for support from the federal government’s $890-million Sovereign Compute Infrastructure Program.
Schull, who is actively lobbying the city of Hamilton, was not permitted to answer any questions about the project specifically. In a statement to Canada’s National Observer, DRAC said “we were asked to share our expertise … to educate the Hamilton community on the importance of sovereign compute infrastructure.”
Nann said this meeting led to the bylaw’s demise. Rather than looking at the bylaw from a broad perspective, Nann said the presentations prompted the council to look at it solely in the context of the data centre project connected to the Digital Research Alliance of Canada.
“What I think ultimately happened was some council colleagues started getting scared about signalling to the federal government that we wouldn’t be interested in a project that could otherwise have some public good,” she said, along with “the potential for however—many–hundreds of millions of dollars.”
Coun. Kroetsch, who seconded Nann’s motion, said the meeting was “lobbying — and lobbying was effective. That’s what happened here.”
Hamilton, Coun. Mark Tadeson says he voted against the bylaw because he doesn’t want the city to “lose the opportunity for these research-oriented data centres.” While he understands the concerns about data centres writ large, he feels that there is assurance from the proponents that the projects will be “following the best practices out there for environmental concerns.”
But Kroetsch said any commitments to best practices don’t hold water for him without a formal, binding proposal, and that includes the project vying for federal funding. To him, councillors that voted against the moratorium wanted to signal to the federal government “that Hamilton is open for business.”
“My question keeps being, at what cost?” he said. “Not only do we not have a proposal for the project, we have no cost-benefit analysis to look at either. This million-dollar investment just sounds good.”
Coun. Craig Cassar said he supported the initial motion for the interim control bylaw “knowing there would be the opportunity to consider it at a future point in time where I would have more information available to me.” Between that and the final vote, he said he learned more about data centres.
“It is my view that decisions made at Council should be informed by facts and a deep understanding of the matter at hand, not on personal feelings or emotion,” he said in an emailed statement to Canada’s National Observer. “I was grateful for the presentations the Mayor organized via the Special Council meeting, as it offered the opportunity to ask questions and further my learning.”
Repercussions for other municipalities
The Hamilton reversal has been closely followed by elected officials in other municipalities looking to draft their own rules around data centres.
“I want to make sure that I don’t get hit with something like that, and I want to make sure that my motion gets passed,” said Milton Coun. Sameera Ali. Her town is facing over 1,000 megawatts in grid connection requests from data centre developers.
She is concerned that an interim control bylaw could be challenged at the Ontario Land Tribunal. “We want to make sure we get the best out of this situation without triggering any legal fights, because we’ve had enough of that,” she added. (In 2025, the Supreme Court of Canada rejected Milton’s appeal against a $250-million logistics hub planned in the municipality, after a lengthy legal battle.)
The risk of legal action came up again repeatedly on Wednesday during Mississauga’s debate about implementing its own interim control bylaw. During the meeting, developer Prologis warned council that it was “very likely” the company would appeal any data centre moratorium.
Despite this, despite Hamilton’s reversal and against the advice of the city’s solicitor and planning staff, all councillors voted to advance an interim control bylaw. The decision followed a string of passionate opinions from members of the public, warning councillors they would be punished during the October municipal elections for allowing data centre developments.
“I think people in that position are very lucky because their municipal governments are much more likely to listen to them in the lead-up to an election than they would be six months after an election,” Tsergas noted.
In Hamilton, the spectre of the abandoned data centre moratorium is likely to loom over the upcoming municipal elections. In the lead-up to the fall election, Nann said she will continue pushing for high standards for data centre projects, along with transparency as projects move forward.
And as far as the interim control bylaw is concerned, if she is re-elected, she plans to bring it back to the new council.
“If I am reelected to my role, I will be bringing it back,” she said. “It will be my first motion.”