Rows of server racks and computer equipment inside a modern data center.
FRANKLIN, Ky. – A proposed multibillion-dollar data center in southern Kentucky has produced dueling court fights that could define the reach of local zoning authority and test a new state law restricting who may challenge land use approvals.
TenKey LandCo I LLC plans to build a roughly 200-acre data center campus with on-site power generation near Interstate 65 in Franklin. The company is fighting Simpson County’s attempt to require a conditional use permit inside city limits, while a citizens group is challenging Franklin’s preliminary approval of the project and defending its right to bring that challenge in court.
TenKey’s preliminary concept calls for three 200,000-square-foot data storage facilities at 421 Steele Road, built over about three years. The company has said each facility could represent a $1.6 billion investment with 100 to 200 jobs paying average salaries of $80,000 to $100,000 and an estimated $17.68 million in tax revenue.
The project, also known as Project Lionsgate or Blackjack, would include on-site power generation. Nearby opponents have raised concerns about noise, lighting, pollution and demands on water and other local resources.
A recent study prepared by Commonwealth Economics Partners and commissioned by NetChoice estimates that a hypothetical $4 billion, 400-megawatt Kentucky data center would generate over its two-year construction period and first decade of operations:
$290 million to $435 million in city and county tax revenue;
$167 million to $222 million for local school districts;
$230 million to $237 million in state tax revenue;
2,800 to 3,200 construction jobs; and
Approximately 200 permanent jobs paying an average of $105,000 annually.
Charlie Kolean, president of the Private Property Rights Institute, said the debate also implicates the rights of people who want to sell their land:
“Property rights do not belong only to those who oppose development,” Kolean told Legal Newsline. “Landowners who freely choose to sell their property should not lose that right simply because others object to the buyer or its proposed use.
“Communities can enforce reasonable, generally applicable rules governing zoning, utilities and environmental impacts, but moratoriums and litigation should not become a backdoor veto over voluntary transactions between property owners and developers.”
The litigation has grown beyond a dispute over one data center.
The developer’s case against Simpson County pits city autonomy against countywide regulatory authority, while the citizens group’s case asks whether Kentucky can restrict judicial review of zoning actions to landowners in a matching zone.
A ruling for TenKey in the county case could limit a fiscal court’s ability to impose stricter project conditions within municipalities that operate independent planning systems. A ruling that HB 321 bars the citizens group’s suit could make it more difficult for neighboring homeowners, businesses, renters and advocacy organizations to challenge local development decisions – even when they claim a project will affect their property or quality of life.
Riley Bright, a member of Franklin Citizens for Responsible Development and owner of Bright’s Antique World, said he fears the project could affect his business and outdoor events.
“The atmosphere we create is a very positive atmosphere where people can gather, talk, and do these types of shows,” Bright told WKU Public Radio. “What they don’t tell you is that these generators produce a silent noise that can penetrate walls and vibrate windows.”
The first lawsuit was filed by TenKey after Simpson County Fiscal Court adopted an ordinance in December regulating “advanced technology centers,” including data centers and their associated power systems.
The ordinance limits such facilities to heavy industrial areas, requires a conditional use permit and authorizes the Simpson County Planning and Zoning Commission to impose operating conditions. It applies in both incorporated and unincorporated portions of the county.
TenKey says the ordinance cannot govern its site because the property lies entirely within Franklin, which has an independent planning and zoning commission. The developer says Kentucky’s planning statutes give the city – not the county – the authority to make land-use decisions within the city boundary.
“This lawsuit seeks to clarify the laws applicable to the project, which is proposed to be built entirely within the city limits,” TenKey attorney Gregory Dutton told WNKY. “The county has attempted to exert control over the project in a manner not authorized by law.”
At an August hearing, Dutton argued the word “independent” in the statute allowing cities to establish planning units means a county cannot layer its own zoning requirements over Franklin’s system.
“You cannot be independent if your jurisdictional borders are going to be essentially overlapped by the county’s authority,” Dutton told the court. “That’s not the way the statutory scheme is set up.”
Simpson County’s attorney, Aaron Smith, maintained the county may regulate when its rules are more restrictive than a city’s under Kentucky’s county home-rule statute. He said the county was not trying to displace Franklin’s planning commission and argued that a development of the project’s size could create effects beyond the city boundary.
“The City of Franklin is not on a bubble.” Smith said. “It’s not on an island. It is part of the county. A project of this significance and of this scale is in Simpson County.”
Simpson Circuit Judge Mark Thurmond said he hoped to issue a written ruling before an October 14 status conference. The decision could clarify whether counties can impose additional land-use requirements on projects inside cities with independent planning authorities.
Meanwhile, a separate suit filed in April by Franklin Citizens for Responsible Development seeks to overturn the Franklin Planning and Zoning Commission’s March approval of TenKey’s preliminary development plan.
The group argues the commission acted arbitrarily and contrary to the city zoning ordinance by treating the data center as a permitted use. The complaint points to the commission’s earlier rejection of a zoning text amendment that would have expressly authorized data centers and on-site power generation in the relevant area; commissioners had said at that time that such projects should require conditional use review.
“The Commission’s approval … was arbitrary, capricious, and inconsistent with the City of Franklin Zoning Ordinance,” the complaint states.
The preliminary approval did not end review of the project. The commission required TenKey to provide additional information on several concerns before any final development plan action.
That residents’ lawsuit has become a test of House Bill 321, a 2025 law that narrowed the class of people authorized to appeal final planning and zoning actions.
Before the law, Kentucky’s zoning appeal statute permitted a person “injured or aggrieved” by a planning or zoning decision to seek judicial review. HB 321 amended Kentucky Revised Statute 100.347 to limit that right to owners of real property within the same zoning classification as the property subject to the decision. The legislation was signed by Gov. Andy Beshear in March 2025.
TenKey argues Franklin Citizens for Responsible Development does not meet that requirement because it does not represent owners of property in the same zone as the proposed data center. Its lawyers have asked Thurmond to dismiss the case.
“The Legislature intentionally chose to narrow what it is that the appeal process is if you’re trying to appeal a zoning decision,” Dutton said during oral arguments.
By invoking a provision of HB 321, TenKey argues the plaintiffs lack standing to pursue the zoning appeal. The provision was advanced partly as a way to prevent development projects from being tied up by parties without a sufficient connection to the affected property, but its use in a major data center dispute could help define how broadly the new restrictions apply.
The 2026 legislature did not resolve the Franklin zoning dispute. But in a separate economic development measure, House Bill 869 directed the Cabinet for Economic Development to study tax credits and incentives for hyperscale data centers and report to lawmakers by August 1, 2027.
Still, the citizens group contends HB 321 unconstitutionally conditions court access on a property owner’s zoning classification rather than on whether the person suffers actual harm from the government’s action.
“The harm is the harm regardless of how your property’s characterized in the zone,” attorney Timothy Mayer said in court.
The group’s lawyers argue the restriction violates equal protection guarantees under the Kentucky Constitution, potentially shutting out nearby residents, businesses and others affected by a project because their land is zoned differently.
Thurmond has not ruled on the dismissal requests. His decision will determine whether the group can proceed with its challenge to Franklin’s approval and could establish an early interpretation of HB 321’s limits on zoning appeals.
