Tempe City Council Proposes Zoning Changes for Data Centers

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New data centers are being constructed in Tempe, Arizona as part of the region's expansion in technology infrastructure.

News Summary

The Tempe City Council is proposing changes to zoning regulations in response to the rapid growth of data centers in the Phoenix metro area. Amid increasing demand driven by artificial intelligence advancements, local officials are concerned about the impact on community resources. The Arizona Corporation Commission is also reviewing the implications of this growth on energy infrastructure, focusing on ensuring equitable contributions from data center operations. Arizona currently hosts a significant number of data centers, with major companies expanding their presence, bringing both economic opportunities and the need for careful regulation.

Tempe, Arizona – In a move to address the rapid expansion of data centers in the Phoenix metro area, the Tempe City Council has joined its counterparts in Phoenix and Chandler in proposing changes to zoning regulations. A public hearing on the new ordinance and accompanying zoning amendments took place on June 5, aimed at managing the increasing demand for data center facilities in the region.

The demand for data centers has surged lately, primarily driven by the acceleration of artificial intelligence technologies. As a result, the Phoenix Valley is fast becoming one of the leading markets for data center developments in the United States. Local governments are expressing concerns about the strain this growth is placing on community resources.

To investigate the implications of this rapid development, the Arizona Corporation Commission (ACC) has initiated a formal review focusing on the impact of data centers on energy infrastructure and local consumers. The commission plans to evaluate whether these facilities are contributing their fair share towards infrastructure costs, which is critical to safeguard residential and small business customers from potential future expenses.

Despite current assessments suggesting that data centers in Arizona are meeting their financial responsibilities, stakeholders believe that a thorough review is necessary as the situation evolves. This process will facilitate an opportunity for public input, allowing residents and businesses to voice their concerns and contribute to informed decision-making.

As of now, Arizona hosts up to 129 operational data centers, underscoring its growing significance as a data center hub. Notable industry players, including Meta, Amazon Web Services (AWS), Google, and Microsoft, have established their presences in the state. Recently, Meta has inaugurated a sprawling 2.5 million square feet data center in Mesa, Arizona, which had faced delays prior to its opening.

In addition, 5C Data Centers has announced an ambitious plan to build a new campus in Phoenix, with the first facility, known as PHX01, scheduled to open in 2025. This facility is projected to span 140,000 square feet and will feature an impressive 20 megawatts of IT capacity, accommodating up to 132 kilowatts per cabinet. Local officials have expressed enthusiasm for the economic potential and job opportunities associated with this project.

Amazon.com Inc. has also made significant strides in this sector, purchasing a 220-acre parcel in Laveen for $277 million, marking it as a potential site for a future data center campus. This acquisition, carried out through Amazon’s subsidiary Amazon Data Services, translates to over $1.2 million per acre, indicating the high value placed on these properties. The Laveen site’s strategic location near Loop 202 and Dobbins Road situates it approximately 20 minutes away from downtown Phoenix, presenting additional advantages for data operations.

This area is envisioned as part of a technology center industrial corridor and was previously under consideration by Taiwan Semiconductor Manufacturing Company for a manufacturing complex. As the data center industry continues to grow, Tempe and other cities in the Phoenix metro area are taking proactive measures to ensure the benefits of this expansion are balanced with the needs and concerns of local communities.

The ongoing changes in zoning regulations and the ACC’s review highlight the challenges and opportunities presented by the data center boom in Arizona. Local residents and businesses stand to gain from enhanced services and job creation, but they also face the need for careful planning and regulation to mitigate any adverse effects from this rapid growth.