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Phoenix data center projects face delays as zoning and regulation tighten
Developers including Vermaland LLC and LPI Co. have paused or reshaped projects amid community opposition and Arizona’s harder entitlement process, with Arizona enacting a three-year pause on new data center tax incentives.
Data center developers in Phoenix are pressing pause on projects as local backlash has prompted regulatory and zoning changes, the Phoenix Business Journal reported. The delays mirror a broader US trend tied to the artificial intelligence boom and the rapid pace of new data center construction.
The report cites projects in Pinal County, including Vermaland LLC’s La Osa Energy Center near Eloy, which was put on hold in May after community opposition. Vermaland later decreased the project size from 59 buildings to 11 buildings and plans to bring updated plans to the board for a vote later this month.
Another stalled effort involves Project Midway, a proposed five-building, 1.25M SF campus, which is also seeing delays. In that case, an attorney for Nevada-based LPI Co. reportedly asked for a continuance after the county’s planning and zoning commission questioned how the project might affect the power grid.
More broadly, the PBJ said entitlements for new data centers are now harder in Arizona, where a three-year pause on new tax incentives and exemptions for data centers took effect in June. The report also noted that while demand is still strong, JLL data cited by the PBJ points to 66+ gigawatts of capacity under construction in North America, with 2 GW in Arizona.