Some Valley cities are putting new rules on data centers. One Mesa official says they're a win-win

Data centers have become a big topic of discussion among city councils around Arizona.

Tucson officials recently rejected a proposal from Amazon called Project Blue to build on 290 acres of unincorporated land near the city. The Phoenix City Council in early July approved design and zoning regulations for data centers in that city.

A few weeks later, Mesa did something similar. In that case, the new amendment requires data center operators to get the approval of the City Council to build. There will also be design guidelines they’ll need to follow and an environmental study they’ll have to do.

Data centers that’ve already been proposed will be allowed to continue to develop in the locations for which they’re planned, but new ones will be centered in specific areas.

Jaye O'Donnell, Mesa’s economic development director, says having data centers located in industrial zones is a win-win for those facilities, the industry and the community.

Full conversation

MARK BRODIE: Jaye, why did Mesa feel the need to come up with these new regulations?

JAYE O’DONNELL: The tipping point really was the amount of data centers that we have now. So, over the past six years, we have seen a great influx of data centers. Fifteen facilities now are either constructed, that are operating, they're under construction, they're approved or proposed. And those 15 data centers represent 15 million square feet over 1,500 acres in the city of Mesa.

BRODIE: Wow. That's a lot.

O’DONNELL: It is a lot, yes. So we've become this hot spot for digital infrastructure companies and felt that it was time to really modernize our code. Because in the past, data centers have been classified as indoor warehousing — which is clearly not exactly what they do. The operations are much broader and more complex than that.

City of Mesa

BRODIE: Were you hearing complaints from residents or other maybe developers who were interested in that land or, you know, homeowners who maybe didn't want these things near them that prompted you to say maybe we should take a look at this?

O’DONNELL: The responses from residents and other companies certainly played a role in how we timed the updating of our code. Certainly, I think the biggest piece to this was data centers are unique and their operations are different. Their sound or noise level that's generated, that makes a huge difference in environmental impacts. They also consume quite a bit of energy, so there's large energy demand.

We also know that some of them — not all of them now with the new technology — consume quite a bit of water, but then also the land compatibility and the land use, and making sure that they're fitting in well with the area in which they locate. That was probably the biggest impetus to really front load this and get it on the front burner for council meetings, updating the text code.

We are not saying no to data centers. We're actually saying we would like you in the places and the right zoning in which we think you'll have a higher and better use. Not just for the data center itself, but for the community at large.

BRODIE: What have you heard from the operators of those data centers? Because I've just been doing some reading, it looks like there's been some sentiment of cities that are putting rules like this into place or being seen as anti-data centers are saying we don't want them, which sounds like not what you're saying.

O’DONNELL: We are not saying no to data centers. What we are trying to do is be very purposeful, intentional about where they go and how they go into heavy industrial zones and general industrial zones. And that then makes it easier for them to locate, because they don't necessarily have to — they don't have the same concerns about the residential abutting the development.

BRODIE: Do you expect that data centers will continue to look to Mesa given these changes, as opposed to any of the other Valley cities that don't have rules necessarily on where they can be or what they can do?

O’DONNELL: We have a large number of data centers based on our population, based on our land size. And we do think that there are other cities that could benefit from having data centers locate in their communities. The bigger challenge right now is power. But I do know there are other communities in the region, in the state who are excited to attract data centers and work with them. Again, we are not saying no to data centers. We just are steering them into the right industrial zoning in which we believe they belong.

BRODIE: Do you worry, though, that maybe some of those companies will look at the rules in Mesa and say, "That's fine, but if we go to city X, we don't have to deal with any of that. We can pretty much go wherever we want in that city." And that maybe new development will go away from Mesa to some of those other Valley cities.

O’DONNELL: The data centers will continue to come to Arizona. Yes, regulations sometimes makes it harder to get a development through the process. However, the region as a whole is taking on these new regulations. So, we're not the only city. There are several other cities in the region who are doing the same sort of thing, or they've already had this kind of zoning in place. Or some are making it even more restrictive than Mesa. So, I think you'll find that as the code catches up to development, we're all going to wind up being in about the same place from a community standpoint.

BRODIE: Is it your expectation that more cities will take a look at further regulating this industry through code?

O’DONNELL: I do think other cities will continue to look at additional regulations for data centers, particularly as their residents see more of them coming. When you look at data centers even 10 years ago, they were smaller, they looked more like office buildings. And now the data centers that we have in Mesa are really massive structures and, you know, there are millions of square feet on a campus, and they are 60 to 90 feet tall. They have mechanical equipment on the roof and outside.

So, making sure that cities have still a really nice aesthetic for their residents and for visitors, who are even driving through the community, is still really important. And the balancing act is really the million-dollar question for economic developers and for elected officials trying to find that sweet spot for a win-win between industry and the community.

BRODIE: Yeah, well, I'm curious from an economic development standpoint, where do data centers rank for you as opposed to pretty much any other kind of development, either residential, commercial, industrial? Is it good for Mesa to have a bunch of data centers? Or would it maybe be better to have, I don't know, like more retail stores or restaurants or housing or warehousing or other, you know, other kinds of development?

O’DONNELL: That's a great question, and it really is a matter of balance. And our role in the Office of Economic Development is to help diversify our economy. And so we believe that 15 data centers is a critical mass. We think it's enough, but we do think that more will likely come.

We're looking also at working with industries that create high-value, higher-density job counts. And when you look at the opportunity cost of what your land is being used to do, data centers do take a big chunk of land. And they don't produce as many jobs as an advanced manufacturer could potentially produce.

So, we're targeting industries like aerospace and defense, health care and biotech, advanced manufacturing, and those types of industries create a larger number of jobs per acre, per capita. So, that's what we're looking to attract now and prioritize those.