Phoenix Data Center Developers Challenge New Ordinance Amid Legal Pressure

Data center developers in Phoenix are contesting a new ordinance restricting construction near neighborhoods, claiming it is unconstitutional. The ordinance, approved by the City Council last summer, aims to protect residential areas from large-scale data center projects. Landowners are asserting that the ordinance violates Proposition 207, which allows for compensation if zoning rules diminish property value. The city has issued waivers for some projects, but developers continue to seek clarity and agreements on their development plans.

Published Mar 27, 2026

Data center developers in Phoenix are opposing a new ordinance aimed at limiting construction near neighborhoods, claiming it is unconstitutional. The ordinance, approved by the City Council last summer, complicates the establishment of new data centers in sensitive areas.

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Developers, particularly those with plans for sites near Interstate 17 and Loop 101, argue that the ordinance infringes on their property rights under Proposition 207, which permits compensation for reduced property value due to new zoning laws. The city has offered waivers for some projects, but developers are seeking further agreements to proceed with their plans.