Data center developers in Phoenix are pressing pause on projects in the face of significant local backlash that has led to regulatory and zoning changes, the Phoenix Business Journal reported.

Some of the delayed projects include facilities by developers Vermaland LLC and LPI Co., both in Pinal County.

Arizona boasts 160 data centers, according to Data Center Map, with Phoenix home to 149 of them. Last year, the city ranked top among data center markets by sales volume.

Developers delaying data center build-out in the region mirrors a national trend. Public outcry in response to the rapid construction of data centers across the country, sparked by the artificial intelligence boom, is prevalent. 

Two massive data center projects south of Phoenix have had to pause development. Vermaland LLC, which is building La Osa Energy Center near the city of Eloy, put plans on hold in May after facing significant community opposition. The company eventually decreased the project’s size from 59 buildings to 11 buildings in response and will bring updated plans to the board for a vote later this month.

Project Midway is also seeing delays with its proposed five-building, 1.25M SF campus in the area. Last month, an attorney for the developer, Nevada-based LPI Co., reportedly requested a continuance after the county’s planning and zoning commission questioned how the project might impact the power grid.

Some developers are responding to increased opposition by increasing their community outreach efforts.

“Getting local communities on board is now the biggest obstacle for the industry,” the PBJ reported, citing a new report from JLL. 

Despite an influx of data center moratoriums across the country — at city, county and state levels — demand for the facilities “shows no sign of waning,” the PBJ reported, as the AI industry continues to grow. 

More than 66 gigawatts of data center capacity are currently being built in North America, with 2 GW in Arizona, according to the JLL report. 

But obtaining entitlements for new data centers is now harder in Arizona, the PBJ reported. 

In June, Arizona enacted a three-year pause on new tax incentives and exemptions for data centers. While this means the construction and operation of new and existing centers can continue, as AZ Family reported, it also creates headaches for a few developers that have had to request waivers or compensation for disrupted projects, such as a data center campus in Casa Grande.

Last year, Phoenix modernized its data center zoning ordinance to add the centers as “a permitted use that must address health and safety concerns when applying for a special permit for construction.” 

The PBJ reported that the state of Arizona maintains the power to pass legislation that overrides local ordinances. But for now, municipalities are holding their own. 

This month, the city of Gilbert voted unanimously to recommend approval of an amendment to its land development code that would establish development standards for data centers, addressing factors such as water, power, sound, lighting and design.