In short
Arizona has no single statewide zoning code for AI data centers. Each city adopts its own land use rules under authority granted by A.R.S. § 9-462.01, and each county does so under A.R.S. § 11-811. A.R.S. § 9-462.01, A.R.S. § 11-811 The state’s Private Property Rights Protection Act, Proposition 207, gives landowners a right to compensation if a local land use law reduces their property value. A.R.S. § 12-1134, Legislative Council analysis, AZ League of Cities and Towns This often means a developer must sign a waiver of that right as a condition of rezoning. The Computer Data Center program offers a sales tax break for qualifying projects, but political opposition has put its future in question. A.R.S. § 41-1519, Axios Phoenix Major jurisdictions including Phoenix, Mesa, Chandler, Marana, and Tucson have all passed specific AI data center ordinances. The rules impose noise limits, setback requirements, water restrictions, and special permit frameworks. The result is a patchwork that makes early local engagement essential.
Who controls zoning for AI data centers in Arizona?
Arizona delegates zoning authority to its municipalities. Under A.R.S. § 9-462.01, a city or town can adopt zoning ordinances, create overlay districts, and set conditional use regulations. A.R.S. § 9-462.01 There is no state zoning board that approves AI data center sites. The city council or board of supervisors where the land sits decides whether a project may proceed. Counties also have zoning power for unincorporated areas. So the front line for a developer is always the local government.
How does Proposition 207 shape AI data center development?
Proposition 207, the Private Property Rights Protection Act, passed in 2006 and is codified at A.R.S. § 12-1134. A.R.S. § 12-1134, Arizona League of Cities and Towns guidance It says that if a land use law enacted after the property’s transfer date reduces the fair market value of the land, the owner can demand just compensation from the government that enacted it. The owner has three years from the effective date of the land use law, or the first date the reduction of existing rights to use, divide, sell or possess property applies to the parcel, whichever is later, to bring a claim. A.R.S. § 12-1134
Cities and counties do not want to pay these claims. So they almost always require a developer to sign a waiver of Proposition 207 rights as a condition of land use approval. By signing, the developer agrees not to sue for any diminution in value the new zoning may cause. The League of Arizona Cities and Towns publishes a model waiver form. AZ League of Cities model waiver Many cities use their own versions.
Mesa’s 2025 data center ordinance explicitly addresses this. It states that an owner whose property was zoned for employment uses before the ordinance took effect may request a binding waiver of enforcement under A.R.S. § 12-1134 if the new restriction reduced the parcel’s value. Mesa Ordinance 5957
Expect to sign a Proposition 207 waiver with almost any zoning approval for an AI data center. That’s standard.
What is the Computer Data Center program and why does it matter for siting?
The Computer Data Center (CDC) program is not a zoning rule, but it often drives where a developer wants to build. Under A.R.S. § 41-1519, a qualifying facility can receive a state transaction privilege tax (TPT) exemption on equipment through the end of the tenth full calendar year following the calendar year containing the effective date, or through the end of the twentieth full calendar year for a sustainable redevelopment project. A.R.S. § 41-1519, ACA CDC guidelines
To qualify, a new facility must invest at least $50 million in Maricopa or Pima County within five years, $25 million in other counties, or $200 million for a greenfield sustainable redevelopment project. An existing facility qualifies with at least $250 million invested between September 1, 2007 and August 31, 2013. A.R.S. § 41-1519
Roughly 64 facilities had been certified by early 2025. Water policy analysis But the program faces growing opposition. Governor Katie Hobbs said in late 2025 that the state should rethink the incentives. ABC15 A bill, HB 2119, proposes moving the certification deadline from December 31, 2033 to December 31, 2026. HB 2119 While the current deadline remains 2033, the political climate makes its future uncertain. That uncertainty affects where a data center is sited.
How do Arizona cities and counties regulate AI data centers?
The rules differ sharply. The table below compares the major jurisdictions.
| Jurisdiction | Zoning approach | Key noise and setback rules | Water rules |
|---|---|---|---|
| Phoenix | Special permit required in C-2, C-3, CP/GCP, A-1, A-2 districts | Noise study within 300 ft of residential, a 150 ft setback for mechanical equipment, and a certificate of occupancy conditioned on noise compliance | None specific in zoning ordinance |
| Mesa | Prohibited by right in employment districts. Special Exception through Planned Area Development overlay | No specific noise/setback in summary, but PAD process allows conditions | None specific in zoning ordinance |
| Chandler | Primary use only in PAD designation. Ancillary limited to 10% of footprint | Pre-construction baseline noise study, annual noise monitoring for five years, generator testing time limits, half mile notification, and two neighborhood meetings | 115 gallons per day per 1,000 sq ft; additional water must come from outside source |
| Marana | Subject to ordinance | EPA Tier 2/3 emergency generators, non-emergency testing capped at 100 hrs/year | Municipal water prohibited for cooling or humidity control. Must prove alternate source and estimate annual consumption |
| Tucson | Large-scale classified as Generating System use, allowed only through PAD process (zoning amendment pending) | PAD process applies | Over 7.4 million gallons per month requires a water conservation plan and City Council approval, and a penalty up to 2,000% of the monthly charge |
| Maricopa County | Updated definitions in industrial districts. Fewer restrictions than cities | No specific conditions in updated ordinance | No specific conditions but subject to county groundwater rules |
The following sections explain each in more detail.
What are Phoenix’s AI data center zoning rules?
Phoenix adopted Ordinance G-7396 (Z-TA-2-25-Y) on July 2, 2025. Phoenix Zoning Ordinance Table, Ord. G-7396 It makes an AI data center a use allowed only with a Special Permit in five zoning districts, including C-2, C-3, CP/GCP, A-1, and A-2. The special permit process requires site plan review and public hearings.
The performance standards are stringent. A noise study is required if the facility is within 300 feet of residential property. Mechanical equipment must be set back at least 150 feet from residential zones. Enhanced landscaping and architectural treatments are mandatory. The certificate of occupancy is not issued until the city confirms the project meets the noise standards. Phoenix Zoning Ordinance § 647 (as amended by Ordinance G-7396)
Phoenix Mayor Kate Gallego had been sharply critical of data centers, calling out unappealing aesthetics and high energy demand. AZBEX The ordinance was the city’s direct response.
What are Mesa’s AI data center zoning rules?
Mesa passed a comprehensive data center ordinance (No. 5957) in mid-2025, effective 30 days later. Mesa Ordinance 5957 It defines a data center as a facility, or portion of a facility, whose principal use is to store and manage computer systems, servers, networking equipment, and components related to digital data operations, and provides that digital data operations include the storage, processing, and distribution of digital information and may encompass activities related to artificial intelligence, block chain technology, cryptocurrency mining, computational modeling, weather modeling, genome sequencing, and other computationally intensive applications. Mesa Ordinance 5957
Under the new rules, an AI data center is prohibited by right in Employment districts (PEP, LI, GI, HI). It can only be built if the City Council approves a Special Exception through a Planned Area Development (PAD) overlay combined with certain industrial zoning districts.
The ordinance sets parking minimums of one space per 5,000 square feet for the first 200,000 square feet, and one per 10,000 square feet after that.
As noted, the ordinance includes an explicit Proposition 207 waiver provision for owners whose land was zoned for employment use before the law and who suffered a loss in value. Mesa Ordinance 5957
What are Chandler’s AI data center zoning rules?
Chandler was an early mover. Its data center ordinance (No. 5033) took effect January 5, 2023. Chandler Ordinance 5033, City of Chandler Under the ordinance, a data center as a primary use is only allowed in a Planned Area Development (PAD) zoning designation. An ancillary data center is permitted only if it occupies no more than 10 percent of the building footprint, serves only the on site owner’s enterprise, and is not a separate stand alone structure.
The ordinance imposes several noise and community conditions, including a pre construction baseline noise study, annual noise monitoring for five years after completion, limits on backup generator testing times, notice to neighbors within a half mile radius, and two required neighborhood meetings. Chandler Ordinance 5033
Chandler also has a water policy from 2015 that caps AI data center water use at 115 gallons per day per thousand square feet of space. Any need above that must be met from an outside source. Circle of Blue
In December 2025, the Chandler City Council unanimously rejected a rezoning for a proposed data center on Price Road. ABC15
What are Marana’s AI data center zoning rules?
Marana’s data center ordinance was adopted in December 2024. Marana Ordinance No. 2024.029 Its most striking provision prohibits the Marana Water Department from supplying potable water for cooling, humidity control, or similar operations. A developer must provide proof of an alternate water source, an estimate of annual water consumption, and documentation from the electric utility showing that adequate capacity is available.
Emergency generators with a maximum engine power at or above 37 KW (50 HP) must meet Tier 2 or Tier 3 emissions standards rather than Tier 4, depending on manufacture date and engine power, and non-emergency operation including testing is limited to 100 hours per calendar year. EPA NSPS for stationary CI engines, Pima County General Air Quality Permit for Fuel Burning Equipment, Pima County Code Title 17
These rules effectively push an AI data center toward air cooling or self supplied water rights. The Luckett Road project, approved in January 2026, was designed with air cooling to meet the ordinance. Tucson Spotlight
What are Tucson’s AI data center zoning rules?
Tucson does not yet have a final permanent zoning amendment for AI data centers. In August 2025, the zoning administrator determined that large scale AI data centers are a Generating System land use. That category is not permitted by right in any zone and can only be approved through the Planned Area Development (PAD) process, which requires public hearings and Mayor and Council approval. Tucson Planning Commission memo
Separately, Tucson adopted a Large Quantity Water User ordinance on August 19, 2025. AZ Family Any Tucson Water customer expecting to use more than 7.4 million gallons per month must submit a water conservation plan, obtain City Council approval, and is prohibited from using more than 120 percent of the approved amount. Penalties for violations range from a 200 percent to a 2,000 percent surcharge on the monthly water bill. AZ Family
The Project Blue saga shows how these rules interact with local opposition. In August 2025, the Tucson City Council unanimously rejected annexation and a development agreement for a 290 acre AI data center. AZ Luminaria The developer switched from water cooling to air cooling and moved forward under county permitting, but faced further controversy when it was found to have used 652,000 gallons of Tucson Water without authorization. AZ Central, Arizona Daily Star
How is Maricopa County handling AI data center zoning?
Maricopa County updated its zoning ordinance on December 10, 2025. Maricopa County zoning update The update clarified definitions for AI data centers and battery energy storage systems, consolidated land use categories from 201 to 137, and eliminated some restrictions in industrial zoning districts. The county’s approach is generally more permissive than that of the cities.
Several of the region’s largest projects sit on unincorporated county land. Project Baccara, a 160 acre campus with two 1 million square foot buildings and a 700 MW power plant, received its county military compatibility permit in May 2026 after strong opposition. FOX 10 Phoenix, Data Center Dynamics The Hassayampa Ranch proposal, a 2,000 acre $25 billion project, won a land use change approval from the county in December 2025. azcentral These projects show that unincorporated county land remains the most viable path for many developers, though public resistance is growing.
Where else are AI data center regulations emerging?
Tempe introduced an AI data center ordinance in mid-2025, joining Phoenix and Chandler. ABC15 Flagstaff is considering restrictions. AZBEX Goodyear’s ordinance is under review. Pima County initiated a process in August 2025 to potentially add zoning restrictions on large scale industrial users, specifically targeting AI data centers. Pima County Supervisor Jen Allen stated that 30 or more data centers have their sights on the county. AZ Family The trend across the state is clearly toward more local control and more conditions.
What pending state legislation could change the landscape?
Several bills in the 2025 to 2026 session have direct bearing on AI data center development.
HB 2756 (2026) would direct the Arizona Corporation Commission to adopt rules preventing the costs of grid connections for extra high load factor customers from being shifted to other ratepayers. It would require ACC review and approval of extra high load factor customer contracts at least 30 days before execution. HB 2756 The bill passed the Arizona House but its Senate status is unconfirmed as of May 2026.
HB 2452 (2026) would have required local governments to include small modular reactors and AI data centers in their land use plans. It was killed on the House floor, with six Republicans joining Democrats in opposition. MultiState, AZ Leg. HB 2452 That shows state lawmakers are unwilling to force data center acceptance on reluctant cities and counties.
HB 2119 (2026) proposes shortening the CDC program certification deadline from December 31, 2033 to December 31, 2026. HB 2119 Its status is also unconfirmed.
These bills, combined with the governor’s comments and the local pushback, show that the regulatory environment is tightening on several fronts.
Key takeaways
- Zoning for an AI data center in Arizona is entirely a local affair. There is no single state permit. You must go through the city or county where the land sits.
- Expect to sign a Proposition 207 waiver as part of almost any rezoning. It is the standard price of approval, and refusing it can stall a project.
- In the major metro areas (Phoenix, Mesa, Chandler) by right development of an AI data center is effectively gone. A special permit or Planned Area Development overlay is required.
- Water use is a flashpoint. Marana bans potable water for cooling. Tucson caps large users and imposes steep penalties. Chandler has a per square foot water limit. Projects that use air cooling or have independent water rights face fewer hurdles.
- The CDC program tax break remains available through 2033 under current law, but its political support is weakening. If you are planning a project, you should plan for the chance that the certification window could close much sooner.
- State legislation and local politics are moving against unrestricted AI data center development. Early community engagement and a plan that addresses noise, water, and grid impacts is critical.
- Unincorporated Maricopa County currently has fewer restrictions, but public opposition is growing and the political landscape is changing.
Frequently asked questions
Q:Does Arizona have a state law that overrides local zoning for AI data centers?
A:No. The state grants zoning power to cities and counties. A bill that would have forced localities to include AI data centers in their land use plans (HB 2452) failed. MultiState
Q:What is a Proposition 207 waiver and why do I need one?
A:It is a written agreement in which you give up the right to claim that a new land use law reduced your property’s value. Cities may request it when they grant a rezoning that imposes new restrictions, to avoid paying compensation under A.R.S. § 12-1134. A.R.S. § 12-1134
Q:Can an AI data center be built by right anywhere in Arizona?
A:In most urban areas, no. Phoenix, Mesa, and Chandler all require a special permit or a Planned Area Development overlay. In some unincorporated industrial areas, an AI data center might fit within existing use permissions, but public hearings are still common.
Q:What water restrictions apply?
A:Marana prohibits the municipal utility from providing potable water for cooling or humidity control. Tucson caps large users at 120% of their approved consumption level. Chandler limits AI data center water use to 115 gallons per day per thousand square feet. Unincorporated areas depend on county rules and groundwater permits. Pima County Conditional Use Permit, ADWR Groundwater Permitting, AZ Family, Circle of Blue
Q:How long does the zoning process take?
A:A special permit or PAD rezoning typically involves neighborhood meetings, planning commission hearings, and city council votes. The process can take six to twelve months or longer. Early engagement with staff and the community is essential.
Q:Is the CDC sales tax exemption still available?
A:Yes, but the deadline to obtain certification is December 31, 2033 under current law. A bill (HB 2119) would move that to the end of 2026. Developers should monitor the legislative session closely. HB 2119
Q:Do AI data centers need to worry about noise?
A:Yes. Phoenix requires noise studies and conditions the certificate of occupancy on compliance. Chandler mandates annual noise monitoring for five years. Chandler limits generator testing hours. Chandler Ordinance 5033 Phoenix regulates AI data center mechanical equipment including generators through noise standards and setbacks. Phoenix Ordinance G-7396
Q:What happened to Project Blue?
A:Tucson City Council rejected annexation and a development agreement in August 2025. The developer then built under county jurisdiction, switching to air cooling. It later faced enforcement action for unauthorized water use. The example shows the friction that can arise between city and county authority. AZ Luminaria, KJZZ, AZPM, KJZZ
Q:Are there any incentives to offset the cost of complying?
A:The CDC program provides a sales tax exemption on equipment, which can be substantial. Some cities negotiate infrastructure reimbursements as part of a development agreement, but these are project specific.
Q:Where can I find a model Proposition 207 waiver?
A:The League of Arizona Cities and Towns publishes a model form. Individual cities often have their own versions, which you request during the zoning process. AZ League model waiver, League recommendations
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Junde Liu, JD, LL.M. (Taxation) candidate at UF Law. Originally published on Compute Law Blog. This article is general information and does not constitute legal advice. Reading it does not create an attorney client relationship. The reader should not act on the basis of any content here without first consulting a licensed attorney in the relevant state. Last reviewed for accuracy May 23, 2026.