Stakeholder Feedback - Data Centers LDC Text Amendment

This memo has not been reviewed or approved by the Gilbert Chamber of Commerce Board of Directors. It summarizes feedback the Chamber has received from stakeholders and should not be interpreted as expressing or establishing a position for the Gilbert Chamber of Commerce.

The Gilbert Chamber of Commerce has been gathering feedback from businesses, developers, property owners, and other stakeholders regarding the Town’s proposed LDC text amendments addressing data center regulations. Several issues have surfaced consistently enough that we believe it is helpful to share them with the Town as part of the public-policy discussion.

Nothing in this memo should be interpreted as Chamber advocacy for attracting data centers as they currently exist; its purpose is solely to convey stakeholder feedback regarding the proposed regulations.

The Chamber Board has not reviewed the proposed regulations or taken a position on them. Accordingly, the comments below should be understood as a summary of stakeholder feedback received to date, not as the Chamber's findings, conclusions, or recommendations.

Stakeholders have raised concerns regarding potential exposure under Proposition 207.

The proposed ordinance changes development rights on several LI and GI properties. Stakeholders have noted that Arizona law provides a process for property owners to pursue compensation when a new land-use regulation reduces existing property rights and lowers property value, as well as circumstances in which a municipality may waive enforcement of a regulation for a particular property.

Feedback has also raised questions about how long claims may be brought and the resulting uncertainty for the Town and affected property owners. Stakeholders have suggested that the Town evaluate potential Proposition 207 implications for affected properties, including any potential impact on Town-owned land, before adoption.

Stakeholders have also raised concerns about how the ordinance may apply to existing facilities. In particular, stakeholders have questioned whether the current reference to an “alteration” could be interpreted broadly enough to include routine equipment replacement or modernization and, if so, whether an existing facility could become subject to new requirements when upgrading technology.

The proposed setback requirements have generated significant stakeholder discussion.

As proposed, a data center would need to be located 400 feet from every property line, in addition to a 650-foot separation from residential zoning. Analysis shared with the Chamber suggests that the combined setbacks could remove a substantial amount of otherwise developable land. A 400-foot setback from all property lines, for example, requires approximately 14.7 acres before any buildable area remains. Stakeholder analysis further suggests that a 100,000-square-foot facility could require approximately 29 acres, with additional acreage potentially required adjacent to residential development.

Stakeholders have pointed to Mesa’s approach, which applies a 400-foot setback toward residential and other sensitive uses rather than from every property line, as one potential point of comparison.

To date, stakeholders working with the Chamber have not identified a Gilbert parcel that clearly meets all proposed requirements. This has led to questions about whether the cumulative standards would leave a realistic development path for an otherwise permitted use. Stakeholders have suggested that parcel-level mapping or similar analysis could help clarify the practical effect of the proposed standards.

Stakeholders have also raised questions regarding language that appears to require “complete approval from the Arizona Corporation Commission” before an application may be filed.

The concern expressed is that projects served by SRP may not have applicable ACC approval available because SRP is not regulated by the ACC in the same manner as investor-owned utilities.

Stakeholders have suggested considering whether a utility will-serve letter, capacity confirmation, or comparable documentation from the applicable utility provider could accomplish the Town’s intended purpose.

Feedback received has generally recognized the Town’s interest in establishing strong water-conservation standards. Stakeholder concern has focused more specifically on whether the ordinance should regulate particular technologies or instead regulate measurable impacts.

For example, questions have been raised about whether prohibiting “humidity control” could inadvertently restrict systems necessary for certain technology facilities. Stakeholders have also questioned whether naming particular cooling systems could create challenges as technology evolves.

One approach suggested through stakeholder feedback is to focus requirements on outcomes the Town seeks to achieve—such as limiting or prohibiting potable water use for cooling—rather than prescribing or prohibiting specific equipment.

Stakeholders have also suggested further review of the proposed definition of a data center.

The proposed definition of “data center” unintentionally encompasses telecommunication and network facilities that are fundamentally different from commercial data center operations. Additionally, terms such as “telecom hotel,” “carrier hotel,” and “co-location center” also describe facilities operated by telecommunications providers to support broadband and network infrastructure.

Telecom companies regularly upgrade, expand, and relocate facilities to meet customer demand and maintain reliable service. Applying data center standards to communications infrastructure would complicate the deployment and modernization of facilities to support residents and businesses alike.

These additional approvals, setbacks, design and operational requirements, and costs would increase and delay critical infrastructure.

Stakeholders have expressed concern that facilities substantially different in size and operation from large-scale data center campuses could inadvertently fall within the same regulatory framework.

Suggestions include considering the size, electrical load, or similar threshold to distinguish larger data center developments from smaller telecommunications infrastructure, and creating a carve-out for telecommunications and broadband companies to continue business as usual.

Some stakeholders have raised broader questions regarding long-term economic development flexibility.

The feedback is not necessarily that Gilbert should actively pursue data center development today. Rather, stakeholders have questioned whether regulations adopted under current technology and market conditions could unnecessarily limit options available to future Councils if technologies, infrastructure demands, fiscal conditions, or economic opportunities change.

Some have suggested including periodic review or another mechanism to reconsider the standards as technology evolves.

Stakeholders have also raised the possibility that highly restrictive local regulations could contribute to future state legislative involvement.

Those raising this concern point to previous instances in which the Arizona Legislature has preempted local authority after local regulations generated statewide policy debate. No one can know whether similar legislation involving data centers would occur, but stakeholders have suggested considering the possibility of future state action when evaluating the ordinance.

The most consistent theme in the feedback received is concern about the cumulative effect of the proposed requirements. Stakeholders have noted that individual provisions may operate differently when considered together and have questioned whether the combined standards could make development or significant modification of a data center impractical on available Gilbert properties.

There has also been discussion about the potential consequences if individual provisions were later modified, waived, or successfully challenged while the underlying designation of data centers as a permitted use through a Special Use Permit remained in place. Stakeholders have suggested that evaluating the ordinance as a whole before adoption could help ensure the resulting code operates as intended.

Among the questions and suggestions raised through stakeholder feedback are:

1. Whether a detailed Proposition 207 analysis should be completed for affected LI and GI properties.
2. Whether the proposed standards should be mapped against existing parcels to better understand their practical effect.
3. Whether the 400-foot setback from every property line should be compared with alternatives tied to residential or other sensitive uses.
4. Whether the ACC approval requirement should instead reference documentation appropriate to the applicant’s actual utility provider.
5. Whether routine maintenance and equipment modernization at existing facilities should be expressly addressed.
6. Whether a carve-out should be created for telecommunications and broadband companies to continue business as usual.
7. Whether water and cooling standards should focus on measurable outcomes rather than particular technologies.
8. Whether the data center definition should be refined to distinguish large-scale facilities from ordinary telecommunications and broadband infrastructure.
9. Whether potential impacts on Town-owned property and future economic development options should be evaluated.
10. Whether the ordinance should include a mechanism for future review as technology evolves.

The Chamber appreciates the opportunity to share stakeholder feedback as the Town considers this issue. We provide this information to ensure that questions and concerns expressed within the business and development community are available to elected officials and staff as part of their review, and we are always grateful for the Town’s willingness to seek feedback from our stakeholders.

These comments are informational only. The Gilbert Chamber of Commerce Board of Directors has not reviewed, adopted, or endorsed them, and they should not be represented as the Chamber's position on the proposed ordinance or on data center development generally.