Data centers bring jobs and cash to Arizona. Phoenix could regulate that away | Opinion

By crafting measured and thoughtful policies toward the data center industry, Arizona can create many more high-skilled, high-wage jobs.

Steve Zylstra and Josh Levi opinion contributors

• Data centers are becoming increasingly important to Arizona’s economy, supporting more than 81,000 jobs in 2023.
• Several Arizona cities are considering regulations that could restrict future data center development.
• Data centers contribute significantly to Arizona’s GDP and tax revenue while also using water and power wisely.

The average household now has 21 devices connected to the internet, powering laptops, phones, televisions, lighting, thermostats and even some appliances.

Every online purchase, telehealth appointment and digital classroom relies on access to data. Cloud-based computing is now central to our nation’s economic growth and innovation, supporting industries including advanced manufacturing, aerospace and defense.

This demand, along with artificial intelligence and other cutting-edge applications, is creating a growing need for data storage and processing made possible by data centers — the physical facilities that provide the digital infrastructure supporting our modern lives and the 21st century economy.

Arizona has become one of the most important states in the country for deploying data centers, with projects from greater Phoenix to Tucson.

Yet Phoenix, Mesa and Tempe are advancing expansive zoning ordinances and regulations that would create uncertainty in the market and impose restrictive and disparate requirements for data centers, risking the viability and competitiveness of data center projects in these jurisdictions.

Utilizing processes that are moving much faster than the cities’ regular deliberations, these potential changes are poised to disrupt the foundation of a forward-looking economy that Arizona has worked hard to develop.

With these changes on the horizon, it’s important to understand the benefits that data centers bring to Arizona communities.

Data centers are more than just physical infrastructure; they are major job creators for Arizona workers. Each project can require hundreds of construction professionals (sometimes a thousand or more at peak) while a facility is being built.

Once operational, it may employ 100 or more workers and contractors with technical knowledge and skills across a variety of roles. A recent PwC report highlighted that Arizona’s data centers supported more than 81,000 jobs across the state in 2023.

Arizona benefits from the strong business ecosystems that data centers support.

PwC notes that each job inside a data center supports six jobs elsewhere in the economy. The building of a single data center often generates hundreds of jobs for local skilled trades and contractors — electricians, carpenters, pipefitters, HVAC technicians and others — spanning several years or even a decade as the facility is built and then maintained.

Arizona data centers use power, water wisely

Data center investments also deliver significant benefits for local communities.

Data centers contributed more than $863 million in state and local taxes to Arizona in 2023, supporting community priorities like education, transportation and public safety that enhance the quality of life for Arizonans.

As highly efficient facilities, data centers enable energy savings and efficiencies for homes, businesses, utilities and other end users. Smart thermostats, smart meters, managed EV charging and many other applications require the digital infrastructure provided by data centers.

Data center companies also invest heavily in distribution and transmission-level infrastructure that benefits all electricity users, helping modernize the nation’s electricity grid.

Data centers are taking significant steps to help secure Arizona’s water future.

Data center companies prioritize efficient water practices in operations and development, and the industry is actively investing in innovations, such as waterless cooling systems, closed-loop cooling systems and the use of recycled or reclaimed water.

Data centers contribute billions to state’s GDP

Arizona has a long history of thoughtful economic development efforts, which have helped transform the state’s economy and attract the 21st-century technology industries we see today, including data centers, advanced manufacturing, and research and development.

Launched in 2013, the state’s economic development program fell in line with 35 other states by extending sales tax exemptions for data center equipment.

The state strengthened the program in 2021, and the data center industry is now making significant investments in Arizona’s economy, contributing more than $25 billion to the state’s GDP in 2023 alone.

It’s important to recognize that data center companies are making significant, long-term, steel-in-the-ground investments that will support Arizona’s economy for decades to come.

By crafting measured and thoughtful policies toward the data center industry, Arizona can create many more high-skilled, high-wage jobs. It can ensure consistent financial support for community priorities, promote responsible energy and water use, and continue to diversify its growing economy.

Steve Zylstra is president and CEO of the Arizona Technology Council. Josh Levi is president of the Data Center Coalition, the national trade association for the data center industry. Reach them on LinkedIn, @stevengzylstra and @joshlevi.