Goldwater Institute calls Pima County's data center ban illegal

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(The Center Square) - The Goldwater Institute sent a letter to the Pima County Board of Supervisors, saying the county illegally implemented a new data center moratorium.

Most of the board members say the ban is needed while the southern Arizona county looks at how to regulate the growing industry, but the members voting against the moratorium point to legal concerns.

Last week, the board, in a 3-to-2 vote, implemented a four-month moratorium on new data center developments. During the moratorium, the county plans to update its zoning regulations for the centers.

Supervisor Jennifer Allen said Pima County doesn’t have anything in its legal code to deal with “the complexities of data centers,” such as their water and energy use, noise levels and proximity to residents.

Allen told The Center Square this week that the moratorium ensures that, while Pima County updates its zoning code, it won't approve new data center developments.

Pima County’s zoning code “is inadequate to prevent irrevocable public harm from data centers in unincorporated Pima County,” said Allen, who voted in favor of the resolution.

She noted the county's moratorium sends a message to data center developers that it has a “clear regulatory process on the books that will allow data centers to know what information they need to share and what expectations should be in working with Pima County.”

In its letter, the Goldwater Institute asked Pima County to “rescind” its moratorium, citing it as “unlawful” and raising “concerns under Arizona’s Private Property Protection Act.”  

Arizona voters passed the act, which was a referendum, in 2006. The measure allows property owners to seek compensation if a land-use law, which is implemented after they purchased a property, lowers its fair-market value.

The letter also noted Arizona law minimizes a “county’s authority to suspend otherwise lawful property development.”

“State law does not authorize a county to halt lawful development merely because officials wish to study an industry, consider additional regulations, or complete amendments to the zoning code,” the letter said.

Jon Riches, an attorney for the Goldwater Institute, told The Center Square this week that when local governments implement data center moratoriums, they violate property rights.

“If counties and local governments are gonna impose land-use restrictions, they have to do them in the first instance lawfully, but they should do them in a way that's clear, in a way where the restrictions apply consistently to similar land uses and in a way that respects fundamental property rights,” Riches said.

“Pima County did none of those things," he said. "They just issued an outright ban, and they did it in a way that state law says they can't."

Riches said the Goldwater Institute, a Phoenix nonprofit litigation and public policy research organization, has not heard back from Pima County.

The county is considering responding to the Goldwater Institute’s letter, Allen said.  

According to Allen, the moratorium lasts only four months because state law caps land-use moratoriums at that length. Allen noted state law allows a county one extension, but she said she didn’t expect Pima County to need it.

The supervisor said Pima County expects to finish updating its zoning code by year's end.

Supervisor Steve Christy, who voted against the moratorium, said it opens Pima County to lawsuits under the Private Property Protection Act.

He told The Center Square this week that the moratorium could expose county taxpayers to lawsuits with “astronomical” costs. Pima County is self-insured, meaning that if it loses a lawsuit and must pay compensation, the money will come from its general fund, he explained.

Christy said his colleagues who supported the measure “acted irresponsibly on this with little or no thought about the consequences, which will really affect the pocketbooks of Pima County taxpayers.”

Christy also said the moratorium will have an “adverse effect” on Pima County because new data centers and other businesses will “think twice” before coming.

He noted Pima County has a reputation as being “unfriendly” to businesses, adding that the Board of Supervisors “wants to cherry-pick what kind of industries can come into Pima County.”

The supervisor said he agreed with the Goldwater Institute’s letter saying the county’s moratorium is “illegal.”

Supervisor Rex Scott, who voted against the moratorium, told The Center Square this week that he did it because it was “based on legal counsel” he and his colleagues received from the Pima County Attorney’s Office. He did not reveal what that legal counsel was, citing attorney-client privilege.

Scott said the moratorium doesn’t affect Project Blue, a large data center currently being built in Pima County.

Christy said the county is reaping the economic benefits from Project Blue.

He cited the county getting $21 million from the sale of county land for the data center, as well as the development creating thousands of construction jobs.