Data center developers submitted 113 applications for Arizona tax incentives during the two weeks before a three-year freeze took effect July 1, nearly matching the total filed during the program’s previous 13 years.
KJZZ reported that the Arizona Commerce Authority received the applications before the state stopped accepting new requests. The agency had received 123 applications since the program launched in 2013 and approved 83. Because the latest filings arrived before the deadline, they may remain eligible, and the authority has 60 days to approve or deny complete applications.
The Computer Data Center Program exempts qualifying equipment purchases from state, county and local transaction privilege and use taxes. Applicants must generally invest at least $50 million in Maricopa or Pima counties, or $25 million elsewhere, within five years. Exemptions can last 10 years, or 20 years for sustainable redevelopment projects.
Gov. Katie Hobbs signed House Bill 4168 in June, blocking new applications through June 30, 2029. Hobbs had sought a full repeal and said the pause could save Arizona $57 million for health care, child care and food assistance. The filing surge could reduce those projected savings if many applications qualify.
The Commerce Authority said most new filings came from facilities already approved for the program or seeking expansions, although some may represent new projects. Hobbs’ office said it is unclear how many applicants will be certified or complete the investments required to activate the benefits.
Industry advocates say the exemption encourages investment and costly server upgrades. Critics contend Arizona no longer needs the subsidy as communities raise concerns about data centers’ water and electricity demands. The freeze does not prohibit construction; it temporarily closes the application window while policymakers reconsider the program.
