Phoenix Data Center Faces Attorney General Investigation
The Ahwatukee development is under scrutiny after using 1996 zoning rules to bypass modern environmental impact studies.
Updated on Oct. 29, 2026 in Data Centers
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Menlo Digital began construction in April 2026 on a 1-million-square-foot data center campus in the Ahwatukee neighborhood of Phoenix. The project includes five buildings, an electrical substation, and over 100 diesel generators on a 38-acre site.
Why it matters
The project's approval highlights tensions between existing industrial zoning designations and local concerns over data center infrastructure development. The site was permitted under 1996 zoning rules, preceding a 2025 city ordinance intended to govern such facilities.
The campus spans 38 acres and features five two-story buildings totaling nearly 1 million square feet. The site is equipped with an electrical substation and more than 100 diesel generators to meet power requirements.
The players
Menlo Digital
A developer of large-scale data center infrastructure currently building a campus in Ahwatukee.
Kris Mayes
The Arizona Attorney General who is currently leading an investigation into the Phoenix data center project.
City of Phoenix
The municipal authority that approved the project based on historical 1996 zoning ordinances.
The details
Menlo Digital's facility uses a high-density power architecture relying on an on-site substation to manage grid intake. The infrastructure incorporates over 100 diesel generators, which act as emergency backup power sources to maintain consistent uptime for server hardware. Because the project was approved based on zoning established in 1996, the city did not mandate new environmental or health impact studies before construction commenced.
Timeline
1996: The site north of Chandler Boulevard was rezoned for industrial use.
2015: Menlo Digital purchased the 38-acre property.
2024: Menlo Digital submitted development plans to Phoenix.
April 2026: Construction began on the five-building campus.
October 2026: Arizona Attorney General Kris Mayes announced an investigation into the project.
The Tech Race
This development highlights the regulatory friction between legacy land-use policies and the rapid expansion of modern data center infrastructure. The project follows a pattern of developers seeking to utilize grandfathered zoning rights before stricter, contemporary municipal standards like the 2025 Phoenix ordinance are enacted.
Ahwatukee residents are affected by the immediate presence of a 1-million-square-foot facility and its associated diesel-powered backup system. Construction activities were previously permitted on a daily basis between 5 a.m. and 7 p.m. until the October investigation.
The takeaway
The Menlo Digital project remains a critical case study for how legacy industrial zoning interacts with current data center density requirements. Interested parties should monitor upcoming updates from the Arizona Attorney General regarding the legitimacy of the initial city approvals.
Further reading
For broader trends in infrastructure regulation, see our coverage on Data Centers.
Source note: This article includes information reported by AZfamily.
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Should city zoning laws prohibit data centers from being built in residential neighborhoods?
