When a city changes its zoning rules, who pays the price? A Texas developer is now asking a Phoenix court to answer that question — to the tune of more than $54 million.
A company called West Buckeye Road LP (WBR) is suing the city of Phoenix after new regulations targeting data centers upended its construction plans. The dispute is testing the boundaries of a nearly two-decade-old Arizona property rights law and could set a significant precedent for how cities manage the booming data center industry.
What Happened
WBR says it purchased industrial land in Phoenix in 2021 and spent millions of dollars preparing the site for a data center. Then, in 2025, Phoenix adopted a new zoning ordinance requiring special permits for data centers operating within city limits. According to WBR, complying with the new rules — which include purchasing advanced cooling equipment and soundproofing panels — added millions in unexpected costs and significantly reduced the property’s value.
The developer is seeking more than $54 million in compensation, arguing the city’s new rules unfairly burdened a project that was already underway.
The Legal Claims
WBR is pursuing two separate legal arguments. The first relies on Proposition 207, Arizona’s Private Property Rights Protection Act, which voters passed in 2006. The law requires state and local governments to compensate property owners when a new land use regulation reduces their property’s value. However, the law does carve out exceptions for regulations designed to protect public health — including fire codes, building standards, and waste management rules…