Congressional candidate opposes data centers despite previous vote for tax break

An Arizona candidate in a key congressional race has expressed opposition to data centers being built in his district, even though as a state legislator, he voted for giving the centers a tax break that cost millions of dollars of taxpayers’ money. Former state Rep. Amish Shah, D-Phoenix, is facing off against Republican candidate Jay Feely for Arizona’s 1st Congressional District seat, which is among the competitive races that could determine which party controls the House after the Nov. 3 midterm election. Shah, a doctor, says on his campaign website that he is against building data centers in the 1st Congressional District, citing water concerns.However, while in the state Legislature in 2021, Shah voted for House Bill 2649, which extended a data center tax incentive for qualified equipment until 2033.The original tax incentive passed in 2013 was set to expire in 2023 unless the state Legislature passed an extension. When Gov. Katie Hobbs signed the new 2027 state budget, it paused new applications for the state’s data center tax break from July 1 until June 30, 2029.Between Fiscal Years 2023 and 2025, the tax break cost the state an estimated $63.5 million, according to the Governor’s Office.Two years after supporting the data center tax break, Shah voted for Senate Bill 1274, which eliminated a restriction on certain data center-related tax refunds.Shah was in the Legislature from 2019 to 2024. The Center Square reached out to Shah’s campaign several times, but it did not respond before publication time.Unlike Shah, Feely has backed data centers. In a June debate with Republican candidates before the party’s primary elections, Feely said data centers can be created “without them adding to the cost of the local consumer.”Data centers should invest in local areas and reduce consumers’ electricity costs, Feely said. He added they should reuse water to avoid wasting it.The Center Square reached out multiple times to the Feely campaign, but it did not respond before publication time.Arizona Republican Party Chairman Sergio Arellano said Shah is “going to say whatever he needs to to get elected. Rather than explaining his previous position to voters, he is taking an easy way out and hoping voters are stupid.””Unfortunately for Dr. Shah, voters are not stupid. They are doing their homework, and we are making sure they know about his flip-flops,” Arellano told The Center Square by email.Arellano noted Arizona voters have “legitimate concerns” about data centers.”They do not want to be stuck with some corporation’s energy cost and they shouldn’t be,” he explained. “Our representatives need to address the complexities of this issue and speak candidly about it.”According to Arellano, “most reasonable people understand that data centers are necessary.””Communities should have a voice in where these facilities are built, how they impact surrounding neighborhoods, and what they are going to require from our water and energy infrastructure,” he added.Josh Heywood, the executive director of Project 48 Arizona, a nonprofit that supports data center development, said the industry in Arizona “generated over $1 billion in state and local tax revenue in 2024.”Heywood noted that data centers increase Arizona tax revenue and investment and only use 0.15% of the state’s annual water supply.Arizona could turn off all its data centers, and the state would “still be facing cuts on the Colorado River,” Heywood said, adding that it would “have less money to help pay for conservation and new water supplies.”When the large data center project in Pima County called Project Blue is online, it will use an estimated 15,000 to 20,000 gallons of water per day, less than the average commercial warehouse over 200,000 square feet, he told The Center Square.According to 2012 Energy Information Administration data, these types of commercial warehouses use 22,000 gallons of water per day. 2012 is the latest year for comparable EIA water-use data for commercial warehouses.Most Arizonans have an unfavorable opinion of data centers, according to a poll from Noble Predictive Insights. The survey showed almost 60% of Arizona registered voters opposed new large data centers.Heywood said Arizonans are concerned about artificial intelligence taking their jobs and how it’s becoming part of everyday life.Many Arizonans have only heard “one side of the story,” Heywood said, noting many concerns about water use, electricity and noise levels can be fixed by proper zoning laws.Project 48’s position is if a data center wants to come to Arizona, the developer “should be required to pay all the costs associated with bringing them online,” Heywood said.Arizona’s three main utility providers – Arizona Public Service, Salt River Project and Tucson Electric – previously told The Center Square that new data centers won’t raise existing ratepayer prices.