Mesa approves PHX 062 data center project 4-0, bypassing East Mark design review rejection
MESA, ARIZONA — March 27, 2025

Mesa approves PHX 062 data center project 4-0, bypassing East Mark design review rejection

Planning board approved a controversial data center project with modified conditions despite East Mark Design Review Committee's rejection, raising questions about private governance authority versus city permitting processes.

Planning Board Approves Data Center Project Over East Mark Design Review Rejection, Intensifying Private-Governance Dispute

The Mesa Planning and Zoning Board unanimously approved (with the chair recusing himself) a controversial data center project on March 27, 2025, allowing Ryan Companies and Amazon to move toward building permits despite the East Mark Master Developer's refusal to issue design review approval. The 4–0 vote, preceded by unusually contentious public testimony, exposed deep disagreement over whether a private development agreement can effectively block city-issued permits—and whether developers can use board modifications to bypass master-developer control.

The conflict pits a multinational technology company and experienced developer against the governance structure of a 14-year-old master-planned industrial district, with the city's zoning authority caught in the middle.

Key Speeches

"I don't think any of us really want to be here today. I think staff nor myself nor probably Miss Demit want to be here. I respect Susan. I don't think she has all the information." — Gary Hayes, Ryan Companies

"We believe that the Planned Community zoning district regulations, the community plan for East Mark, and specific provisions in the development agreement lay the groundwork and set forth the requirements that this design review and design guideline compliance would be a collaborative effort with the city and East Mark through the life of any development project." — Susan Demit, Gammage & Burnham, PLC, on behalf of East Mark Master Developer

"After I got this letter I reached out to staff and said do I have a zoning issue. Staff said no. I have an email from Evan and Mary that said you have no zoning issue, but I can't get them to approve or even allow me to submit. I said staff, I just need to get through this process. I'll go to DRB, I'll do whatever I need to do in order to get my permits, and that's why we're here today." — Gary Hayes

"I can't have East Mark using a private cause of action for lack of a better term to hold up my permit from the city of Mesa." — Gary Hayes

Timeline

Applicant presentation: Gary Hayes presented a timeline of emails showing the progression from conditional approval language to rejection, emphasizing that city staff (Evan and Mary, surnames not given in transcript) had confirmed no zoning issue exists.

Staff recommendation: Approval with conditions (staff position not disputed during public testimony).

Public comment: Two speakers—Susan Demit for East Mark Master Developer and Gary Hayes for the applicant. East Mark presented a 14-year precedent argument; applicant framed the issue as a conflict between private governance and city permitting authority.

Council discussion: Board member Peterson asked the city attorney whether it was appropriate for Susan Demit to return for further clarification, given significant differences between her letter and Gary Hayes's email timeline. The attorney confirmed the board could call witnesses for clarification (not debate). Peterson then invited Demit back to address the discrepancy in her letter that stated Amazon "never filed a request" with the DRC, a claim contradicted by the February 2024 conditional approval emails. Demit acknowledged she had not seen those materials and that there had been a 2021 approval for a different use and a 2024 conditional approval before the May rejection.

Vote: Motion to approve Item 3A (PHX 062 modifications to conditions 2 and 3) passed 4–0, with Chair SS abstaining. Vice Chair Pitcher voted yes, Board Member Blakeman voted yes, and two additional board members voted yes (Board Members Peterson and Farnsworth, based on roll call at start, though individual votes not explicitly named in the motion vote).

Opposition

Number of speakers: 1 (Susan Demit, representing East Mark Master Developer)

Main concerns:

  1. Regulatory precedent: All 14 years of East Mark projects have required East Mark Design Review Committee approval, creating an enforceable contractual and zoning-district requirement.
  2. Development agreement authority: The Planned Community zoning district regulations, the community plan, and the development agreement between the city and East Mark establish a collaborative design review process that is binding, not merely private governance.
  3. Circumvention of process: The applicant previously went through East Mark DRC in 2021 for a different use (distribution/warehouse); they have not attempted to resubmit under the new data center use but instead sought to modify board conditions to bypass the process.
  4. Conditional approval was issued: A conditional design review approval was issued in February 2024 before rejection in May, showing the applicant had engaged the process.
  5. Zoning vs. design review conflation: Demit suggested Brookfield/East Mark was conflating zoning issues with design review authority, but she did not dispute the staff finding that zoning is appropriate for data center use.
  6. Systemic impact: Approving a modification that bypasses East Mark DRC would set a precedent undermining 14 years of coordinated development governance.

Most compelling arguments:

Organized groups: East Mark Master Developer (DMB Mesa Proving Grounds LLC) and Brookfield (East Mark operator), represented by Gammage & Burnham, PLC.

Support

Number of speakers: 1 (Gary Hayes, applicant)

Main concerns / arguments:

  1. City staff confirmation: City staff (identified only as Evan and Mary in the transcript) confirmed no zoning issue exists; the property is appropriately zoned for data center use.
  2. Private governance distinction: East Mark's rejection is a private contractual/governance action, not a city regulatory requirement; the city attorney agreed with this characterization (per Hayes's reference to study session).
  3. Conditional approval followed by rejection: East Mark issued conditional approval in February 2024, then rejected the submission in May 2024 based on a manufactured zoning concern that city staff contradicted.
  4. Competing project precedent: Hayes noted that a similar Ryan Companies project outside East Mark has obtained building permits, demonstrating that the zoning is appropriate and the only barrier is East Mark's refusal.
  5. Permit authority: The city of Mesa, not East Mark, has authority to issue building permits. East Mark cannot use a private approval mechanism to block city permits.
  6. Process circumvention by East Mark: Brookfield/East Mark is conflating two issues—zoning and design review—and using the zoning pretext to prevent even resubmission of design review, effectively holding the permit hostage.
  7. No prior request to resubmit: Hayes implied that Brookfield's letter telling him to obtain a use restriction amendment before resubmitting is itself a barrier, since the city has already confirmed zoning is not an issue.

Most compelling arguments:

Project Details

Vote Breakdown

Outcome & Next Steps

The Planning and Zoning Board approved modification of conditions 2 and 3 for case Z 24-001019, allowing Ryan Companies and Amazon to proceed with building permit applications with the city despite East Mark Master Developer's rejection of design review approval.

The modified conditions effectively remove or reframe the requirement for East Mark DRC sign-off as a condition of city permits. The applicant can now move to the city's building permit phase without further design review approval from East Mark or Brookfield.

Next steps: The project will proceed to the city's building permit phase. East Mark Master Developer and Brookfield retain the option to seek legal recourse (litigation, injunction, or contract enforcement) outside the planning board process if they believe the development agreement gives them enforceable control over design review approval. The city attorney's characterization of the East Mark DRC as "private governance" (per Hayes's reference to study session) may be contested in court. The city council could also weigh in if appealed, though no such appeal path was discussed in this meeting.

Controversies & Context

The core controversy centers on the enforceability and scope of the East Mark development agreement. The city's Planned Community zoning for East Mark requires or permits a master developer to establish design review controls; the development agreement between the city and East Mark formalized these controls. For 14 years, every project in the district has obtained East Mark DRC approval before (or concurrent with) city permits.

Ryan Companies and Amazon argue this is a private governance structure: once the city confirms zoning is appropriate, the private design review committee cannot block city permits. The applicant's remedy is either to comply with design review or to seek board-level modification of conditions—which they have done.

East Mark argues the development agreement is a binding contract with regulatory effect, enforceable by the master developer as a third-party beneficiary or as a party to the agreement itself. The 14-year precedent demonstrates that design review approval has been a prerequisite, not a discretionary preference.

City staff position: Staff recommended approval, suggesting the planning staff agrees with the applicant that once zoning is confirmed as appropriate, city permits should issue. However, staff's role in enforcing the development agreement was not debated in the transcript.

City attorney position (referenced, not present): At study session (not transcribed here), the city attorney apparently opined that the East Mark DRC process is "private governance," implying it does not create a binding regulatory requirement that the city must enforce as a condition of permits. This opinion appears to align with the board's approval.

Precedent and systemic risk (per East Mark): If the board can modify conditions to bypass design review, the 14-year cooperative structure of East Mark collapses. Future developers might argue they do not need DRC approval either, dismantling the master developer's ability to maintain design cohesion and quality standards across the district.

Legal exposure: Brookfield and East Mark may have grounds to seek injunctive relief or damages based on the development agreement. The question of whether the agreement creates enforceable rights to design review approval—and whether the city can unilaterally modify those rights through board condition modifications—remains unresolved and may be litigated.

Duration

Other Notable Items

Item 3B / Case Z 24-001022 — Atlas East Mark (38-acre industrial development): Approved with conditions on consent agenda. A 24,950 sq. ft. industrial development on a 38-acre preliminary plat, located near the PHX 062 data center site. Approved without controversy.

Item 3C / Case Z 24-001079 — Get Airports Mesa 3 (commercial recreation facility): Approved with conditions on consent agenda. A 3.5-acre site at the northeast corner of South Ellsworth Road and East Elliot Road for a small-scale commercial recreation facility with attached commercial uses. Approved without controversy.

Item 4A / Case Z 24-00548 — Saia Motor Freight Lines (13 acres, freight terminal): Continued to a date uncertain. A plan review for a freight truck terminal and warehouse at a site approximately 1,900 feet east of the southeast corner of East Posos Road and South Krisman Road. No details on the reason for continuance were discussed in the public meeting.