Huge data center complex near Tucson endorsed by Pima County administrator

Pima County’s administrator recommends approval of a proposed multi-billion-dollar data center complex on the far southeast side that will eventually become one of the largest electricity users in the entire Tucson Electric Power system.

County Administrator Jan Lesher has for the first time identified the site developer and prospective land purchaser for the now county-owned, 290-acre data center site near the county fairgrounds.

The prospective land purchaser is Humphrey’s Peak Properties, LLC, of San Francisco, and the developer is Beale Infrastructure, a company developing other data centers nationally, a new memo from Lesher says.

Lesher’s memo asks the Board of Supervisors to require that the complex employ at least 75 employees at an average annual salary of $75,000. That’s more than the $64,000 annual salary that the data center company has said it will pay on average to its long-term workforce of 180.

The developer will spend $1.2 billion to build the complex and invest $2.4 billion in new equipment at the site during its first three years of operations, a fact sheet accompanying Lesher’s memo says, citing an economic impact analysis of the project done by the Chamber of Southern Arizona. The first buildings would be open in 2027. The complex could eventually expand to as many as 10 buildings.

When three phases of construction of the project are finished, it will occupy 2.5 million square feet of building space, the fact sheet says.

The developer is committed to replenishing “all consumptive water losses” that the data center generates through its water use. It will pay to create a 30-acre aquifer recharge project in the area and has committed that its water projects will save more water than its industrial processes consume, Lesher’s memo says.

The data center complex, known as Project Blue, also has a long-term power agreement with Tucson Electric Power to “protect existing rate payers, promote overall system reliability, and help create a cleaner energy portfolio,” Lesher wrote. Over time, Project Blue will become one of the utility’s largest customers, the fact sheet says.

Lesher’s memo provides some but not all the details about the project that have been requested by county supervisors and some residents.

It gives no details, for instance, on how the project would recoup its future water uses to achieve its goal of being “water positive.” It doesn’t explain how the project would protect existing TEP ratepayers. It doesn’t say how big the reclaimed water line to be built to the data center site would be or how the site could meet a commitment not to take reclaimed water away from any existing uses including water recharged daily into the Santa Cruz River.

Pima County officials, citing a non-disclosure agreement they made with Project Blue developers, have declined to release specifics on the project’s water or energy use.

On Tuesday, June 17, the county Board of Supervisors will consider a proposed $20.8 million land sale for the project and a specific plan and comprehensive plan amendment that would put through the zoning changes needed for the data center project to be built.

Lesher’s memo recommends board approval of those actions, based on “significant economic benefits” the project is predicted to generate. She also cites what she calls “a committed comprehensive approach by the project to sustainably mitigate resource consumption.”

“Data centers are the physical backbone of the internet,” Lesher’s memo says. “They drive our modern economy and have become essential to our daily lives. Data centers support all of Tucson’s major industries, enabling both day-to-day operations and long-term innovation in aerospace & defense, bioscience & health care, advanced manufacturing & mining operations, financial services, education & research, tourism and all levels of government.”

Her memo doesn’t say, however, what kinds of industries would be served by the new data centers, or that much of the recent, explosive growth in data centers has been to serve the burgeoning artificial intelligence industry.

The developer, Beale Infrastructure, says on its website that it “partners with the world’s leading technology companies to develop data centers and infrastructure that supports national economic growth.” The company says it is “developing new data centers and infrastructure throughout North America.”

The website cited no specific projects, however. The Tulsa, Oklahoma, Metropolitan Area Planning Commission last week gave its blessings to a rezoning for a 500-acre data center proposed by Beale Infrastructure.

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The Pima County fact sheet describes Beale as “a data center and infrastructure development company featuring a diverse and developing portfolio of projects and a focus on responsible development including community engagement and investment, sustainable power and water resource alignment, and design and construction safety.

“Beale is active in North America, with a team of 20+ industry professionals and a fully capitalized investment fund through their parent company, Blue Owl,” it says.

Blue Owl is a major national player in data center investing, reports Data Center Frontier, an online site that covers the data center industry nationally. Headquartered in New York City, it describes itself as an investment management asset company.

An estimated 3,024 construction jobs and 2,049 additional “indirect jobs” could be created during Project Blue’s expected construction period of 2026-2028, Lesher’s fact sheet says.

Once the complex is complete, the company could generate an annual economic impact of of $63.5 million by 2029, or $507 million total over the next 10 years, according to the economic impact analysis.

The company could support an estimated 136 indirect and induced jobs and $7.3 million in annual labor income at other local businesses in Tucson at full employment levels, the analysis says.

Specifically on water, a fact sheet released this week by Pima County says Project Blue will ultimately use “100% renewable water, primarily reclaimed water, for its industrial purposes.” The memo doesn’t say, however, how long it will be before reclaimed water is used at the site.

Project Blue developers have pledged to build an 18-mile-long pipeline to carry water to their site from county and city sewage treatment facilities on the northwest side. This pipeline will “significantly increase city-wide access to reclaimed water, providing the opportunity to reduce overall potable demand,” the county fact sheet says.

The pipeline will be “over-sized” in capacity, allowing Tucson Water to “facilitate sustainable growth in southeast Tucson and convert existing potable water customers to non-potable supplies.”

The developers will also pay to build a new 30-acre aquifer recharge facility “that will improve system-wide supply,” the fact sheet says.

It didn’t say what the reclaimed line’s capacity is and how the recharge facility will improve area water supplies.

Project Blue, in partnership with Tucson Water, “will provide direct investment into local water projects that have a measurable, net positive impact on water availability, quality, and accessibility within the region.”

“The total volume of water projects funded by Project Blue will meet or exceed the consumptive water usage,” says the fact sheet, which again provides no statistics detailing the savings gained by the water projects.

“The reclaimed water supply for this project has been allocated for development projects like Project Blue and will not adversely affect other existing reclaimed water customers and uses, including the water currently supplying the Santa Cruz River Heritage Project,” which recharges reclaimed water into the river on Tucson’s south side to improve wildlife habitat there, the fact sheet says.

On energy issues, the fact sheet says Project Blue developers were drawn to Tucson “by Southern Arizona’s excellent solar resource and a utility that is embracing the clean energy transition in a cost-effective way that maintains reliability.

“Tucson Electric Power’s (TEP) approach to growing its energy independence by harvesting regional solar and wind resources in tandem with flexible energy storage facilities underpins its ambitious carbon reduction targets and supports long-term rate stability. These attributes make TEP an ideal partner for Project Blue,” the fact sheet says.

Project Blue’s long-term power agreement with TEP “will be structured to protect existing ratepayers and the project will help support electric affordability for TEP customers,” it says, without explaining how that will happen.

Project Blue will finance electric grid upgrades that will benefit other customers and support economic growth without impacting local reliability, the fact sheet says, again without offering specifics.