The Pima County Board of Supervisors meets at the County Administration Building in downtown Tucson.
In a 3-2 vote, the Pima County Board of Supervisors approved a Purchase-Sale Agreement for Project Blue, a data center project that will be located north of the county fairgrounds during Tuesday’s meeting.
The 290.31-acre site will be built at the Southeast Employment and Logistics Center on South Houghton– a site that was appraised at $20.8 million.
The county will be receiving an earnest payment of $500,000 per the agreement.
There will be 2.25 million square feet of building space upon completion, which is estimated to be in 2029, however the San-Francisco based project developer, Beale Infrastructure is optimistic that one of the four planned buildings could be operational by 2027.
Keri Silvyn, an attorney representing Beale said that the total investment represents an “unprecedented” total capital investment of $3.6 billion.
“This includes $1.2 billion in construction and $2.4 [billion] in equipment over a three year time period,” Silvyn said.
The project is also estimated to generate $250 million in total tax revenues, allocating $97 million to the City of Tucson, $60 million to Pima County and $93 million to the state over a 10-year period.
Rex Scott, supervisor and chairman of the board called the decision “auspicious” in a press release following the decision.
“It will be a major boost to our economy and sets the stage for future projects of a similar nature coming into our region,” Scott said.
Project Blue touts the creation of 180 full-time jobs by the third year of operations, including engineers, technicians, operations and security promising an average salary of $64,000 annually.
However, Heath Vescovi-Chiordi, director of the economic development for the county said that under the PSA, the company must employ at least 75 full-time employees with the average salary of $75,000 annually and that all employees must be located onsite.
“There would be a two-year reporting period bi-annually via employment certificates which is a similar mechanism that we’ve used across similar types of agreements for economic development,” Vescovi-Chiordi said.
Failure to meet those requirements, Beale Infrastructure will be required to pay the county $12,500 in damages per position, that wouldn’t exceed $250,000 per report or $1 million over the course of the two-year reporting period.
At the start of the meeting, Chair Scott stated that 43 speakers were signed up to speak for the public meeting, many of them split between concerns related to water usage or welcoming the economic opportunity for the local workforce.
Tomás Díaz de la Rubia, senior vice president for research and partnerships at the University of Arizona said, “Not only because of the jobs that it will entail for our graduates, for our Wildcats, but also because the project aligns with the university leadership’s vision for the future.”
Jeffrey Nase, Chancellor of Pima Community College said, “Projects like Project Blue that bring investment, infrastructure and job creation to our community when approached with care and focus for long-term impact can open up doors for the very students that we serve at Pima.”
Conrad Carrasco with the Carpenters Union also expressed support for the project stating, “Our apprenticeship program trains the next generation of skilled workers and Project Blue gives them the opportunity to build their future here in Tucson.”
Those in opposition to the project like Jacob Davis said that although he understood the economic appeal, he didn’t believe that the project aligned with Tucson’s conservation practices.
“The focus just clearly isn’t on community, but rather on profit. Words like ‘water positive’ I believe is a Trojan horse,” Davis said.
J.J. Lamb with the Vail Preservation Society said, “Transportation infrastructure in the southeast has not kept up with planned growth, critical deficiencies exist. Traffic backs up onto I10, there are safety issues and quite frankly RTA Next projects projected over the next 20 years as stated now will not meet the current critical needs, much less the needs of Project Blue and SELC.”
Shea Lambert, a local resident who works in tech said the promise of permanent jobs is a myth while also expressing concerns for water.
“The most concrete thing we’ve heard from Tucson Water is that they’ll have to pay a fine if they’re using too much water– this happens all the time. They’re going to pay the fine and they’re going to use the water and we’re going to be in a situation where we don’t have the water we need,” Lambert said.
He added that over time, it becomes easier for data centers to automate with less manpower due to AI and automation.
Stephanie Gershon, a local resident who lives in Hedrick Acres expressed her opposition after experiencing a brownout.
“When I hear that this data center will become one of TEP’s largest electricity users, I’m worried. I don’t see how we can justify putting that kind of pressure on our grid especially when we haven’t seen concrete plans or guarantees that it won’t lead to more outages for the rest of us,” Gershon said.
During the presentation, Silvyn said that project developers have been working closely with Tucson Electric Power to develop a long-term power supply partnership that’s structured in three ways; first protecting or benefiting existing ratepayers or residents, promoting system-wide reliability and contributing to the growth of TEP’s renewable generation portfolio.
The campus is slated to become one of the utility’s largest customers over time, but will not get economic incentives in their rates.
Silvyn noted that all power agreements will have to go through the Arizona Corporation Commission, the state’s regulatory authority for utilities.
“The way our rate structure is set up is that those large industrial customers typically pay more than residential, that’s been a long standing policy with the Arizona Corporation Commission to ensure that we’re finding ways to keep residential rates as reasonable as possible,” said Erik Bakken, senior vice president and CEO of TEP.
District 3 Supervisor Jen Allen asked Bakken what the estimated rate would be, but he was unable to provide a number at that time.
The project will fund new electrical infrastructure including a new substation as well as an 18-mile purple pipeline and 30-acre aquifer recharge facility, promising to only use reclaimed water and replace all consumptive losses.
Sylan said the pipeline is oversized and will provide an opportunity for nearby customers using potable water to opt for reclaimed water.
“One example of an existing user along this route that could transition to non-potable water is the Los Reales Landfill, which is estimated to use up to 100 million gallons per year of potable water right now,” Silvyn said.
Tucson Water is figuring out how to levy financial penalties if the project exceeds water usage within the development agreement, said Scott Schladweiler, deputy director of Tucson Water.
“There will also be some additional stipulations included in there that will not allow further development throughout the phasing that we saw on the site, until the reclaimed and renewable infrastructure is complete and built out to the site,” Schladweiler said.
Supervisor Allen voiced concerns about water consumption despite promises to use reclaimed water.
“We only have it if we have potable water. The two are interconnected and given our drought, given the limits on CAP, it’s in our groundwater, right? It is useful but I’m just concerned about the limitations that we have on the potable water, which creates the flow, then of reclaimed water,” Allen said.
It is unclear how much water the 4-building campus will use, but promises were made to build an 18-mile pipeline and fund an expansion of Tucson Water’s reclaimed water system.
Towards the end of the hearing and ahead of the roll-call vote, Supervisor Scott said that despite environmental concerns, especially related to water usage, the economic boost to the county could be transformative.
“Plans and promises have been made that if they are fulfilled, could make this project a model for how to balance economic development and environmental protection,” Scott said.
The project will now head to the City of Tucson for consideration.
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