ZONING: Tucson, AZ ends USD 3.6bn AWS-linked Project Blue, plans new regulations
- Vote means Beale won’t make USD 100m investment to expand city’s reclaimed water system
- City staff to develop regulations for future data center proposals
Tucson City Council of Arizona Aug. 6 voted to discontinue consideration of a USD 3.6bn Amazon Web Services (AWS)-linked data center project and to establish a regulatory framework for future data center development within the city.
Plans for Project Blue, proposed by developer Beale Infrastructure, include the construction of up to 10 data center buildings, totaling 2,200,000 square feet, on a 290-acre parcel west of Houghton Road and north of Brekke Road, according to county filings.
AWS was identified as the project’s intended end user in a 2023 Pima County document obtained by the Arizona Luminaria.
An AWS spokesperson sent a statement to NPM stating that the company “does not have any commitments or agreements in place to develop this project” and will “continue to assess all potential geographic regions to ensure our data center developments provide the best possible product and value for our customers, while bringing positive benefits to the local communities where we operate.”
Beale Infrastructure is a portfolio company of Blue Owl Capital.
At full buildout, the campus was expected to require between 400 and 600 MW of power fromTucson Electric Power, with a secondary site potentially raising demand to 1.3 GW.
During the Aug. 6 meeting, City of Tucson City Manager Tim Thomure said council instructed him to “immediately cease all work on Project Blue and take all actions necessary to not pursue Project Blue nor bring it back for any annexation consideration.”
“Project Blue is dead,” he said.
The decision follows public concern over water use, environmental impacts and a lack of transparency.
According to a copy of the motion read at the meeting, Council won’t “consider or approve Project Blue as it has been proposed” and canceled the annexation public hearing and removed the development agreement relating to Project Blue from the Aug. 19 agenda.
Brendan Gallagher, Beale senior vice president of development, said in a press release that Beale is disappointed by the decision “not to pursue this opportunity for Tucson.”
“We partnered closely with municipal engineering teams and Tucson Water to develop plans directly compatible with Tucson’s Climate Action and Adaptation and One Water plans. … This project potentially represents tens of millions of dollars in tax revenue, hundreds of millions of dollars in infrastructure to serve the community, and thousands of high-paying local and union jobs,” he said.
Projected economic benefits included:
- An estimated USD 250m in total tax revenues, with USD 97m to the City of Tucson, USD 60m to Pima County and USD 93m to the State of Arizona over a 10-year period
- The creation of 180 full-time jobs by the third year of operations in 2029 – when the full buildout is estimated to reach completion
- A USD 100m investment to expand Tucson Waterʼs reclaimed water system – water needs were estimated to be 0.78 million gallons per day (MGD)
According to the release, Beale will continue working with Tucson on data center development standards, as well as evaluating partnerships, clean energy and digital infrastructure investment opportunities.
Tucson City Councilwoman Nikki Lee also issued a news release Aug. 5 stating Beale has backup site options within the larger Tucson metropolitan area.
A vote from Tucson terminating the project “removes us from the process entirely and places that responsibility elsewhere,” she said.
Despite the City of Tucson’s termination, Pima County gave its approval of Project Blue in June, advancing a comprehensive plan amendment and rezoning and was under contract for a USD 21m land purchase by Beale, contingent on annexation into the City of Tucson.
The future of that land sale is uncertain, as the current iteration of Project Blue plans are no longer advancing following the city’s decision.
As part of developing a regulatory framework regarding data centers, council has instructed staff to draft an ordinance regulating large quantity water users, to be considered Aug. 19, and to prepare amendments to the Unified Development Code defining data centers and setting development regulations, informed by policies in Phoenix, Chandler, Mesa and Tempe.
*This story was originally published exclusively for NPM US subscribers.
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