Project Blue - Facts and Information

Project Blue is a proposed data center project. It represents an opportunity for more than $3.6B in economic development for the City of Tucson. Project Blue includes a major reclaimed water infrastructure expansion (valued at more than $100 million) that is funded, designed, and constructed by the Project in partnership with Tucson Water. Project Blue will be water positive and match 100% of all water consumed with additional water replenishment projects. Project Blue models how public-private partnerships can support responsible development of critical digital infrastructure by prioritizing community needs.

This web page has been created to provide information to address many of the critical questions that have been brought forward by members of the Mayor & Council, and the public, about Project Blue. The information contained in the accordions below, the links to the Project Blue Fact Sheet, the City Manager's Executive Summary, and the Draft Development Agreement for Mayor & Council Review,  will, to a large extent, fill the communication void that resulted from this project’s early-stage Non-Disclosure Agreement (NDA) requirements.

While NDAs are a standard practice for economic development projects to protect confidential business information from competitors, they have also constrained fact-sharing to date. Mayor & Council and the public will now have access to much of the desired information about the project, and the process timeline, which will hopefully replace the misinformation and speculation that has been prevalent to date. And, this is the start of the official dialogue about the city’s consideration of Project Blue, with additional public meetings and other avenues for input that will happen before Mayor & Council determine the future of Project Blue, likely in late Fall 2025.

The information on this page will be updated regularly and links to all related documents will continue to be added. I encourage you to check back in often and we welcome questions and comments via email at ProjectBlueInfo@tucsonaz.gov.

• A data center is a specialized facility designed to house computer systems, servers and related hardware that store, process and manage digital information.
  
  
• Data centers support technological advancement, driving economic growth and securing national leadership in innovation. Cloud infrastructure remains the primary application of data centers, and requires proximity to population centers to benefit customers.
  
  
• Data centers are high quality infrastructure assets, generating significant recurring revenue for communities with minimal impacts to local traffic, noise, and air quality relative to other industrial projects.

• Project Blue identified Tucson as a potential location for a data center due to its location near major markets such as Phoenix, Los Angeles and Las Vegas which makes it a prime hub for interconnectivity between major population centers. The region also features low natural disaster risks, strong availability of long-haul transport, and a strong and diversified pool of skilled labor.
  
  
• Project Blue’s Primary Project site, a 290-acre parcel west of Houghton Road and north of Brekke Road (just north of the Pima County Fairgrounds), is located within the Pima County Southeast Employment and Logistics Center (SELC).
  
  
• The Initial Phase of the primary project could be operational as soon as 2027. A secondary project is under exploration within the Tucson City limits and would also utilize the reclaimed water infrastructure. Exact location is still being determined.
  
  
• Feasibility studies are under way for a third site in the metro area, but outside of Tucson city limits. Only the primary and secondary projects are contemplated in the Fact Sheet(PDF, 146KB) and the Draft Development Agreement for Mayor & Council Review(PDF, 2MB) with the City of Tucson.
  
  
• Project Blue is intended to be constructed in phases. Phase 1 entails an estimated $3.6 billion capital investment by the developer, Beale Infrastructure.

Pima County Action Taken to Date

• Pima County, at the June 17 Board of Supervisors meeting, authorized re-zoning the 290-acre parcel to the Southeast Employment & Logistics Center Specific Plan Phase I (the “SELC Specific Plan”). The SELC Specific Plan permits a variety of light industrial business park uses, including data centers.
  
  
• Beale Infrastructure and Pima County have entered into a purchase and sale agreement (“County PSA”) whereby the County agreed on June 17, 2025, to sell the property to the developer to develop a data center campus in conformance with the SELC Specific Plan, contingent upon the City’s annexation of the Property into its jurisdictional limits.

• Project Blue will be “net water positive.” That means the developers of Project Blue will directly invest in projects and/or fund Tucson Water efforts to conserve or secure new water resources to offset their consumptive use, gallon-for-gallon, and more. The draft development agreement (DA) that has been sent to the Mayor and Council for their review, establishes how this is to be achieved.
  
  
• Project Blue will use minor amounts of potable water ongoing for commercial use, just as any other office-type customer – and this water will be offset annually.
  
  
• The Primary Project will use potable water for less than two years for the cooling needs of only the Initial Phase, until the site can be converted to using reclaimed water. This initial use of potable water will be replaced – drop for drop.
  
  
• Project Blue will use reclaimed water for cooling and all industrial uses beyond this initial, short-term use of potable. And, all reclaimed water used will be offset annually.
  
  
•  Even though all reclaimed water used will be offset by the developer, some in the community have questions about how much reclaimed water the city has available for all uses. The City of Tucson’s Reclaimed Water System is sourced by treated effluent from local wastewater reclamation facilities and by remediated groundwater from the Tucson Airport Remediation Project (TARP). From 2026 onward, the city’s total reclaimed water supply is about 32,000 acre-feet per year (AF/YR), including 22,000 AF/YR of treated effluent plus 10,000 AF/YR from TARP. Notably, the city also wheels effluent owned by other entities to their sites through the Reclaimed Water System, which is not derived from the city’s water portfolio.
  
  
• Currently, the Reclaimed Water System delivers approximately 11,000 to 14,000 AF/YR to city customers, using about 40% of the available supply. The remaining supply volume is either recharged at city facilities such as SHARP or discharged to the Santa Cruz River, where the city supports riparian habitat and generates additional groundwater recharge credits. However, the city also loses a significant volume of effluent annually, when it flows out of the region. The city is pursuing projects to capture more of its local effluent supply for beneficial use in the near future.
  
  
• The build-out demand for the two Project Blue sites that would be served by the Reclaimed Water System is about 1,910 AF/YR on average, which is about 6% of the city’s supply for the system. Project Blue would not only build the physical infrastructure necessary to deliver this water to their sites, they will also replace all water used – gallon for gallon. Further, use of reclaimed water for Project Blue will not impact the city’s ability to support current riparian habitat projects, such as the Santa Cruz River Heritage Project.
  
  
• In the simplest terms: Project Blue will not deplete Tucson’s water supplies for the community. No other project in Tucson to date can make such a claim.

• Project Blue is required to fund and build significant water infrastructure to service the project sites – saving Tucson Water rate-payers significant money. Details are outlined in the DA and Fact Sheet found in the Project Documents section of this page.
  
  
• The city will have ongoing mechanisms to hold Project Blue accountable to meet these requirements as follows:
  • Project Blue will pay the standard rates and fees for all water used (reclaimed or potable, as applicable) and failure to pay their water bills will result in their service being canceled. Tucson Water controls the valves and meters that serve all customers, including Project Blue, and will be monitoring usage closely.
    
    

  • In addition, Project Blue will be assessed a “water positivity charge” for every unit of water used. This charge (currently estimated at $750 per acre-foot) will be indexed to the recent costs to conserve, acquire, or otherwise generate one acre-foot of new water to replace every acre-foot of water used by Project Blue. The charge will be indexed to inflation over the term of the agreement. Recent, real-world examples of such efforts include the many projects and programs funded under the Water Conservation Grant Fund (WCGF) administered by the Arizona Water Infrastructure Finance Authority (WIFA).

  • Any “water positivity charge” proceeds received by Tucson Water will be used to meet the requirement for Project Blue to offset the water they will be using.

  •  Project Blue also has the option to directly invest in their own efforts to provide water savings or resources to Tucson Water, which can in turn, reduce their “water positivity charge.” For example, Project Blue could purchase water credits, fund water conservation programs, etc.

  •  As such, Project Blue can offset their water use by providing new water to the community, they can pay the “water positivity charge” to Tucson Water to generate the water, or a combination of both over time. Tucson Water will track compliance with these requirements and Project Blue will be held accountable through the monthly billing process – failure to comply would result in shutting off water service.

  •  Finally, the DA includes water allocations for each project site, which cap the amount of water that Project Blue can use (even though they will offset all usage). Under qualifying conditions, Project Blue would pay a premium cost for water used above their allocation, pay “Liquidated Damages” that would be assessed for continued high water use – and still be required to offset any excess water use.

• Project Blue was drawn to Tucson by Southern Arizona’s unique access to clean energy generation resources – such as solar, wind, and energy storage – coupled with the region’s existing electric grid infrastructure.
  
  

• Project Blue is supportive of TEP’s 2050 Net Zero Emissions goal and planned coal retirements, as well as the City of Tucson’s Climate Action and Adaptation Plan. As one of TEP’s largest future customers and a major catalyst for regional energy transformation, Project Blue will advocate for aggressive renewable deployment while maintaining affordable rates and reliable service.

• The Initial Phase of Project Blue will be supplied under a long-term electric utility agreement with TEP and supported by local clean energy generation and storage resources, subject to ongoing discussions. These resources are already operating or under advanced development because of TEP’s all-source request for proposal (ASRFP) procurements conducted between 2022 and 2024, which successfully identified a large pipeline of new solar, wind and energy storage resources.

Energy Infrastructure & Service

• Project Blue will help reduce TEP’s cost of service by diluting TEP’s fixed costs over a larger volume of electricity sold.
  
  
• Project Blue will fund all grid upgrades completed for its direct benefit, ensuring that these costs are not paid by other customers. The rates paid by Project Blue will cover all of TEP’s associated costs of service.
  
  
• Project Blue will support economic growth while improving local and overall electric system reliability. TEP has conducted rigorous studies of its system and the overall electric grid will benefit from the addition of Project Blue’s electricity use.

Energy Capacity

• The capacity values shown above are estimates of potential power capacity that may be required to support future Project Blue developments.

• Power capacity is one of several enablers to a successful project. Capacity is typically secured through a power contract with a local utility, separate from land, development, and other agreements. Project Blue anticipates contracting for capacity with TEP when needed.

• Data centers generate substantial and reliable property tax revenue for local governments while requiring minimal local government services and have little impact on traffic congestion in surrounding neighborhoods. This local tax revenue from data centers would otherwise need to be supplied by other revenue streams, such as increases in residential property taxes.
  
  
• The Chamber of Southern Arizona, in collaboration with Pima County and the City of Tucson, retained Applied Economics, an independent 3rd party consultant, to perform an Economic Impact Study (EIS) which calculated the following potential direct economic benefits for the Initial Phase of the Primary Project:
  • $3.6 billion total capital investment planned over the multi-year construction period.
  • $250 million in total tax revenues, with $97 million to the City of Tucson, $60 million to Pima County, and $93 million to the State of Arizona over a 10-year period.
  • 180 new full-time, permanent jobs created by the third year of operations in 2029. These positions are on-site and include engineers, technicians, operations, and security, with an average salary of $64,000 per year.
  • 3,000 direct construction jobs created during the multi-year construction period anticipated to take place between 2025 - 2028 that will require skilled union and trade labor that is intended to be sourced locally in Tucson.

• The Primary and Secondary Projects of Project Blue, if fully built, are projected to create over four times the number of full-time permanent jobs as those estimated for the Initial Phase. The number of construction jobs and the economic impact would also exceed those generated by the Initial Phase by more than threefold. This is an unprecedented investment in the city of Tucson, and an economic development opportunity that will bolster city and county budgets without an increase in taxes on residents.
  
  
• Project Blue is located in the Vail School District - one of the fastest growing districts in Arizona and the only growing district in Pima County. Alongside direct tax revenue allocations, Project Blue will unlock a much needed increase in bonding capacity for all Districts in Pima County - creating new potential for capital improvements and long-term investment in local education.
  
  
• Sources of tax revenue include, but are not limited to, construction sales tax, real estate property taxes, personal property taxes and transaction privilege taxes on lease rental income. Data centers also upgrade capital equipment over time, generating further substantial tax revenue for local governments.

• Project Blue will generate a significant number of new local construction and permanent jobs, creating opportunities for skilled Tucsonan workers to find employment close to home, rather than having to travel or commute long distances.
  
  
• Project Blue is committed to building meaningful relationships with the local Tucson community and will partner with local experts to identify and deliver programs that meet unique local needs, such as:
  • Apprenticeships & Internships
  • STEM Education Classes
  • Skills Certifications
  • Educator Workshops
• These programs benefit Project Blue by upskilling people who can work on the project while also providing valuable professional skills that participants can use throughout their career.

• Project Blue will incorporate many sustainable design features of interest to the community.
  • Tree Planting: The project will meet and exceed tree planting requirements for the Native Plant Preservation Ordinance (NPPO). Where feasible, the project will cooperate with the City in implementing components of the Tucson’s Million Trees Program.
    
    
  • Public Green Space: The planned aquifer recharge facility will include a public recreation area with native landscaping, ramadas, and walking trails similar to SHARP.
    
    
  • Native Vegetation: The site plan includes native plant mitigation to enhance flood control.
    
    
  • Rainwater Harvesting: The project will meet the City’s Rainwater Harvesting ordinance and the County’s requirements for “first flush.”
    
    
  • EV Charging: Project Blue’s design voluntarily includes EV charging stations for employees onsite.
    
    
  • Solar: Project Blue will evaluate an installation of solar panels above the parking areas on-site.
    
    
  • Open Space Preservation: The Project is preserving current open space and complying with local ordinances related to flood control.

• July 23 - A public meeting has been scheduled at the request of Ward 4 Councilmember Nikki Lee, Wednesday, July 23, 5 – 7 p.m. at Mica Mountain High School.

• July 31 - A second public meeting is being scheduled at the request of Mayor Regina Romero, tentatively to be held Thursday, July 31, at a time and location to be finalized.
  
  
• Aug. 6 - Mayor and Council Study Session discussion about Project Blue, economic analysis and proposed DA.
  
  
• Aug. 19 - Mayor and Council Public Hearing for consideration of Development Agreement and Brekke and Harrison Annexation(Project Blue Site Location).
  
  
• October 7 - Mayor and Council Regular Meeting item - Brekke and Harrison Annexation (Project Blue Site Location) Final Consideration.
  
  
• November 18 - Mayor and Council Regular Meeting item - Brekke and Harrison (Project Blue Site Location) Original City Zoning Final Consideration.

When corporations are competitively seeking sites to expand or relocate, the process to evaluate the sites and negotiate with all the appropriate local governments, utilities, and other regulatory authorities can take many months. Corporations seek to keep information about the company at a minimum for a number of reasons. If a relocation, it could affect many of the company’s employees and create anxiety about moving even though the relocation may not occur. If an expansion, most corporations exist in a highly competitive market and almost always do not wish to alert their competitors to their plans until they have the approvals they need to proceed. Additionally, it is part of managing expectations, in that they also often do not want to get communities that may be under consideration unduly excited about the expansion or relocation due to their complex nature. Lastly, many different pieces of information are considered proprietary by these companies. This information is usually included in all stages of negotiations, and therefore, they need to maintain a level of confidentiality that protect proprietary and sensitive information.

For local governments wanting to be competitive in the site selection market, NDAs are a necessity because without them, governments would not be able to engage in preliminary discussions with business attraction and expansion prospects and would not be able to participate in all stages of negotiation without the ability to protect sensitive information of the company. Without NDAs, employment prospects may pass over communities for the above stated reasons. Many other governments throughout the country have the ability to enter into NDAs, and do so. 

Governments also have a duty to be transparent and open with the public and provide as much information as possible so that elected officials and decision makers can make informed decisions and good evaluations.

This City of Tucson page, and Pima County's Project Blue page, provide all of the available information for public review.

Be sure to click on the links in the Project Documents section to find and review all available documents.