New Billion-Dollar Deal with Data Center Provider Closer to Fruition

The Pima County Board of Supervisors voted 3-2 Jun. 17 to approve a Purchase-Sale Agreement with Beale Infrastructure to build a technology campus intended to help meet the massive demand for digital infrastructure in the United States. The total investment by the company is estimated at more than $3.6 billion.

The proposed campus will be located at the county’s Southeast Employment and Logistics Center on south Houghton Road near the Fairgrounds It will have up to 2.25 million square feet of building space when completed, which is expected to be in 2029. The first building could be operational in 2027. The project will next go to the City of Tucson for consideration. The city is expected to annex the site to provide water service. The project has been referred to in government documents as “Project Blue”.

“Today’s approval of Project Blue was an auspicious decision by the Board of Supervisors. It will be a major boost to our economy and sets the stage for future projects of a similar nature coming into our region. Construction alone will inject $1.2 billion into our area over the next three years. We will see the creation of thousands of short-term jobs and hundreds of high-wage, long-term jobs,” said Board Chair Rex Scott. “Beale Infrastructure has been an accommodating partner who understands our community’s determination to safeguard our precious water resources. Project Blue strikes the proper balance between economic growth and the strong environmental stewardship Pima County is known for.”

Pima County led a regional effort to secure the agreement alongside the City of Tucson, Tucson Water, Tucson Electric Power, and the Arizona Commerce Authority and The Chamber of Southern Arizona, among others.

The 290-acre project will be built at the Logistics Center just north of the Fairgrounds. The agreement includes the developer agreeing to pay a market-appraised value of $20.8 million for the land, as well as to employ at least 75 full-time employees operating onsite at an average salary of $75,000. Total full-time employment for the site including full-time contractors is expected to be about 180. 

The agreement includes “clawback” and other remedy provisions, which allow the county to buy back the land for nonperformance, and/or enforce monetary penalties on the developer for failing to meet employment requirements. Other infrastructure improvements include expansion of reclaimed water lines and other infrastructure necessary to serve the project.

“The infrastructure upgrades associated with the project will benefit the entire South Houghton Road corridor south of Interstate 10 and make the remainder of the SELC more attractive to other employers,” Pima County Economic Development Director Heath Vescovi-Chiordi told the board Tuesday during the project discussion.

“Today’s decision reflects the policy priorities of the county. This project is a one-of-a-kind opportunity that will create hundreds of jobs, infuse our region with capital investment, make our economy more resilient, and invest in critical infrastructure that facilitates additional economic development opportunities while protecting natural resources,” Vescovi-Chiordi said.

Project Economic Highlights:

• Total investment estimated to be $3.6 billion consisting of $1.2 billion for construction and another $2.4 billion for equipment;
• 3,000 or more direct construction jobs and more than 2,000 additional indirect jobs forecasted during construction;
• Estimated 180 permanent full-time jobs at build-out with average salaries of $64,000;
• Annual economic impact at completion estimated at $63.5 million;
• An estimated $250 million in tax revenues and fees among Pima County, Tucson, and other local governments over the first 10 years of the project.

“Today’s vote was a critical first step. With significant capital investment and tax revenues to both Pima County and the City of Tucson, this $3.6 billion project would be the single largest economic development project in Southern Arizona’s history,” said Joe Snell, president and CEO, The Chamber of Southern Arizona. “In addition, the substantial infrastructure investment by the developer in energy and reclaimed water infrastructure improvements benefit each and every citizen here in the region. This project is a win-win for everyone.”

Pima County Administrator Jan Lesher Tuesday and in a Jun. 10 memorandum to the board assured that the agreement addresses the county’s priorities to protect water, environmental, and cultural resources, and is in line with the county’s and Tucson’s climate action plans.

Lesher told the board in her memo:

• Project Blue carefully selected a site already designated for industrial growth, near existing infrastructure required for the project, and not directly adjacent to residential areas or other sensitive receptors. Additionally, no protected species were identified onsite, and cultural resource studies have been completed.
• The company was 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. The developer’s long term power agreement with TEP will benefit existing customers, protect existing rate payers, promote overall system reliability, and contribute to a cleaner energy portfolio.
• Project Blue’s developer is committed to water stewardship throughout development, including using 100 percent reclaimed water in industrial systems, onsite water efficiency, and a commitment to replenish 100 percent of consumptive water losses in partnership with Tucson Water.

“TEP will be serving the project with an expanding energy portfolio that will include new solar and energy storage systems that support progress toward the sustainability goals of both Pima County and the City of Tucson,” said Susan Gray, chair of The Chamber of Southern Arizona and president & CEO, Tucson Electric Power. “The company’s operations will support affordability for all TEP customers while helping us maintain top-tier reliability throughout our region.”

Beale Infrastructure will not be the operator of the data center, Deputy County Administrator Carmine DeBonis Jr., said. The operator will be announced in the future.