Beal presents Project Blue in Tucson; developers and utilities pledge 'water positivity' while residents press risks

TUCSON — Beal Infrastructure and city and utility officials laid out plans for "Project Blue," a proposed multi‑phase data center campus near Interstate 10 and Houghton at a public forum on July 23, while residents and local groups pressed officials on water use, financial risk and public‑safety impacts.

"We will replenish over 100% of consumptive use," Beal representative said during the presentation, describing a package of measures the company and Tucson Water said would make the project "net water positive." Beal said it will finance an 18‑mile reclaimed water pipeline and a 30‑acre aquifer recharge and recreation area that the company would construct and gift to the city for ongoing operation.

The developer told attendees the initial phase would include roughly four buildings, an estimated $3.6 billion in first‑phase investment (the presentation listed about $1.2 billion for construction and $2.4 billion for equipment), and an estimated $250 million in tax revenue overall, with about $97 million to the City of Tucson during the first 10 years.

Tucson Water deputy director Scott Schladweiler said the reclaimed‑water system currently delivers credits of about 20,000–22,000 acre‑feet per year and serves roughly 1,000 reclaimed customers. "Our customers take about 11,000 to 14,000 acre‑feet a year," he said, and the city stores both Colorado River and reclaimed water in managed recharge facilities. He described the proposed pipeline as connecting near Mission Manor Park to an expanded recharge facility operated and permitted like existing facilities; only water stored at that facility, he said, would be recoverable to meet demand.

Schladweiler and Beal officials acknowledged the pipeline would take approximately two years to build and that potable water would be used during that interim period. Tucson Water described two options to achieve "water positivity": a contractual charge that Tucson Water would collect and direct to replenishment projects, or developer‑funded replenishment projects that Tucson Water would review.

Tucson Electric Power (TEP) representatives said the initial phase — roughly 300 megawatts of load, the presenters said — can be served by existing resources and recent renewable procurements. Ryan Anderson, manager of business development for TEP, said contracts and future resource decisions will be vetted by the Arizona Corporation Commission.

During a two‑hour forum that shifted into extended public comment, residents and local organizations voiced skepticism. "Reclaimed water is our future drinking water," said Tom Tarter, a member of the public. Watershed Management Group speaker Melanie Cooley said Beal’s water‑positivity accounting relied too heavily on "paper water" and did not account for construction‑period potable use or water used to generate the energy for the project.

Community speakers also raised questions about corporate structure, financial guarantees and who would bear the cost if construction stopped. One commenter asked whether the development agreement required a bond or letter of credit to protect Tucson Water and TEP customers; presenters said contract terms and financial protections are part of the development agreement and that the mayor and council and the Arizona Corporation Commission will review related utility contracts.

Beal and utility representatives stressed that the development agreement and related contracts will be subject to public review and elected oversight. "The mayor and council need to have all business risk information in front of them before they would be asked to make a decision," a city moderator said. City staff announced the item will appear at a mayor and council study session on Aug. 6, providing the first formal opportunity for elected members to discuss the development agreement.

Speakers requested additional independent review. The city said it has an offer from the University of Arizona to review the water‑positivity analysis and that independent expertise will be part of materials provided to the mayor and council.

No formal action was taken at the forum. Staff said presentation materials, agreements and answers to outstanding questions will be posted on the project's public webpage and invited submitted questions to projectfluinfo@tucsonaz.gov.

The Aug. 6 study session will be the first formal review by the mayor and council, and any council deliberation or direction would follow public notice and agenda rules.