NAU expert tells Flagstaff commission data centers are industrial water users; recommends three-tier allocation policy

NAU professor Ben Ruddle told the Flagstaff Water Commission that data centers are "just another type of industrial water use" and urged the city to adopt a clear, tiered policy for large water users to provide speed and guardrails for economic development. He said the choice confronting Flagstaff is not whether to accept industrial development but how to do so without socializing costs while privatizing benefits.

Ruddle laid out a three-tier structure he has advised elsewhere: tier one grants a modest, pre-approved allocation tied to zoning and standard rates; tier two is a discretionary pot of extra water reserved for projects that deliver exceptional community value and would be approved through city council review; tier three requires full cost recovery and effectively asks large users to ‘‘bring their own water’’ or pay today’s full price for new supply and infrastructure. "If you want more water than your allocation, you either pay full freight or you make the case to the council," he said.

Ruddle emphasized benchmarking as a decision tool. He presented 'water value intensity' measures—dollars of revenue per cubic meter—and argued these metrics help compare industries and sites so officials can prioritize developments that produce higher community value per gallon. He pointed to Phoenix-area benchmarks and Flagstaff-specific benchmarking work using city-provided, sanitized data to show how different neighborhoods and industries compare on gallons-per-acre-per-day and value produced.

Commissioners pressed on implementation details. Members raised concerns that a tier-three "bring your own water" approach could allow competitors to drill wells just outside city limits and capture benefits without contributing to Flagstaff's tax base; Ruddle suggested the city itself acquire and supply such water under tier three terms to control sustainability and legal exposure. He also warned that if the city sets tier-three costs too high, developers might locate outside city limits.

On job impacts and revenue, Ruddle noted modern data centers generate much revenue but relatively few long-term payroll positions: "other than the construction jobs ... there's really not many employees." He said data centers can compare favorably on value-intensity but are weak in payroll creation, so councils must weigh which value measures (property tax, sales tax, jobs quality) matter most locally.

Ruddle discussed reclaimed water in benchmarking: his method treated reclaimed water as already-counted reuse and therefore did not include it in raw-use denominators; commissioners noted Flagstaff's reclaimed supply makes up a meaningful portion of the portfolio and requested staff factor that accounting into local benchmarks.

He closed by asking the commission to create policies that produce clarity and speed for desirable projects while keeping guardrails for projects that impose community costs. Staff and commissioners said they would follow up with more benchmarking work and drafts to bring back to the commission.