Council approves property-specific Prop 207 waivers and conditions tied to potential data-center development

The Casa Grande City Council voted to approve Resolution 5960, authorizing binding, property-specific waivers under Arizona's Private Property Rights Protection Act (Prop 207) that would resolve pending claims tied to the city's change in how data centers are regulated. The waivers apply only to the specific parcels identified in the claim and include operational restrictions the city and property owners agreed to during negotiations.

Staff member Larry (city staff) told the council the waivers are designed to reduce the city's litigation exposure while preserving the city's broader zoning approach for future data-center proposals. "This approach substantially reduces the uncertainty, the litigation costs, and potential financial exposure associated with the Proposition 207 claim while allowing the city to secure enforceable development and operational environmental standards to protect the community," Larry said.

Key conditions attached to the waivers include requirements that owners: submit a cooling-technology disclosure and an estimated water demand before building permits are issued; prohibit once-through cooling; and limit aggregate potable-water demand for the project to 800 acre-feet per year. Staff noted those caps were intentionally set below the current estimated agricultural irrigation on the parcels. The owners also must submit power-generation disclosures and documentation of relevant federal and state environmental permits before any on-site generation is installed.

Fred Schneider, president of Arizona Water Company, told the council that new large developments typically fund their own infrastructure and pay standard commercial tariffs. "Development pays for development," Schneider said, explaining the company would expect a developer to fund wells or mains needed to serve the project so existing customers would not shoulder those costs.

APS representatives said data centers are high-load-factor customers and described a queue and interconnection process designed to preserve grid reliability; the company has rate mechanisms that allocate growth costs to large high-load customers. Richard Rosales of APS told the council the utility is managing supply and has measures in place to reduce cost shifts to residential customers.

The waivers also require an acoustical noise study and establish operational noise standards (60 dBA daytime, 55 dBA nighttime), limit generator testing windows, require post-construction noise verification, mandate decommissioning steps if a facility ceases operations for 24 months, and include an annual water-use reporting requirement that will be made public. As a community benefit, the property owners agreed to a voluntary $5 million contribution for recreational facilities payable in two $2.5 million installments tied to the first two phases' certificates of occupancy.

Representing the applicants, counsel Jason Morris said the negotiated document addresses the industry impacts the city and community raised and provides enforceable measures. "What we've put in front of you is a document that addresses what's occurred in this industry," Morris said. Former Supreme Court Justice Andy Gould, also on the applicants' team, described Prop 207's legal framework and said granted waivers are a recognized alternative to expensive litigation.

Opponents at the podium warned about groundwater, environmental effects and community character. Tyler Stein of Rural Arizona Engagement said the cap of 800 net acre-feet per year could still represent large net withdrawals and urged the council to consider long-term aquifer impacts. "Before you move forward with approving this waiver, consider the future and how you would explain to your constituents why you allowed the data center to exist as municipal wells go dry," Stein said.

After extended discussion, the council moved to approve Resolution 5960. The clerk conducted a roll-call vote and the motion carried. The approval grants property-specific waivers while preserving the city's conditional-use-permit approach for future data-center proposals that are not the subject of these waivers.