Casa Grande is about to have its first official test of city's new data center permitting rules

Casa Grande leaders created new rules for data center development last year amid concerns the facilities could be built in industrial areas without a formal hearing.

Data centers are now considered a conditional industrial use under the city’s zoning code, which requires a hearing and final approval from the city’s planning and zoning commission, but not its mayor and council.

Two land owners promptly sued the city over the new requirements, claiming $140 million in damages from lost property values related to a data center project that was close to submitting plans to build.

The city agreed to waive that project’s need to complete a conditional use permit outlining the site’s water, energy and noise conditions, to avoid the settlement expense. But all other data centers will now need to submit these details.

Casa Grande received its first data center application under the new rules, and Thursday’s meeting will be the first test of its new public process.

The planning and zoning commission is considering an application from Colliers Energy, on behalf of the LKY Development Company, to build a 954-acre data center campus with an on-site natural gas plant and battery energy storage systems.

The Grande Valley Industrial Data Center Campus is planned southwest of the Maricopa-Casa Grande Highway near Montgomery Road, about 8 miles from the heart of the city.

Casa Grande City Manager Larry Rains says it's ideally located away from homes and other businesses.

“It is actually situated directly between two copper mines that are actively preparing to start mining,” Rains said.

The permit application does not disclose a specific cap on the number of data center buildings, how much energy they’ll require, or what’s their primary fuel source. Those details would be shared with the city planning director later.

For now, there are plans to power the data centers using on-site natural gas generation, potentially through fuel cells, rather than standard combustion, which the developer says will help limit emissions at the site.

The permit says the site will be limited to 300 acre-feet of water per year for cooling servers inside the data center and for generating power on-site. According to Rains, that’s a much lower water use limit than other cities have placed on data center projects.

According to the Arizona Department of Water Resources, 300 acre-feet is about what 600 to 900 homes may use in a year.

In its conditional use permit narrative, the developer says the project is designed to go without grid interconnection to avoid shifting costs onto other customers on the system. However, the formal permit outlines a potential process for utility interconnection.

The developer will be responsible for costs associated with connecting the data center to the grid, according to the permit, but these terms are ultimately left up to the utility.

Rural Arizona Engagement plans to participate in Thursday’s public hearing. The organization is concerned the project could threaten water and energy supplies that are already in flux for the community.

“The federal government announced significant water cuts from the Colorado River last month, and we know that’s going to impact the Central Arizona project, which is taking something like a 50% cut,” said Antonio Ramirez, RAZE’s political director.

The Central Arizona Project is a canal conveying Colorado River water to communities across the state. Currently, the source helps replenish groundwater aquifers throughout Casa Grande.

Ramirez says he is also concerned connecting the data center to the grid could further complicate the delivery of power throughout Pinal County, which includes Casa Grande. He says the San Carlos Irrigation Project, a utility that serves parts of the county, is currently going through divestment and offloading some of its customers onto other systems.

The project up for consideration Thursday falls within APS’ service territory, according to an APS service area map. 

Casa Grande Mayor Lisa Navarro Fitzgibbons says it was important to the council to find a way to create more oversight of projects like the Grande Valley Industrial Data Center, without overstepping state property laws.

“Even though it’s zoned in an industrial area, we wanted to make sure that the public can get involved, can come and see what’s happening, look at the conditions that have been addressed by them,” said Fitzgibbons.

She says she feels positive about the parameters the city has placed around the site’s water and energy use, as well as noise mitigation.

The conditional use permit requirements may continue to be assessed for their effectiveness by the council, according to Fitzgibbons.