Notes from Ward 4

June 26, 2025

TL;DR: Summary of What You Need to Know About Project Blue

Project Blue is a proposed economic development initiative that could bring multiple data centers to the Greater Tucson region. While my ability to share details is limited by a Non-Disclosure Agreement signed by the City’s Economic Initiatives Director prior to my initial briefing, I want you to know that I’ve been fully engaged on this project for months. I serve as the Councilwoman for the area where a proposed site may be annexed, and I was elected to represent the interests of all Tucsonans.

This proposal comes with big promises: private investment, job creation, and accelerated upgrades to our water infrastructure. But it also raises serious questions about water usage, energy demands, long-term community benefit, and transparency. I’m asking those questions and working to get the facts we need to make the best decision for Tucson.

I also know this is about more than one project. It is about trust in government and how we show up for our community. That is why I’m being open about what I know, what I’m asking, and how I’m leading through this process.

If the Mayor and Council vote to begin the annexation and development agreement process, that will trigger a formal timeline with multiple opportunities for public engagement before any final decisions are made.

We only get one chance to get this right, and I’m committed to doing the work to make sure we do. Please read on for more detail about the proposal, the questions I’m asking, and how I’m working to represent you.

Project Blue: A High-Stakes Opportunity That Demands Full Transparency and Accountability

You may have heard about a proposed economic development initiative referred to as Project Blue. While I’m limited in what I can share due to a Non-Disclosure Agreement (NDA), I want to speak directly to you, not in vague generalities, but with real clarity about what I know, what I’m asking, and how I’m showing up in this process. As the City Councilwoman who represents the area where one of the proposed sites is requesting to be annexed, and as someone elected citywide, I have a responsibility to represent the interests of all Tucsonans. I have been actively engaged for months, asking critical questions, and working to ensure this proposal is evaluated with the seriousness, transparency, and long-term thinking it demands.

This project sits at the crossroads of economic development, technology infrastructure, water and energy policy, and community impact. These are not abstract issues. They’re critical, complex, and deeply connected to our city’s long-term future. I take my role in evaluating this proposal very seriously.

I bring more than 25 years of experience in the tech industry, along with an MBA and national leadership roles in Artificial Intelligence (AI) and Smart Cities. I’ve followed data center development across the country for years because this is my world. I understand the infrastructure, the urgency, and the opportunities tied to AI advancement. Data centers are essential to the future of U.S. innovation and national security. I’ve also worked on water and infrastructure policy here in Tucson, which gives me a unique lens on how these projects intersect with local resources and long-term sustainability. I don’t just understand what’s at stake. I’ve lived it. That’s why I’m asking tough questions and insisting we move forward in a way that is informed, balanced, and right for our community.

What We Know (and What We’re Being Asked to Approve)

Project Blue has the potential to bring significant private investment to our community, especially in our reclaimed water system, which is decades overdue for expansion in Tucson’s southeast region. If executed properly, this project could accelerate water infrastructure improvements by nearly ten years. That would save millions of dollars for Tucson Water customers and improve our long-term water resilience.

But potential isn’t the same as proof. This project raises several red flags and open questions that must be addressed before we make any major commitments. That includes beginning the annexation and development agreement process for the first site that would pave the way for full development.

Let me be clear. I fully support responsible economic development and want to see long-term, high-wage job opportunities come to Tucson. I believe in the power of technology to improve lives, strengthen our economy, and position our region as a leader in innovation. I welcome that progress. At the same time, I am committed to making sure we get it right. I will ask the tough questions, protect our resources, and ensure any project aligns with the best interests of our community.

The Questions That Still Need Answers

Here are the key concerns and information gaps I’m actively working to address so I can make the most informed, responsible decision on behalf of the public who has entrusted me with this work.

1. Water Usage and Security

• How many total sites and phases are planned for this project? What is the estimated total water demand at full build-out across all sites and phases?

• How much potable water will be required before the reclaimed system is operational?

• What is the actual timeline for transitioning the site to reclaimed water, and what commitments or enforcement mechanisms will ensure that this transition happens as planned?

• What assumptions were used in the water usage modeling for this project, including how climate change impacts were factored into the estimates?

• What mechanisms exist to hold the project accountable if water usage exceeds projections?

2. Environmental and Public Health Protections

• Will chemicals or cooling agents be added to the water as part of the process, and how could those substances affect our groundwater, surrounding wells, or broader environmental systems?

• How will water discharge be handled? What safeguards will be in place to ensure there is no contamination of our groundwater, nearby wells, or the surrounding environment?

• What is the potential impact on local air quality, particularly from backup diesel generators or other emissions sources?

• Have we thoroughly reviewed challenges faced by other cities with similar data center developments, including issues related to water usage, energy demand, air and water pollution, and community health impacts, to ensure we are not repeating mistakes that have been made elsewhere?

3. Energy Infrastructure and Public Cost Exposure

• What is the energy demand of this project at full scale?

• Will Tucson Electric Power (TEP) be able to meet those demands before infrastructure upgrades are complete?

• Residents in some areas of Southeast Tucson are already experiencing energy reliability issues. What assurances can be provided that this project will not add to the strain on existing infrastructure, and that necessary upgrades will be completed before the facility comes online?

• Who pays for those upgrades? Can we get assurances that ratepayers will not be on the hook?

4. Economic Value and Community Benefit

• The company has projected anywhere from 75 to 180 jobs by the third year of operations in 2029, depending on the source. What is the actual number of ongoing jobs expected at full build-out, how certain is that estimate, and what are the consequences if those employment projections are not met?

• Will the majority of these jobs be technical, operational, or support roles? Given that data centers are often highly automated, what assurances do we have that these will be meaningful, long-term employment opportunities for Tucsonans?

• The company has stated that the average salary for these jobs will be $64,000. How many of these positions will be accessible to local residents without advanced degrees, and what types of roles are expected to make up that workforce?

• What construction-related job opportunities will be available to local firms and workers during the estimated $1.2 billion buildout? How are we ensuring that local companies and trades benefit during the construction phase?

• What road, traffic, or infrastructure improvements are planned for the Ward 4 area to support this project and the surrounding neighborhoods?

• What is the City’s expected net benefit given that we are forgoing approximately $62 million in revenue during Phase 1 alone due to Arizona’s Computer Data Center Program, a state-level incentive established in 2013 that exempts qualifying data center equipment from Transaction Privilege Tax and Use Tax for up to 20 years?

• The City of Tucson is projected to receive an estimated $97 million in tax and fee revenue over a ten-year period. How much of that is guaranteed, and how much is contingent on full build-out, job creation, or other performance milestones?

• The company’s presence is expected to generate indirect and induced economic activity in the region. How are these projections calculated, and what assumptions about employee spending, local business engagement, and supply chain relationships are built into those models?

Transparency, Governance, and Public Trust

This may be one of the most significant economic development opportunities Tucson has ever seen, or it could become one of the most resource-intensive projects with limited long-term return. Either way, the public deserves transparency, and so do the elected officials at all levels who are being asked to make decisions with incomplete information, including those at the City of Tucson and Pima County.

Right now, we are being asked to evaluate a proposal with limited access to written documentation. Aside from City of Tucson-generated materials, public memos from Pima County, and the Economic Impact Analysis, no detailed documentation has been provided to the Mayor and Council. Because of NDAs, FOIA concerns, and the company’s need to protect proprietary business information, the Project Blue team has declined to share specifics in writing through government email. While I respect the need to safeguard sensitive data, this approach makes it difficult to ensure the transparency and accountability that a project of this scale requires. It is essential that all of us, including myself, my colleagues on the City Council, and the Pima County Board of Supervisors, are working from the same complete and accurate set of information as we consider decisions that will shape Tucson’s future. I agree with Supervisors Allen, Heinz, and Cano that we need access to full and verifiable information to carry out our responsibilities on behalf of the public.

I also want to acknowledge something deeper. Much of the concern I have heard from residents so far is not just about this specific project. It is about trust. We are living in a time when public trust in government is fragile, and the lack of transparency around this proposal touches that nerve. I believe this is a driving force behind the early and intense reaction we are seeing. That is why I am sharing what I can, why I am asking tough questions, and why I am committed to a process that earns and maintains public confidence. This communication is one step toward addressing that valid concern and helping to build trust where it matters most.

Where Things Stand Now

The City Council vote to begin the annexation process was originally expected in August. That timeline may shift if the Pima County Board of Supervisors revisits its zoning decision in July.

I’m not interested in meeting someone else’s business deadline. I’m interested in making the right decision for Tucson.

While I was disappointed that Pima County did not engage the Southeast community before selling the land, I am committed to a fully transparent and community-driven process from this point forward. The public must be included, informed, and respected.

My Commitment to You

This project could become one of the most transformative opportunities Tucson has ever seen. It could also carry risks that outweigh the benefits. That is why we only get one chance to get this right, and I take that responsibility seriously.

If there is a question or concern you think I have missed, please do not hesitate to reach out. I want to hear from you. I work for the people of Tucson, not for developers, not for outside interests, and not for short-term gain.

We have an incredibly thoughtful and engaged community, and I believe we can navigate this moment together. But doing so requires transparency, diligence, and trust. That is what I am committed to delivering every step of the way.

If the Mayor and Council choose to vote in favor of beginning the annexation and development agreement process, that would start a formal timeline that includes multiple opportunities for public engagement before any final decisions are made. Should that occur, I will work to ensure these opportunities are widely shared and that community members have the time and information they need to participate meaningfully.

In the meantime, I want to hear from you. What questions am I missing? Where are my blind spots? I welcome and am grateful for your feedback at ward4@tucsonaz.gov. Your voice matters, and I look forward to hearing it.

How Can I Stay Updated?

There are multiple ways to stay updated with my office and the City's work:

• Looking for city updates? Follow the Ward 4 City of Tucson page to learn about core services, projects, events and helpful information about all things Tucson.

• Looking for me? Follow my Councilwoman Nikki Lee page to see what I'm up to around town, articles I write, official events I'm hosting, and more!

• Follow my Council Member twitter account, @CouncilwomanLee.

• Follow my Council Member instagram account: @nikkilee_az.