Item #3 - Large-Scale Data Center Regulations Memo(PDF, 4MB)

aD
OF >, IN MMISSION MEMORANDUM

CITY OF
TUCSON
Date: May 27, 2026 for June 3, 2026 scheduled meeting Page: | of 7
To: Planning Commission
From: Koren Manning, Director of Planning and Development Services,

and Executive Secretary
Subject: C8-25-04 Large-Scale Data Center Regulations Unified
Development Code Amendment (Citywide)

Issue — This Planning Commission Public Hearing item is being held to review a proposed code
amendment to the Unified Development Code (UDC) to establish regulations and standards for large-
scale data centers and to take public comment. This amendment was initiated by Mayor and Council
during their August 6, 2025 study session (see Attachment A for the Legal Action Report from that
meeting). At that time, Mayor and Council directed City staff to develop regulations for this use. This
request was part of the motion Mayor and Council adopted to not consider the proposed Project Blue
data center annexation and Development Agreement. A second Mayor and Council Study Session was
held on April 7, 2026 during which Mayor and Council provided additional feedback on the proposed
code amendment (see Attachment B). Two Planning Commission Study Sessions have been held, with
the initial one taking place on September 17, 2025 (see Attachment D). A second Planning Commission
Study Session was held on May 6, 2026 (see Attachment I) where additional feedback on the proposed
code amendment was received.

The proposed code amendment would establish a definition of large-scale data centers and establish use-
specific standards. The proposed code amendment has been developed with input from a Technical
Advisory Committee (TAC), four community engagement meetings and community survey, Planning
Commission, and Mayor and Council feedback.

Staff Recommendation — Staff recommends the Planning Commission make a recommendation to
Mayor and Council to adopt the Unified Development Code Amendment to establish regulations for
large-scale data centers as proposed.

Background — At the August 6, 2025, Mayor and Council study session regarding the proposed “Project
Blue” annexation, Mayor and Council directed staff to develop zoning regulations for large-scale data
centers. Staffthen brought this request before the Planning Commission for an initial Study Session,
and formed a Technical Advisory Committee to inform the development of the proposed standards, as
detailed below.

On September 9, 2025, the Zoning Administrator issued a Determination which established large-scale
data centers as the most appropriately classified use per the Unified Development Code as a Generating
System land use (see Attachment C). This use is not currently permitted by-right in any zone, has no
use-specific standards, and may only be developed through a rezoning process to a Planned Area
Development (PAD). This Determination anticipated a later UDC code amendment process

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UDC Amendment Planning Commission Public Hearing (Citywide)

to establish a new defined use, development standards, and review process for large-scale data centers.

On September 17, 2025, the Planning Commission held a study session at which Planning and
Development Services Department (PDSD) presented information on existing regulations for data
centers, an overview of the Zoning Administrator Determination and a timeline to establish regulations
for large-scale data centers (see Attachment D). That presentation included an overview of the demand
for data centers, how facilities are currently classified in the UDC, and potential regulatory components
such as definitions, zoning classifications, use-specific standards, and review procedures. PDSD staff
also requested and received initial feedback on potential regulations for large-scale data centers from
Planning Commission members.

Large Quantity Water Users Ordinance

The proposed regulations for large-scale datacenters are meant to be administered in parallel with the
Large Quantity Water Users Ordinance, adopted by Mayor and Council on August 20, 2025 (Attachment
J). This ordinance establishes additional review requirements for customers expected to use 10,000
hundred cubic feet of water or more per month, equal to approximately 7.48 million gallons per month.
Before receiving new or expanded waterservice, qualifying users must submit a sustainable water service
application and a water conservation plan.

The application must identify projected water demand, proposed conservation measures, potential use
of reclaimed water, and how the proposed use aligns with Tucson’s long-term water resource planning
goals. Tucson Water reviews the application, and Mayor and Council make the final decision to approve,
deny, or request additional information.

If approved, the application and conservation plan become a binding water service agreement. Approved
users must update their conservation plan every five years, stay within approved water-use limits, and
maintain required conservation or reclaimed-water measures.

Throughout the process, there has been coordination between the development of standards for large-
scale data centers and the City’s Large Quantity Water User Ordinance, with overlap between the staff
as well as stakeholders involved in each process.

Community Outreach and Stakeholder Engagement

Following direction from Mayor and Council and the Planning Commission study session, staff
initiated research and analysis of regulatory approaches used in other jurisdictions and formed a
Technical Advisory Committee (TAC) to provide subject matter expertise. Membership of the TAC and
meeting notes are provided in Attachment E. Data center regulations from the City of Chandler, Town
of Marana, City of Phoenix, and City of Mesa were reviewed. The review included how each jurisdiction
defines data centers, where they are allowed, applicable community input processes, and standards
related to noise, site and building design, backup power, utilities, water use, parking, and enforcement.
A comparison of the standards included in these regulations is provided in Attachment K.

In addition to convening a TAC, PDSD staff sought input and feedback on the proposed regulations
through public outreach efforts. Staff held four public community meetings in February and March
2026. Please see the Compilation of All Public Comments (Attachment F) for additional information on
public feedback.

A more detailed description of the Technical Advisory Committee as well as the public outreach process
and feedback can be found in the Planning Commission Memorandum from May 6, 2026 (see

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Attachment I).

Mayor and Council Direction

On April 7, 2026 Mayor and Council held a study session on the proposed regulations for large-scale
data centers. During this study session, PDSD staff presented an update on the development of the
proposed regulations. These included a summary of the TAC's work, engagement with community
members, and key takeaways from public outreach. The proposed regulations and options for revisions
to specific standards were also presented.

Mayor and Council conveyed that they were in support of the potential revisions suggested by staff and
informed by public feedback. They also acknowledged the concerns that community members expressed
during the engagement process with regard to the amount of water and energy required for a large-scale
data center to operate, with unknown community benefits. However, it was also acknowledged that
technology is changing rapidly and conditions for development may be more favorable sometime in the
future. Furthermore, Arizona State Statute limits the City’s ability to place a moratorium on large-scale
datacenters forlonger than 120 days without justifying the prohibition or risk legal action from potential
developers. Mayor and Council offered several notes for revisions to the first draft of the amendment
language:

1. Several council members supported the inclusion of an energy consumption threshold as part of
the definition of a large-scale Data Center

2. There was consensus on enhanced public notice standards

3. Several council members supported limiting large-scale datacenters toPAD or PCD applications
instead of allowing them within the I-2 zone due to environmental justice concerns.

4. Several council members requested that staff continue to investigate what other localities have
done to regulate large-scale data centers.

Mayor and Council then directed staff to present their findings and draft materials to the Planning
Commission for additional feedback and consideration.

Second Planning Commission Study Session

On May 6, 2026, the Planning Commission held a study session on proposed regulations for large-scale
datacenters (see Attachment I). PDSD staff presented the proposed regulations and provided an overview
of the development of the proposed regulations, including a summary of the Technical Advisory
Committee’s work, community engagement efforts, and feedback from public outreach. Following the
presentation, staff answered questions and received feedback from the Planning Commission.

Key themes of the discussion were:

e Energy demand, grid capacity and ratepayer impacts - Commissioners raised questions about
defining “adequate energy supply,” whether the electrical grid can support large-scale data
centers, whether new infrastructure costs would be shifted to ratepayers, and expressed interest
in renewable or lower-impact energy options

e Water use and sustainability — comments were made regarding the applicability of large quantity
water user requirements, use of potable versus non-potable water, whether closed-loop systems
could be required, wastewater impacts and environmental concerns.

e Noise, separation distances, and land use compatibility - comments covered potential impacts
including noise, heat island effects, emissions from backup generators. Some Commissioners
suggested increasing the required separation distance from residential uses and expressed a desire

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for greater landscaping and buffers.

e Legal authority and risk - Commissioners asked whether the ordinance was legally defensible
and within the City’s authority, including whether it had a clear public purpose, complied with
state and federal law, and could invite legal challenges from property owners, utilities, or data
center operators.

e Enforcement - Commissioners noted concerns about regulatory thresholds and loopholes,
including the proposed 50-megawatt and 25,000-square-foot thresholds, and ownership
structures and raised questions about ongoing reporting, performance targets and enforcement.

Based on feedback received, the following proposed changes were made to the draft regulations, which
are addressed in more detail below:
e Updates to the definition for large-scale data centers to reduce the energy consumption criteria
to 20 MW
e Addition of a maximum height limit of 50 feet for all large-scale data centers
e Increased minimum separation distances from residential and non-industrial uses to address
noise and heat impacts
e Increased width of landscape borders and protection of native vegetation to address heat impacts

Present _Consideration(s) — The proposed amendment to the Unified Development Code would
establish a regulatory framework for large-scale data centers. The proposal introduces a definition for
large-scale datacenters and establishes where and how these facilities may be permitted, along with use-
specific standards intended to address land use compatibility, environmental impacts, and operational
considerations (see Attachment G, Proposed Code Amendment Fact Sheet).

Large-Scale Data Centers Unified Development Code Proposal

Throughout the process of research, advisory input from the TAC, public input, and Planning
Commission feedback, staff developed a proposal for UDC code changes. The proposal is based on best
practices, regional considerations, and precedents already established in the UDC. Below is an overview
of the current proposed regulations (see draft code amendment in Attachment H).

Definition and Size Threshold

Proposed Regulation: The proposed large-scale data center use would be defined as part of the Utility
use group, and the definition includes both a square footage and a power consumption threshold,
minimum floor area of 25,000 square feet, or power consumption of 20 Megawatts. This was reduced
from the original proposal of 50 megawatts based on feedback received during the May 6, 2026 Planning
Commission Study Session. The beginning of the proposed definition was also changed from “A
facility” to “Any facility” based on feedback received. The proposed definition for a large-scale data
center is as follows:

Any facility, multiple facilities, or portion of a facility on a contiguous site with the same
controlling ownership interest, and a gross floor area greater than 25,000 square feet or uses
greater than 20 megawatts (MW) of energy, housing networked computer systems and/or
telecommunications equipment used for remote storage, processing, and distribution of data.
Large Scale Data Centers are permitted through adoption or major amendment of a Planned Area
Development (PAD) or a Planned Community Development (PCD) and are subject to Use
Specific Standards 4.9.11.D.

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Review Process and Zoning

Proposed Regulation: Large-Scale Data Centers would be permitted through adoption or major
amendment of a Planned Area Development (PAD) or a Planned Community Development (PCD).
Large-Scale Data Centers would not be permitted as of right or through a special exception in any specific
zone. Establishing or amending a PAD or PCD is a rezoning process subject to Mayor and Council
review. This process includes a neighborhood meeting and a Zoning Examiner public hearing prior to
Mayor and Council consideration, providing an opportunity for nearby residents and other stakeholders
to review and comment on the request.

This proposal would require a higher level of review for large-scale data centers than most land uses in
the UDC as it would only be allowed through a PAD or PCD. Generating Systems under the Utilities
Use Group are the only other defined land use that is only permitted through a PAD or PCD.

Separation from Residential_and other Non-Industrial Uses

Proposed Regulation: Must be located a minimum of 2,640 feet (one half mile) from residential zones
as well as certain uses (nursing home, residential care facilities, educational uses) and 1,000 feet from
commercial or office zones. These proposed separation distances were increased following the May 6,
2026 Planning Commission Study Session based on concerns expressed about noise and urban heat
island effects.

Public Notice

Proposed Regulation: Require an enhanced public notice of all property owners within a half mile, and
all Neighborhood Associations within 2 miles, which is consistent with Planned Community
Development notice requirements, for the required neighborhood meeting and public hearing before the
Zoning Examiner. Notification of property owners is based on the requirements of state statute, which
establishes notice obligations tied to property ownership. Notification of residents who are not property
owners was discussed at the Planning Commission Study Session. Any adjustment to this standard
should likely be considered as part of a more comprehensive conversation for applicability across the
entire zoning code. Additional notice is being proposed due to the broader impacts of large-scale data
centers, and the typically low-density surrounding areas where large-scale data centers are likely to be
proposed.

Water Supply Certification_and Restriction on Potable Water Use

Proposed Regulation: Reaffirm requirements to comply with the City’s Large Quantity Water User
Ordinance. Additionally, if an applicant is not subject to the Large Quantity Water User Ordinance, the
use of potable water for data center cooling is prohibited and an applicant is required to demonstrate
access to an adequate water supply. A mitigation plan may also be required to address impacts during
drought or local water emergency.

Energy Disclosure
Proposed Regulation: At the time of application, require that applicants demonstrate access to an

adequate energy supply and disclose their proposed amount of energy and energy mix, including
renewables.

Noise and Generators

Proposed Regulation: Applicants must provide an independent noise study as well as a noise mitigation
plan at the time of application. The code establishes strict decibel limits at the property line and requires
annual monitoring. For generators, only Tier IV or natural gas/dual-fuel generators would be permitted,

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with requirements for “battery-first” backup systems, limits on hours of maintenance testing, and
prohibition of “load shifting”. Additionally, data center operators could be required, at the City’s
discretion, to identify a point of contact for community concems about noise or other negative impacts.
This stipulation was added after receiving feedback from both the public at large and Mayor and Council.

Maximum Height Limit

Proposed Regulation: Establish a 50 foot maximum height for large-scale data centers. This proposed
standard was added following the May 6, 2026 Planning Commission Study Session. This standard is
based on the maximum height permitted in the Park Industrial (P-I) zone.

Development Standards

Proposed Regulation: Require a 40-foot enhanced landscaping border and right-size parking
standards to reduce paved surfaces and mitigate urban heat island effects. The proposed width has been
increased from 20 to 40 feet based on feedback received at the May 6, 2026 Planning Commission Study
Session. Additionally, the proposal has been updated to add more specificity regarding environmental
and plant salvage requirements.

Additional proposed regulations requiring sound blocking and screening for generators and other noise-
producing mechanical equipment through solid screened walls or rooftop screening. Lot coverage is
restricted to 40% where the remaining area must be dedicated to natural open space and any disturbed
land not included in project site must be revegetated with native plantings.

In addition to the use-specific standards described above, any large-scale data center would also need to
comply with all applicable regulations as established per the Unified Development Code — including
the Native Plant Preservation ordinance, Commercial Rainwater Harvesting standards, Environmental
Resource Zone (ERZ), and Watercourse Amenities, Safety, and Habitat (WASH) standards.

Plan Tucson _Consideration(s) — Plan Tucson policies regarding Government, Climate, Water,
Environment, Economy and Land Use have been considered in developing the proposed regulations.
Relevant policies include:

Government 4: Provide diverse, well-resourced opportunities for productive public engagement
throughout the planning and decision-making process of City initiatives that respect and
accommodate disabilities and diverse cultural needs by implementing a variety of interactive
methods and communication tools to maximize inclusive participation.

Climate 3: Use a variety of strategies to ensure that all residents benefit from initiatives aimed at
resilience and sustainability.

Climate 6: Develop a regional collaborative approach with public and private partnerships to
reduce energy consumption and transition to renewable energy sources.

Water 3: Encourage appropriate use of reclaimed water and other potable water alternatives.
Water 7: Encourage increased water efficiency in both existing and new private and public

developments, promoting user-level conservation practices across all water use contexts by
expanding effective water efficiency and conservation programs across all sectors.

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Environment 8: Promote the designs of buildings and use of materials that mitigate or reduce
noise pollution

Economy 13: Create a business supportive climate through investment in public infrastructure
and services, through its regulations and policies, and in building public-private partnerships.

Land Use 6: Create a business supportive climate through investment in public infrastructure and
services, through its regulations and policies, and in building public-private partnerships.

Land Use 12: Apply the Guidelines for Development Review to the appropriate Building Blocks
in the Future Growth Scenario Map, included in chapter four, to evaluate and provide direction
for annexations, plan amendments, rezoning requests and special exception applications, Board
of Adjustment appeals and variance requests, and other development review applications that
require plan compliance.

Land Use 25: Work collaboratively with Arizona State Land Department, Pima County, and
nearby major land users to identify strategic and appropriate land uses within the Southlands and
Houghton Corridor area.

Attachments:

AE Om mOOw>

August 6, 2025 Mayor and Council Legal Action Report

April 7, 2026 Mayor and Council Legal Action Report

Zoning Administrator Determination Letter for Large-Scale Data Centers
Planning Commission Study Session Materials, September 17, 2025
Technical Advisory Committee Membership, Meeting Summaries, and Presentations
Compilation of Public Comments as of May 21, 2026

Updated Proposed Code Amendment Fact Sheet

Updated Draft Regulations for Large-Scale Data Centers

Planning Commission Memorandum, May 6, 2026 Study Session

Large Quantity Water Users Ordinance

Comparison of Data Center Regulations