Casa Grande Faces First Test of New Data Center Permitting Rules as 954-Acre Campus Proposal Hits Planning Commission

CASA GRANDE, Ariz. — The City of Casa Grande is set to run the first official test of its new data center permitting rules, as the planning and zoning commission reviews a proposal for a massive 954-acre industrial data center campus near the city's southern edge.

The application, submitted by Colliers Energy on behalf of LKY Development Company, calls for the Grande Valley Industrial Data Center Campus, planned southwest of the Maricopa-Casa Grande Highway near Montgomery Road, roughly 8 miles from the city's center. The project would include an on-site natural gas plant and battery energy storage systems.

The public hearing comes after Casa Grande passed new regulations last year that reclassified data centers as a conditional industrial use under the city's zoning code. Under the new rules, data center developers must submit a conditional use permit detailing the site's water, energy, and noise conditions, and the proposal must be approved by the planning and zoning commission.

A New Process Born of Concern

City leaders created the new rules amid concerns that large data center facilities could be built in industrial areas without a formal public hearing. The process gives residents a seat at the table for one of the largest categories of industrial development in the region.

Mayor Lisa Navarro Fitzgibbons said it was important to the council to create more oversight of projects like this 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," Fitzgibbons said.

The new rules also follow a dispute with two landowners who sued the city over the conditional use permit requirements, claiming roughly $140 million in damages from lost property values tied to a data center project that was close to submitting plans. The city agreed to waive the permit requirement for that specific project to avoid settlement costs, but all other data center applications are now required to go through the full process.

Water and Energy Concerns Take Center Stage

The permit application does not yet disclose a specific cap on the number of data center buildings, total energy requirements, or the primary fuel source. According to city officials, those details would be shared with the city planning director at a later stage.

What has been disclosed: the site will be limited to 300 acre-feet of water per year for cooling servers and generating power on-site. According to the Arizona Department of Water Resources, that volume is roughly equivalent to what 600 to 900 homes may use in a year. City Manager Larry Rains described that as a much lower water use limit than other cities have placed on similar projects.

The project is designed to be powered 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 conditional use permit narrative also states the project is designed to operate without grid interconnection to avoid shifting costs onto other utility customers, though the formal permit does outline a potential process for utility interconnection. If the data center does connect to the grid, the developer would be responsible for the associated costs, though those terms are ultimately left to the utility.

The site is located directly between two copper mines that are actively preparing to begin operations, according to Rains, who said the location is ideally situated away from homes and other businesses.

Opposition Weighs In

Rural Arizona Engagement, or RAZE, has announced it will participate in the public hearing. The organization is concerned the project could threaten water and energy supplies that are already under pressure 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 percent cut," said Antonio Ramirez, RAZE's political director.

The Central Arizona Project is a canal system that conveys Colorado River water to communities across the state. It currently helps replenish groundwater aquifers throughout Casa Grande.

Ramirez also raised concerns about connecting the data center to the electrical grid, noting it could further complicate power delivery across Pinal County. He pointed to the San Carlos Irrigation Project, a utility serving parts of the county that is currently undergoing divestment and offloading some of its customers onto other systems. The project under review falls within the APS service territory, according to an APS service area map.

What Comes Next

The planning and zoning commission's review is the first step in the conditional use permit process. Fitzgibbons said she feels positive about the parameters the city has placed around the site's water and energy use, as well as noise mitigation, and said the council may continue to assess the effectiveness of the conditional use permit requirements going forward.

The hearing marks a pivotal moment for Casa Grande and the broader Pinal County region, where rapid data center development is colliding with questions about water, energy, and community control in a desert landscape that is already stretched thin.