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ITEM  7 City Council Memorandum      Development Services  Memo No. 24-032         Date: June 27, 2024 To: Mayor  and Council Thru: Joshua H. Wright, City Manager Andy Bass, Deputy City Manager & Acting Development Services Director  From: Alisa Petterson, Senior Planner Subject: PLH23-0063 CBREIM Frye Adoption of Resolution No. 5821 Introduction and Tentative Adoption of Ordinance No. 5105   Request: Development Agreement related to the development and operation of an expanded data center on the property, including removal of water-based cooling equipment at the existing data center Rezoning from Planned Industrial District (I-1) and Planned Area Development (PAD) for Office Development to Planned Area Development (PAD) for Data Center uses and Planned Industrial (I-1) uses with Mid-Rise Overlay for building heights up to 95 feet Preliminary Development Plan (PDP) approval to expand an existing data center facility   Location: 2500 W Frye Road, generally located 1/2 mile south and east of Chandler Boulevard and Price Road Applicant: Taylor Earl, Earl & Curley

Proposed Motion:

Development Agreement Move City Council pass and adopt Resolution No. 5821, authorizing a Development Agreement between the City of Chandler and CPUS West Frye Road, LP, related to the development and operation of an expanded data center on the property, including removal of water-based cooling equipment at the existing data center. Rezoning Move City Council introduce and tentatively adopt Ordinance No. 5105 approving PLH23-0063 CBREIM Frye, Rezoning from Planned Industrial District (I-1) and Planned Area Development (PAD) for Office Development to PAD for Data Center uses and Planned Industrial (I-1) uses with a Mid-Rise Overlay for building heights up to 95 feet, subject to the conditions as recommended by Planning and Zoning Commission. Preliminary Development Plan Move City Council approve Preliminary Development Plan PLH23-0063 CBREIM Frye for site layout and building architecture for the expansion of an existing data center on approximately 14.5 acres, subject to conditions as recommended by Planning staff.

Background Data:

The subject property has undergone several development actions since its annexation into Chandler. A summary is provided below: 1978:  Subject site is annexed into the city as AG-1.   1979:  Property is rezoned from AG-1 to I-1.   1988:  A manufacturing building is constructed on the property.   2002:  The Countrywide mortgage company acquires the subject property that at the time includes approximately 25.5 acres to the north on which they begin construction of four office buildings and a parking garage.  As part of the construction of the new office campus, the existing manufacturing building is converted to a data center in support of and as an ancillary use to the Countrywide offices.     2008:  Bank of America acquires the parcel consisting of the office campus and the data center for its use; an SRP substation is built soon after, northwest of the data center building.    2019:  Bank of America splits the parcel and sells the data center and associated substation.  The data center continues to operate independent of the Bank of America office campus to the north, effectively making it an illegal use given that the zoning does not allow data centers as a stand-alone, primary use.    2022:  Chandler amends the zoning code for data centers, requiring PAD zoning for properties where a data center is the primary use and establishes neighborhood notification and noise mitigation protocols. This zoning amendment officially renders the property as "illegal non-conforming" status since it is no longer associated with the Bank of America campus and is operating as a stand-alone, primary use.   The current request proposes to rezone two properties, including the data center and associated electrical substation, from Light Industrial (I-1) district and PAD for Office Development to PAD for Data Center uses and Planned Industrial (I-1) uses, as prescribed by City Code, to return the data center to legal conforming status.   The current request also proposes an approximately 243,000 square foot expansion to the existing data center building on an underutilized parking lot at the south end of the data center property.   The Development Agreement requires the data center to remove water-based cooling equipment before any Certificate of Occupancy is issued for the expansion.   In 2023, the data center property used 14.09 million gallons of water. Staff anticipates removal of water-based cooling systems will result in significant water savings for the City.    The proposed building expansion is comprised of a three-story building with exterior screen walls that are a maximum of 90 feet high, as needed for sound mitigation per City of Chandler zoning requirements. Thus, the request also seeks approval for a Mid-Rise Overlay to allow building heights up to 95 feet.

Surrounding Land Use Data:

North Business park / office buildings     South Frye Road, then office buildings East Ellis Street, then Chandler Fire Station No. 3, then undeveloped land currently zoned as I-1 Light Industrial West Parking lots for the office buildings to the north and west of the subject site

General Plan and Area Plan Designations:

Existing Proposed General Plan Employment and within the Medical / Regional Retail area     No change

Proposed Development

Subject Site Approximately 14.5 acre property at the existing data center Approximately 1.9 acre property at the existing substation adjacent to the northwest corner of the data center property Proposed Building Expansion Square Footage Approximately 243,000 square feet Proposed Building Expansion Max Building Height 3 stories total 90 feet high to tallest point of the angled parapet walls Requesting Mid-Rise Overlay for heights up to 95 feet Existing Building Square Footage Approximately 150,000 sq. ft. Existing Building  Max Height 1 story 30 feet high to top of parapet walls Parking Existing parking lot with approximately 226 parking spaces will be demolished to allow expansion 58 additional parking spaces provided at new parking area Site Layout Existing driveways and entrances to site will be maintained Existing site fences are minimally adjusted and existing landscaping enhanced to meet current codes Main entry to site is off Frye Road, with direct access to new parking area New fire lanes surround building expansion Three new screened outdoor equipment yards are proposed Existing SRP substation at northwest corner of site expected be expanded Existing 10-foot-high security wall around substation will likely be adjusted Landscaping Existing mature landscaping will remain as much as possible and will be supplemented with new landscaping, as needed, to meet Chandler's current landscaping standards and maintain visual buffers along Frye Road and Ellis Street A mix of existing landscaping, new landscaping and salvaged landscaping from the site will be provided along Frye Road Building Setbacks Front: 50 foot setback (at Frye Road) Sides: 30 foot setback (at Ellis Street and west property line) Rear: 25 foot setback (at north property line) Sound Mitigation Strategies Taller parapet walls control noise from roof top mechanical equipment Parapet wall designs with sound absorptive materials to control and diffuse noise Strategic mechanical unit placement to help reduce noise Sound barrier walls at outdoor equipment areas to reduce noise impact Building Design Proposed building design utilizes high-tech themes Elevations feature designs which reference Chandler’s history Overlapping screen walls with and without some degree of transparency Overlapping and sloped parapet walls Sloped walls serve as a transition between new and existing architecture Large building elevations are broken down into smaller masses Stairs visible at the building exterior through painted, perforated metal create visual interest Materials & Accents Precast concrete panels with smooth and custom sandblast patterns Perforated steel and metal panels with digital imagery Two types of metal mesh with digital imagery Painted perforated metal Brushed perforated metal Four exterior paint colors

Review and Recommendation

Background The data center site is currently zoned I-1 Light Industrial and has been in operation as a data center for years. It is in proximity to other industrial uses, such as Microchip Technology to the immediate northeast and the Air Products campus to the west. The property is bordered by the Bank of America campus to the north and CVS offices to the west. Large parking lots west of the site buffer views to the west. An SRP substation, currently zoned PAD for Office Development, is part of this rezoning request and is located on an adjacent parcel northwest of the data center. This substation, which powers the data center, is anticipated to be expanded internally as part of the proposed development. The original data center at the heart of this request was developed to support Countrywide and later the Bank of America campus to the north using water-cooling technology that was standard in 2008. The data center remained in service to Bank of America until 2019, when the property was sold. In 2022, Chandler adopted new code amendments to prescribe how and when data centers may be developed in Chandler. Per that ordinance, the existing data center operation today does not meet Chandler’s code requirements, because it is considered a primary use instead of an ancillary use on a hard-zoned property. This request presents the opportunity to bring the facility into code compliance and deliver a net positive water impact back to the city. Development Agreement Chandler’s zoning code provides a path for approval of this application through a PAD zoning process that will update the existing facility’s status from "illegal non-conforming” to code compliance. As a condition of approval, the applicant has agreed to execute a development agreement with the City. Under the terms of the agreement, the developer will replace the water-based cooling equipment at the existing facility to a mechanically cooled system. The existing equipment must be replaced before the developer will receive a Certificate of Occupancy for the data center expansion. Moving forward, the developer will be prohibited from using water-based cooling systems on the property, which will result in significant water savings for the City.  The Public Works and Utilities Department has reviewed the water consumption associated with the existing data center and reports the amount of water used in 2023 was 14.09 million gallons. While it is difficult to quantify how much of that water was used for data center equipment cooling versus typical domestic water usage or landscape irrigation purposes, it is highly probable that the amount of water savings Chandler will realize from this conversion will be significant. Public Works and Utilities indicates that an average Chandler resident uses 43,800 gallons of water per year. Based on that figure, 14.9 million gallons of water is equal to the typical yearly water use of 340 residents. Proposal This request seeks rezoning and PDP approval for site layout and building architecture for a data center expansion that will be located where an underutilized parking lot for the existing data center sits today. Staff supports this proposal as the highest and best use of the available property, as any other employment use would not be able to develop because of the inherent site constraints and limitations. The proposal will improve the area by converting a little-used parking area currently screened from view by mature landscaping into an active site. The benefits provided by high-quality of design proposed, the opportunity for Chandler to realize water savings, and bringing an existing property into code compliance outweigh the negatives of the request. The architectural design of the expansion features a high-tech aesthetic in homage to Chandler’s unique history. Proposed materials include custom sandblasted and smooth-finish concrete panels. A variety of brushed metal, painted metal and perforated metal mesh panels with and without applied digital images are well-suited to the surrounding area and nearby industries. The variety of perforation patterns, textures and transparencies help to screen views of ground-mounted equipment and enhance the architecture. The applied imagery evokes concepts related to technology networks, referencing Chandler's high-tech economic development focus. The proposed color palette of cool blues and grays is accented by pops of yellow to create greater visual interest and identify the main entrance at the west elevation. The larger massing of the building is broken down into smaller elements via applied materials, colors, varying roof heights and horizontal articulation. Framed architectural elements at the south and east facades serve as focal points that highlight visible stairs behind painted perforated metal and create unique architectural vignettes within the composition. A new landscaped outdoor courtyard is provided between the existing building to the north and the new structure. Tapered metal screen panels extend from the new expansion down to the existing building to unify the architecture. This request proposes to meet all data center requirements defined in Chandler's data center zoning ordinance. Noise control is addressed by the architecture through the use of sound walls with absorptive panels integrated into the screen walls to mitigate sound trespass. Layered parapet walls that slope in opposing directions impart an energy and dynamic quality to the architecture while screening mechanical equipment and further diffusing equipment sounds. An on-site liaison will be provided, as required by the data center ordinance, from 8 am until 10 pm daily to respond to complaints, and community messaging will inform neighbors of planned noise-generating operations. A baseline sound study has been performed by a third-party acoustic engineer to confirm the design meets sound control requirements. Additional sound studies will be performed at issuance of Certificate of Occupancy, with follow-up studies required for five years after completion of construction to ensure the sound control is working as planned.  The proposed site includes a new parking area with 58 parking spaces, appropriate to serve the administrative areas within the larger data center facility. Fire lanes surround the new building, as required. A new outdoor mechanical yard to the east and a new outdoor equipment yard to the west are appropriately screened from view and blend with the architecture. A third outdoor equipment yard near the northwest corner of the site will be screened from existing site walls as well as the SRP substation to the immediate west, which is screened via a 10-foot wall. While the site features mature landscaping that screens views from Ellis Street and Frye Road, the building architecture is appropriately enhanced to deliver an attractive and modern addition to the neighborhood.  Staff finds the proposal to be in alignment with the General Plan and consistent with the existing surrounding development within the larger Medical/Regional Retail growth area. Planning and Zoning Commission recommends approval with conditions.

Public / Neighborhood Notification

This request was noticed in accordance with the requirements of the Chandler Zoning Code.   A Neighborhood Meeting sign was posted on the site and on social media via Next Door.   Two Neighborhood Meetings were held due to the request for Mid-Rise Overlay.    The first Neighborhood Meeting was held on January 29, 2024, and the second on February 5, 2024.   Both Neighborhood Meetings were presented as an open-house type of meeting, and only a handful of neighbors attended each of the meetings.   No residents appeared at either meeting to express opposition to the proposed development.    There was some discussion about screening rooftop mechanical units from view; the applicant explained the equipment would be screened by the parapet walls, as required.   There was some discussion about whether the perforated metal screen walls surrounding the ground mounted equipment would sufficiently screen the equipment from view. The applicant explained the material proposed would be effective in screening the equipment, and pointed out the landscaping surrounding the property would help to screen views as well.   Resident interest in the proposed development included questions about the proposed overall height of the development. The applicant explained that the height of the exterior walls is integral to the design to effectively control the sound generated by the facility and contain it as much as possible on-site, as required by Chandler's data center zoning ordinance.   Further resident comments included an expression of appreciation for the required sound-control measures and for the quality of the proposed architectural design of the building expansion.   As of the writing of this memo, Planning staff is unaware of any opposition to the proposal.

Planning and Zoning Commission Vote Report

Planning and Zoning Commission meeting June 5, 2024 Motion to Approve In Favor:  5     Opposed:  0     Absent: 1    Planning and Zoning Commission modified Preliminary Development Plan stipulation 8, requiring 75% of the trees along Frye and Ellis to be either salvaged from the site, a minimum of 36 inch box and a minimum of 12 feet in height at the time of planting, or an existing mature tree.

Recommended Conditions of Approval

Rezoning Planning and Zoning Commission recommends the City Council approve Rezoning from I-1 Planned Industrial District and PAD for Office Development to PAD for Data Center uses and Planned Industrial (I-1) with Mid-Rise Overlay for building heights up to 95 feet, subject to the following conditions:  Development shall be in substantial conformance with the Development Booklet, entitled "CBRE Data Center Expansion" and kept on file in the City of Chandler Planning Division, in File No. PLH23-0063 modified by such conditions included at the time the  Booklet was approved by the Chandler City Council and/or as thereafter amended, modified or supplemented by the Chandler City Council.    Allowed uses include data centers and all uses permitted in I-1 Planned Industrial District provided that parking requirements are met pursuant to Article XVIII Parking and Loading Regulations of the Chandler City Code.   The Midrise Overlay applies only to the new building addition and shall be limited to a maximum height of ninety-five (95) feet. All other buildings shall be subject to a maximum height of forty-five (45) feet.   All water-based cooling systems operating on the property to cool electrical equipment must be removed before the City will issue a certificate of occupancy (including temporary certificate of occupancy) for the proposed data center expansion area south of the existing data center and such water-based cooling systems may not be used on the property at any time following the issuance of such certificate of occupancy.  For purposes of this ordinance, "water-based cooling systems" means cooling systems that reject heat from the refrigeration process to the atmosphere by means of water evaporation or other water-based methods that use and discard water as part of the process of transferring heat away from equipment that generates heat on the property.   Right-of-way dedications to achieve full half-widths, including turn lanes and deceleration lanes, per the standards of the Chandler Transportation Plan.   Future median openings shall be located and designed in compliance with City adopted design standards (Technical Design Manual #4).   Completion of the construction of all required off-site street improvements, including but not limited to paving, landscaping, curb, gutter and sidewalks, median improvements, and street lighting to achieve conformance with City codes, standard details, and design manuals.   The landscaping in all rights-of-way shall be maintained by the adjacent property owner or property owners' association.   The landscaping in all open-spaces shall be maintained by the adjacent property owner or property owners' association, and shall be maintained at a level consistent with or better than at the time of planting.   Development standards shall comply with I-1 Planned Industrial District standards, except as modified by conditions here within.   Minimum building setbacks shall be as provided below and further detailed in the development booklet.   Property Line Building Setback North 25 feet South 50 feet West 30 feet East 30 feet Preliminary Development Plan Planning and Zoning Commission recommends the City Council approve the Preliminary Development Plan, subject to the following conditions: Development shall be in substantial conformance with the Development Booklet, entitled "CBRE Data Center Expansion" and kept on file in the City of Chandler Planning Division, in File No. PLH23-0063 modified by such conditions included at the time the Booklet was approved by the Chandler City Council and/or as thereafter amended, modified, or supplemented by the Chandler City Council.   All signage shall be reviewed under a separate permit.    The site shall be maintained in a clean and orderly manner.    Landscaping plans (including for open spaces, rights-of-way, and street medians) and perimeter walls shall be approved by the Planning Administrator.   Raceway signage shall be prohibited within the development.   Sign packages, including free-standing signs as well as wall-mounted signs, shall be designed in coordination with landscape plans, planting materials, storm water retention requirements, and utility pedestals, so as not to create problems with sign visibility or prompt the removal of required landscape materials.    All mechanical equipment, including HVAC, utility meters, etc. shall be screened from view by material(s) that are architecturally integrated and consistent with the proposed buildings.    75% of all trees along Frye Road and Ellis Street shall be either salvaged from the site, a minimum of 36 inch box and a min of 12 feet in height at the time of planting, or an existing mature tree.   Preliminary Development Plan approval does not constitute Final Development Plan approval; compliance with the details required by all applicable codes and conditions of the City of Chandler and this Preliminary Development Plan shall apply.

Attachments Resolution 5821 Development Agreement Ordinance 5105 Vicinity Maps Development Booklet

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