The City of San José today announced that Prologis Inc. is the preferred developer for 159 acres of economic development land belonging to the San José-Santa Clara Regional Wastewater Facility.
City officials said in a press release that this agreement will lead to the creation of a new data center and advanced manufacturing campus at the intersection of Highway 237 and Zanker Road in the heart of Silicon Valley that will create an estimated 6,000 jobs, generate $30 million annually in tax revenue and drive economic growth in San José.
“This project is a perfect match between the city’s assets and market demand,” said Mayor Matt Mahan. “With abundant clean power and recycled water available immediately adjacent, we will transform unused wastewater treatment facility land into a hub for data centers and advanced manufacturing that power the AI revolution right here in Silicon Valley. It’s the largest economic development opportunity our region has seen in years, and we’re excited for Prologis to turn this vision into jobs, investment, local tax revenues and long-term prosperity for our residents.”
City staff recommended Prologis after an evaluation process identified the company’s proposal as the strongest fit for both the site and the City’s long-term economic goals. Prologis’ plan makes the most of the land’s potential by focusing on data centers and advanced manufacturing uses — industries that generate high-quality jobs and strong local revenue is tailored for California’s regulatory environment, with flexible building designs, efficient land parcelization, and a clear strategy to utilize the first 250 megawatts of available power.
The company told the city it also is committed to partnering with Pacific Gas and Electric Company to secure additional capacity in future phases, ensuring the site’s long-term growth potential. With a lease structure that limits risk to the Regional Wastewater Facility and a development team experienced in delivering comparable projects nationwide, “Prologis offers the most capable and sustainable path forward for this landmark opportunity,” according to the city.
“San José is a prime destination for innovation and technology,” said City Manager Jennifer Maguire. “The development of major data centers and advanced manufacturing facilities will help retain and attract high-tech industries, stimulate the economy and create jobs, and will also generate lease revenue to help offset future costs to the Regional Wastewater Facility’s ratepayers. By transforming underutilized land, we’ll further reduce operations and maintenance expenses – delivering long-term savings to our communities.”
This announcement comes just months after the City of San José signed a first-of-its-kind implementation agreement with PG&E to guarantee speed and certainty of power delivery for large energy customers. PG&E has requests for nearly 2,000 megawatts of new demand from data centers in the San José area, and in addition to the local data center demand, San José is preparing to benefit from 2,000 megawatts from two new high-voltage transmission lines by 2028, which could provide enough power for nearly 1.5 million homes.
Located in North San José, the wastewater facility serves 1.5 million residents and over 17,000 businesses across eight cities and four sanitation districts. The city predicts that the development of the buffer lands will be an economic boon for the entire region, and generate revenue that will be distributed to each partner agency including: the cities of San José, Santa Clara, Milpitas, Cupertino Sanitary District, West Valley Sanitation District, County Sanitation Districts 2-3 and Burbank Sanitary District. Additional revenue from the development will offset future costs to the agency's ratepayers.
The San José City Council will hear this item on Nov.18. With City Council approval, San José will enter into an agreement with Prologis to define project milestones, community engagement efforts, and key development terms.
Over the next several months, the city said it and Prologis will collaborate on a detailed land use, infrastructure, and financing plan while engaging nearby residents and stakeholders. The project will undergo environmental review and additional public hearings before a final development and ground lease agreement is brought forward for approval by the City Councils of San José and Santa Clara.
