Verified:

Environment:
openstack-tripleo-heat-templates-0.8.6-121.el7ost.noarch


I'm getting UTC by default:

[root@overcloud-controller-0 ~]# date
Thu Feb 18 03:24:28 UTC 2016
[root@overcloud-controller-0 ~]# timedatectl
      Local time: Thu 2016-02-18 03:24:31 UTC
  Universal time: Thu 2016-02-18 03:24:31 UTC
        RTC time: Thu 2016-02-18 03:24:31
       Time zone: UTC (UTC, +0000)
     NTP enabled: yes
NTP synchronized: yes
 RTC in local TZ: no
      DST active: n/a




When depoyed with:
  TimeZone: Asia/Tel_Aviv

Get the following:

[root@overcloud-controller-2 ~]# date
Thu Feb 18 06:02:35 IST 2016
[root@overcloud-controller-2 ~]# timedatectl
      Local time: Thu 2016-02-18 06:02:36 IST
  Universal time: Thu 2016-02-18 04:02:36 UTC
        RTC time: Thu 2016-02-18 04:02:36
       Time zone: Asia/Tel_Aviv (IST, +0200)
     NTP enabled: yes
NTP synchronized: no
 RTC in local TZ: no
      DST active: no
 Last DST change: DST ended at
                  Sun 2015-10-25 01:59:59 IDT
                  Sun 2015-10-25 01:00:00 IST
 Next DST change: DST begins (the clock jumps one hour forward) at
                  Fri 2016-03-25 01:59:59 IST
                  Fri 2016-03-25 03:00:00 IDT

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://rhn.redhat.com/errata/RHBA-2016-0424.html