This story was reported and written by Radio IQ.
Virginia’s data center industry is massive– in both the amount of land it covers and, most importantly, the tax revenue it brings. But as some localities tire of the massive tech hubs, others are swinging open their doors to welcome them.
“We think, with the right company, the right data center, it could be a fruitful engagement for the both of us,” said David Manley with the Joint Industrial Development Authority of Wythe County.
He and some other rural Virginia communities are looking to bring data centers to their parts of the state as industry hubs in Northern Virginia and suburban Richmond sour on the industry worth billions in local and state funds.
“Our community is rapidly changing and sometimes we feel quite helpless in that change,” Delegate Josh Thomas told Radio IQ. His suburban Northern Virginia district and its Digital Gateway is expected to see over 2,000 acres of farm land turned into data centers. But the operations are power-hungry and require new, massive transmission lines through other localities who don’t get the benefits.
“They’re not getting a single cent of revenue for Prince William’s data centers,” Thomas said of the pass through counties. “They’re just having to give up valuable farm land.”
Delegate Michael Webert’s district, just outside of Thomas’, is among those bearing the brunt of those power lines.
“There’s a lot of people who don’t want to forgo the economic impacts data centers can bring, but we need to take into consideration the unintended consequences data centers have brought,” Webert, who was actively tending to his cattle when he spoke with Radio IQ, said.
And other localities that once sought data centers are now taking steps that could wrangle them in. After getting Facebook to build a massive facility in Henrico County at the “microscopic” rate of $.40 for computers and related equipment, they’re now bumping it up to $2.60. That’s still cheaper than NOVA localities, and its benefits to locals will be significant with millions going back to home and car owners as well as businesses.
But that deal isn’t available for all localities who once welcomed data centers. The City of Manassas is eyeing a 67% hike on the facilities, but without the tax cuts Henrico gets to enjoy.
This is among reasons Senator Danica Roem is among the least enthusiastic about Virginia’s data center growth. And while data center tax revenue for Prince William County has seen a 2,475% increase, $6.5 million to $166.4 million, in the last decade, it’s caused other problems, including, she said, an increase in property taxes.
“Tax ‘em until they leave as far as I’m concerned,” Roem, whose district includes western Prince William County, told Radio IQ.
Still, that tax revenue, $9.1 billion in Virginia GDP annually, is nothing to laugh at. You only have to look at some southern Virginia localities that have already opened their doors to data centers to see the results. In Mecklenburg County, an early adopter of data centers thanks to its proximity to North Carolina’s tech triangle, the rural community was able to build a new combination middle/high school thanks to the influx of data center funds.
For localities looking to welcome the new operations, they need not look much further than the region around Fredericksburg. About a decade ago five local governments in the area got together to standardize their tax rate in the hopes of drawing data centers to the region. It worked, thousands of acres are now occupied by the high speed data processors.
Curry Roberts is with the Fredericksburg Regional Alliance.
“We worked hard with the companies, the localities, to take lessons learned from PWC and Loudoun and not replicate the ones that are really controversial,” Roberts told Radio IQ, noting that data centers are east of I-95 while much of the area’s population sits to the west.
Roberts also spoke to the importance of attracting a larger data center first to a rural county. The larger scale outfits, he said, can cover costs for the complex infrastructure required to hook up all future projects.
“We didn’t have any data centers and if you’re gonna do it, do it when you don’t have any,” Curry said.
The regional project is also notable for how much land the data centers could envelope. Thomas said Loudoun County, the state’s data center birthplace, considers their oversaturating rate at about 40 million square feet; if all of the projects Curry is linked with get approved, it could be 70 million.
“That’s across multiple localities and doesn’t include the campuses,” Curry said, noting not all the projects will get approved. “There’s a critical mass you want and an over build you don’t want.”
And counties can offer incentives, like rebates on taxes for a certain length of time, in exchange for the companies completing the infrastructure work. Those can include rebates on any future tax increases too.
“You can’t guarantee you won't raise the rate, that’s illegal, but they can agree to rebate the difference,” he added.
Back in Wythe County, Manley and his Joint Industrial Development Authority are taking in those lessons too, and with high speed data lines that link Washington DC to Atlanta running through their region, they hope to bring in some of that tax revenue.
“What might not be good in one area might be entirely wholeheartedly welcomed in another,” Manly said, pointing to an ordinance his county recently passed announcing their intention to welcome new data center projects.
As for the industry itself, they point to the massive influx of new jobs it has created. Perhaps not running the facilities, but many well paying union jobs that involve construction and running wire. It’s also born a new education industry with community colleges, including Germanna Community College outside Fredericksburg, offering new training programs.
“There’s a lot of fiber being laid out here,” Curry said.
And the industry knows they’re being courted.
“We’re seeing significant interest among local jurisdictions across the country seeking to attract data center investment,” Kate Smiley with the Data Center Coalition, said to Radio IQ in a statement. She said many factors play into whether or not a data center wants to invest in a new location, including the tax and regulatory climate.
“While predictability and certainty of cost structures are important for all businesses, they are especially important for the data center industry, given the magnitude of long-term capital investments involved in each data center project,” she said. “Sudden, significant changes to a local area’s business climate can signal uncertainty and may impact competitiveness and investment decisions.”
Delegate Thomas, meanwhile, said he wasn’t surprised to see new localities hoping to get into the data center game.
“You can see how the market is responding,” he said of tax increases and cuts across the state. “While we’re trying to protect our communities, the market is doing it for us.”
“There’s less resistance from those populations so they may go there,” he added. “Now those communities need to worry about the infrastructure involved.”
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
