Buddy Rizer, executive director for the Loudoun County Department of Economic Development, has spent 15 years promoting Loudoun as the data center capital of the world. The effort has been successful by most measures. Since 2008, not a single day has gone by without a data center being under construction somewhere in Loudoun, according to Rizer.
The industry has been a huge boon to the county, which expects to bring in $576.2 million in related tax revenue this year – approximately a third of the local tax income.
But after years of growth, Loudoun is running out of room for data centers, which some say dominate the landscape in the eastern part of the county. Some residents in Virginia’s fastest-growing county complain that the data centers are a noisy eyesore. Last year, Loudoun’s Board of Supervisors limited construction in some neighborhoods and added new environmental and design requirements.
Those restraints came on top of a surprise announcement by Dominion Energy that it faced a capacity shortage in eastern Loudoun – data centers consume enormous amounts of energy – putting a potential damper on construction through at least 2025. With the Rural Policy Area in the western Loudoun off-limits to data centers, developers have shifted their focus to Prince William County, but also have their eyes on Stafford and Fauquier counties, according to Rizer.
“If the data center industry itself is in the second or third inning, Loudoun County is probably in inning seven or eight for multiple reasons: the energy reasons and the land reasons, and because we want to make sure that we have land remaining for other types of businesses.”
As developers turn to nearby counties to meet demand, the Piedmont Journalism Foundation sat down with Rizer to hear his point of view on the future of data centers in the region.
Can you tell me a little bit about how you became first aware of data centers?
After the tech bubble burst [in 2000], we had three custom-built data centers that were empty. So I really started focusing on filling those three buildings. We saw that if we made it easy for data centers to do business – by providing access to fiber optic networks, water and electricity, along with access to a workforce that would allow developers to get to market quickly – there was an opportunity for us to build.
How did you convince the county government to embrace data centers?
My pitch was an anti-jobs argument. This isn't about jobs. The thing that makes data centers great for us is that we're not bringing more people here. We're not building schools, we're not creating roads. We are not doing community services.
At the same time, we're getting a lot of tax revenue. We will receive about $650 million in local tax revenue this year from the data centers. [Rizer said the $576 million estimate mentioned above and in Loudoun’s 2023 projections does not include real estate tax and other revenue that brings the county’s total income from data centers up to $650 million.] It's about 3% of our land base, providing over 30% of our tax benefits.
Dominion Energy announced in July that it didn’t have the infrastructure in place to supply continued growth of data centers in Loudoun.
We had always worked under the assumption that the power was a given, and we worked very closely with Dominion to help them with their infrastructure. We were very surprised when in July, we started hearing that there was an issue and that they weren't going to be able to deliver power to some new data centers that we were already committed to. So yes, that was a shock to all of us.
Have you run out of space where you can put data centers in Loudoun?
We have land limitations, we have power limitations, and we have political limitations.
What are your political limitations?
Our residents want to make sure that if they're going to see data center buildings that they're not dominating our community. I think that from a budgetary standpoint we don’t want to become overly reliant on one revenue stream.
What do you think happens as there are fewer opportunities for tech companies to build data centers here? What does it mean for Fauquier?
It’s opportunity and pressure. It's the opportunity to attract what has been a community-enhancing and community-changing industry. But it also puts pressure on development patterns that were maybe not ever considered before. We have drawn a hard line in western Loudoun County – we have made a conscious decision that we are not going to build data centers there.
What do you mean?
I don't want to speak for Fauquier, but I'll speak for Loudoun. There is pressure. People ask why we can’t put data centers west of Route 15. There is plenty of land. There are landowners out there that don't want to farm anymore. They want to cash out and they see this opportunity to sell their land for millions an acre. So there is that pressure, right?
I think it's the same in other communities. They may have not thought of themselves as a place of dense development or high-impact development. And for, you know, whatever you want to say, data centers are high-impact development. They're big. They have a lot of energy needs.
Is there enough demand from the data center industry to expand beyond Loudoun to places like Fauquier?
Our internal research would indicate that the digital infrastructure demand is going to exceed the supply through at least the middle 2030s nationwide, worldwide. People are paying $4 million and $5 million an acre for land in Loudoun County. It is still the most important data center market in the world. And that's expanded just outside of Loudoun. Prince William is now part of that, Fauquier even.
Do you have any advice on how Fauquier should approach the potential development of data centers?
I would say my lesson learned is to be very strategic -- set real expectations and work with the elected officials within the community. Define the envelope where it would be appropriate for data centers. I would include it around existing infrastructure and transportation corridors and consider proximity to environmentally sensitive areas and residential areas. I think that if you start encroaching or overlapping, that could be a dangerous precedent.
Loudoun’s energy and telecommunications infrastructure made it the No. 1 data center region in the world. If Prince William builds that same level of infrastructure, will it make it easier to build in nearby counties?
Yes, Stafford and Fauquier. You look at it as the same market. Right now, the focus is on Loudoun and Prince William, but there are those who are starting to view Stafford and Fauquier as part of the data center market.
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