Loudoun County is preparing new rules on where data centers should be built

A large new data center in Sterling, Virginia in Loudoun County. (Photo: Rich Miller)

LEESBURG, Virginia – The Data Center Alley house is updating its guidelines for future data center development and wants industry feedback before deciding on new rules. But first, data center companies must digest a complex proposal presented by a Loudoun County committee on Monday night.

Regulations proposed by the Transport and Land Use Committee (TLUC) would govern the location and appearance of future data centers, seeking to resolve tensions arising from the huge cloud cluster growth surrounding Ashburn, in Virginia. The proposals are sent to the entire supervisory board, which will examine them at the end of September.

Loudoun County has more data centers than anywhere on earth, with 26 million square feet of existing space and an additional 8 million square feet under development. Indeed, Ashburn sits atop the densest fiber optic network intersection in the world, making it an ideal location to store and distribute data for internet companies such as Amazon, Meta, Microsoft and Google. .

Cloud builders’ appetite for real estate has left a limited supply of vacant land for development, driving up real estate prices and creating tension with locals. Local officials responded by seeking to update county rules on where data centers should and should not be developed.

The proposed updates address two questions about the future development of the data center in Loudoun:

  • Location: The county wants to limit data center growth in certain areas, including several where data center development was previously “as of right.” The TLUC recommended that this be addressed through changes to place types in the county’s comprehensive plan, as well as a rewrite of zoning ordinances. A major goal is to avoid the development of data centers along Route 7, where there is limited electrical infrastructure to support them.
  • Standards: Future data centers must meet new standards regarding high-quality building design, environmental sustainability and their proximity to residential areas. Supervisors may also consider additional guidance on loud noise from data center operations.

Monday’s proposal follows months of discussions between the TLUC and the Loudoun County Board of Supervisors, as local officials vigorously debated the industry’s impact on land values, residential communities, tax rate and county budget.

Confusion over deadlines

The data center industry had hoped for more time to digest Proposaland requested that it be reviewed again by TLUC in September before being sent to the Board of Supervisors.

But the TLUC opted to take its recommendations to supervisors for action at the second council meeting in September, citing a tight timeline for a review of zoning ordinances, which would help implement some of the new regulations.

TLUC President Michael Turner apologized to the data center community for any confusion regarding the process.

“My intention was to try to go to a fourth meeting (in September), but the rewrite of the zoning ordinance is just a monumental project that we really need to move on,” Turner said. “We are not trying to rush. The truth is that this was a miscommunication, and we absolutely need to get input from the data center industry. »

First, the industry will need to get clarification on the proposal, which has at times left TLUC members confused. The talks are summarized in a presentation county staff at Monday’s meeting, which includes multiple maps. The TLUC is recommending changes to zoning ordinances as well as the comprehensive plan, which will provide more granular management of data center growth, including new design standards.

Supervisory Board Chair Phyllis Randall said TLUC’s proposal is subject to change and stressed the importance of input from the data center community in the board’s process.

Grandfathering for existing data centers

County zoning has defined several “types of locations” where data centers are a rightful development and eligible for expedited approvals without the need for hearings with local councils. This simplified approach has been a key factor in the rapid growth of the data center industry in Loudoun.

One of the primary goals of the TLUC was to avoid data center development along Highway 7, which includes many Suburban Mixed-Use parcels that are zoned for data center development by right. The region does not currently have the electrical infrastructure to support data centers, meaning any new projects would likely require additional power lines.

With this in mind, the TLUC has focused its efforts on prohibiting data center development in the mixed-use suburban type of location, which includes 83 vacant parcels totaling 887 acres of land that previously supported development by right. This is just one of many types of locations that allow for the development of data centers in their own right.

The committee said existing data centers will be “grandfathered” from prior legislative or administrative approvals for their properties, and in some cases, statutory protections associated with the Route 28 tax district.

“We want to protect existing data center developments,” Turner said. “We asked the industry to come here and build. They have been great community partners. The goal here is to protect people with skin in the game.”

“My goal is to see data centers continue to grow and thrive here in the county,” Supervisor Caleb Kershner said. “It is important to provide regulatory and legal certainty so as not to disrupt this industry.”

Data Center Landbanks Quick Debate

But some grandfathered data centers could still see an impact. In areas where zoning changes prevent the development of additional data centers, acquired data centers could continue to operate but would be classified as non-conforming use, “which would require additional approvals for expansion or improvements” , said Kate McConnell, senior planner for the Loudoun County Department. planning and zoning.

Approved data center projects and those that have already submitted plans for approval can move forward. But the TLUC has struggled with the appropriate treatment of “land banks” in the type of mixed-use suburban location, where data center companies have purchased property but have yet to begin the approval process. County. This category currently includes 13 properties, according to Loudoun Economic Development staff.

“If they bought land, we shouldn’t change what’s allowed on that land,” said supervisor Tony Buffington, who noted that data center properties sell for $2 million an acre or more. “They have made a significant investment in Loudoun County.”

Several other TLUC members said they were open to allowing these projects to continue as data centers, but preferred to make those decisions on a case-by-case basis, subject to evaluation by county staff.

“We are invested in Loudoun”

The stakes are high for both the department and the data center industry. Data center real estate makes up about 1.5% of the county’s total land area, but will contribute about 31% of all budget revenue, or about $575 million in fiscal 2022.

A 2022 Northern Virginia Technology Council study found that Loudoun County data centers have a tax impact ratio of 13.2, meaning they pay $13.20 in local property taxes for every 1 $.00 in utilities associated with their presence in Loudoun County.

“We are invested in Loudoun, and our teams live here and work here,” said Josh Levi, president of the Data Center Coalition, in a letter to the TLUC. “We are proud of our outsized contributions to county tax revenue to help meet school funding, social services, affordable housing and many other critical county priorities.”

A key factor in that growth has been knowing what to expect, Levi said.

“Regulatory certainty and predictability are key drivers of Loudoun’s historic success and are essential to maintaining the strength of the county’s data center industry in the future, especially given the size, scale and the long-term nature of siting decisions for existing and future investments,” Lévi writes.

Balancing Resident and Industry Concerns

All TLUC members have highlighted the importance of the data center industry. As DCF noted in February, “Loudoun County values ​​data centers. But he doesn’t want it everywhere.

County officials are aware of residents’ concerns, including the outward appearance of data centers, their proximity to residential neighborhoods, noise from equipment, and the impact of rising property values ​​on affordable housing.

This created a difficult balance for the TLUC and county planning staff, who undertook a thorough review of how the committee’s goals could be implemented using the master plan and zoning ordinances.

“It was a very sensitive discussion,” Turner said.

Randall noted that the entire supervisory board will need to be made aware of the proposal, as a number of supervisors are not part of the TLUC, whose sessions on the future development of the data center lasted seven hours of discussion. over three sessions.

“Those three meetings were very, very involved,” Randall said. “If they’re going to be able to vote on this, I think they need to be offered a fairly detailed briefing.”

The data center industry will face a similar challenge, which must analyze the TLUC’s recommendations and develop responses that address how these changes could impact their operations in Loudoun County in the future.

“It’s not just paying lip service to asking the data center for input,” Turner said. “We cannot make an informed decision on the Supervisory Board without strong input from the data center community on these motions.”

“Hopefully the data center industry will have time to review the recommendations and come back to us with a prioritized list of concerns,” Buffington said.

Ramon J. Espinoza