Counties try to keep data center development in bounds

Key Takeaways

For 20 years, data centers were cash cows for county governments. 

With construction complete, they generated minimal traffic because relatively few employees would commute and they added no students to the school system, but the revenues would pay off consistently, bolstering the tax base. As demand for data processing capacity rapidly increases, driven in part by artificial intelligence proliferation, so do the complications for planning departments and governing bodies. Nowhere else is that as evident as the Washington, D.C. metropolitan area. 

County planning departments in Virginia and Maryland have worked to keep data centers out of sight, out of mind and out of the ears of their residents, but also to land a shot on a moving target. Prince William County, Va. started in 2016 by creating a zoning overlay district to keep data centers within industrial areas.

“I think they’ve lost their luster, because of some of the externalities, like noise and pollution, but others that we didn’t know were going to be a problem [are too,] that they were very tall, with blank walls, because they don’t have windows like an office building would,” said David McGettigan, the county’s deputy planning director. 

“They started being very unattractive structures and then they start requiring electrical substations, which are also not very attractive. We wanted to try to get a handle on that.”

Data centers are equipped with diesel backup generators, which must be used and maintained monthly, adding an environmental reason to separate them from residential areas. The operating electricity, water and gas needs alone are staggering.

Even so, data centers remain a targeted industry for the Prince William County’s economic development department, and the county, with plans for 37 data centers, accounting for 23 million square feet of space on 1,502 acres, remains in striking distance of overtaking neighboring Loudoun County “home of the internet ” — accounting for 70% of traffic in 2021 — in the coming decades, adding a million square feet of data center space per year. Loudoun County currently sports 200 data centers occupying 43 million square feet, with 47 million additional square feet being reviewed. Proximity to other data centers, to fortify redundancy, has driven their clustering, and McGettigan noted that traditional use, more so than increased artificial intelligence, has thus far driven the demand for more capacity in Northern Virginia.

McGettigan calls the zoning overlay district a success.

“I think it was successful at focusing the growth within the district, he said. “I think that without that we would have had impacts all over the county instead of having it focused in these industrial areas,” and has insulated non-industrial areas from the property value increases.

“Data centers are so hungry for land that they’ve driven up the price of industrial land to such high levels,” McGettigan said. “One was $2 million an acre. It’s sort of unimaginable that somebody would buy land for that price that isn’t in downtown Manhattan.”

It hasn’t been perfect, though, and the changing demands from data centers has driven revision. Real estate prices are prompting the previously one-story data centers to grow to three stories. An overlay district revision in 2019 added architectural standards and a current revision in consultation with a citizen advisory group is looking at noise ordinances.

“Some neighborhoods have been adversely impacted by the noise from the data centers, there’s a persistent hum,” McGettigan said. “It’s disruptive to residential neighborhoods nearby.”

Sodding the playing field

Across the Potomac River, Frederick County, Md. Executive Jessica Fitzwater is taking a deliberative approach to regulating data centers. The county currently has one data center district, located on the site of a former smelting plant, but she wants to have the playing field well defined before the industry comes for her county’s land.

A county data center work group represented a cross-section of Frederick County residents and stakeholders and examined siting, sustainability and community benefit aspects. The county Council is now working on bills to address siting and zoning. 

“We want to get it as right as we can, given how fast everything is changing,” Fitzwater said. “We are being extremely transparent about this because there’s so much speculation about big businesses coming in behind closed doors and signing NDAs (non-disclosure agreements). We’ve seen that concern in other communities. We’re saying ‘yes’ to anyone who wants to meet with us, but we’re telling people who we’re meeting with and bringing it all back to the Council.

“That makes these processes take a little longer, which sometimes people don’t like, but to me, it’s worth it on the front end to take that approach and make sure we’re covering all our bases as much as we can.”

Running out of space, energy and goodwill

Fitzwater’s caution seems warranted given the outlook by Loudoun County Supervisor Mike Turner. 

His analysis of the rapid growth in data centers sees trouble ahead for a county whose data center market is greater than the next six U.S. markets combined, particularly when it comes to energy needs.

“The existing paradigm of power generation, transmission and consumption this nation has relied on for more than a century is simply not capable of providing sufficient power to Loudoun County data centers (and very likely Prince William County data centers) going forward,” he writes in a policy paper on the topic. “The demand from that sector of our market environment is too high, and that demand is accelerating rapidly to historic levels.”

Despite being an early leader attracting data centers, Loudoun County’s comprehensive plan was not updated to reflect the industry until 2019 and its zoning ordinance was not updated until 2023, a time during which data centers began exercising their “by right” development options.

“This plan/ordinance misalignment could not have occurred at a worse time and seriously limited the Board’s ability to manage data center growth as envisioned in the Comprehensive Plan,” Turner writes.

Although utilities are upgrading their infrastructure, Turner believes the new transmission lines will not keep pace with the rapid increase in future demand in Loudoun County.

Meanwhile, Fitzwater is concerned both about the need for additional energy and the lack of input and oversight counties and even the state have in regulating utilities, in her case, the proposed 70-mile Maryland Piedmont Reliability Project.

“Residents don’t care who’s in charge of what, they’re going to come to us because we’re the ones that they know, but we’re not the ones that have any real levers to pull on this conversation,” she said. 

“So, our role is really amplifying the concerns of our residents, taking a stance, but being very transparent that we’re not the decision-makers here, and I’m very careful about not coming across as promising something like ‘We’re going to solve this for you.’” 

In Loudoun County, the local power utility’s overhead transmission line project cutting across active farmlands, wetlands, tree conservation areas and through a historic village galvanized popular opposition in 2023. 

That opposition drove the Board of Supervisors, in 2024, to deny a major data center application for the first time. 

The supervisors will likely require oversight of all data center construction in the near future, Turner writes, and he only sees opposition increasing, even at a point where the needs existing data centers will outpace local energy supply. 

“If incumbent elected officials are then voted out of office, they will be replaced by other elected officials with a mandate to vehemently oppose the data center and utility sectors,” he wrote.

The least costly or unsustainable option, Turner writes, involves creating tax incentives to encourage data centers to use onsite, carbon-net-zero power production through microgrids. 

Tracing the evolution of the problem, he feels the county, data centers and utility company have been overwhelmed by the rate at which the data center environment has changed. 

“We’ve invented the airplane but just realized we haven’t yet invented runways,” Turner said. 

“This level of systemic change demands new paradigms at almost every level if we are to avoid an involuntary and likely painful landing.”

That change may come from the federal level. 

Politico reported that President Biden is considering issuing executive orders to allow data centers to exceed pollution limits, open federal lands to data center construction and give data centers priority access to available power supply.

Watching her neighbors navigate the issue has helped Fitzwater appreciate the degree of difficulty in play.

“Even with the regulations we have in place, the industry is changing so fast,” she said. “You feel like you’re ahead of the curve and behind the curve at the same time.”