Loudoun County’s Transportation and Land Use Committee (TLUC) held the first of its three-part Data Center Discussion Series, which targets revisions to policies and regulations concerning data center uses throughout Loudoun County, with a particular focus on data center uses in the Route 7 Corridor. Recall, Loudoun County’s Route 7 Corridor is an area where a prohibition on constructing data centers is being considered.

READ MORE: Loudoun County Mulls Route 7 Data Center Prohibition, Nixes ‘Dulles Cloud South’

The purpose of the first part of Loudoun County’s Data Center Discussion Series was to ascertain TLUC’s feedback on the Data Center Land Study map, including the identification of concerns (e.g., use, design, infrastructure) with data centers in the Route 7 Corridor. As shown through the map of Loudoun County below, the Route 7 Corridor is the red area (#1) at the top of the map.

Data Center Land Study Map – Loudoun County
Loudoun County Data Center Map Route 7 Corridor Dulles Cloud South

Background – Route 7 Corridor – Loudoun County

Presently, there is no power infrastructure along the Route 7 Corridor, meaning it is missing a critical factor in the development of data centers. However, at the same time, the addition of new power routes is a very disruptive event. As such, Loudoun County is considering a prohibition on constructing data centers in the Route 7 Corridor area, as part of its ongoing zoning ordinance rewrite.

In February 2022, Loudoun County’s Transportation and Land Use Committee (TLUC) recommended that the Board of Supervisors establish a zoning overlay prohibiting data centers in the Route 7 Corridor. However, at Loudoun County’s Board Business Meeting in April 2022, the Board did not accept this recommendation. Instead, the Board opted to send the item back to TLUC for more comprehensive discussion.

Discussion Progresses

As Michael Turner, Supervisor (Ashburn District) on Loudoun County’s Board of Supervisors and Chair of TLUC notes, prohibiting data centers in the Route 7 Corridor is a topic of serious concern for data center developers and land owners:

“I have had numerous conversations with representatives from the data center community, conversations with multiple County staff members – we’ve had several staff meetings on this”. He continues stating “The data center community have been extraordinarily good community partners for 20 years now. And they are in a rapidly changing environment; they are in a high demand, high growth business environment.” Turner adds “These kind of discussions, with the stakes of the game as high as they are, can get very emotional, they can get personal – egos can get involved”.

Finally, Turner does not forget about the all-important issue of money, stating: “This is really complex. We’re dealing with hundred-million-dollar investments within the industry. An entire industry that has staked everything on the development in Loudoun County. They’ve been extraordinarily favorable and good community partners to Loudoun County”.

Data Center Managed Growth Discussion Principles

In order to “establish a respectful, collegial environment” for Loudoun County to conduct a series of discussions with the data center community on the Route 7 Corridor issue, Turner set-out an 8-point plan, known as the Data Center Managed Growth Discussion Principles, as outlined below:

Principles #1-4

  1. Loudoun County has the highest concentration of data centers in the world. In recent years, data center growth in Loudoun County has increased significantly. This unprecedented growth creates unique challenges for all community stakeholders
  2. The Loudoun County Board of Supervisors considers the data center community a valued community partner
  3. As a reflection of this valued relationship, Loudoun County, through the Board of Supervisors and the Department of Economic Development (DED), has historically extended favorable business development terms to the data center community to encourage sector growth
  4. The data center sector in Loudoun County now provides significant revenue to the County through real property and business personal property taxes. In recent years, the revenue generated from business personal property tax on computer equipment in data centers has become the greatest single source of tax revenue, other than real property taxes, within the County operating budget

Principles #5-8

  1. The Board of Supervisors supports the managed growth strategy embodied in the Loudoun County 2019 Comprehensive Plan. Unmanaged, unlimited growth by any one sector, as opposed to balanced growth, based on the Board’s strategic priorities, could eventually create a strain on County resources, negatively effecting the quality of life of our citizens
  2. Given the recent significant growth of the data center sector in Loudoun County, the Board of Supervisors, as the elected governing body of the County, has an opportunity to conduct a data-based, factual analysis of the tools it has at its disposal, to consider an appropriate land use balance that would allow data center use in suitable areas, prohibit data center use in unsuitable areas, and predict & manage data center growth in the future, while acting in a financially responsible manner to protect a significant source of revenue
  3. Existing computer equipment within established data centers has provided significant personal property tax revenues to the County’s budget. But the value of those assets depreciates year-over-year. To protect the County’s existing revenue, while examining policy responses to new growth in this sector, the Board seeks to stabilize the market to ensure existing operators continue to replenish their equipment
  4. The goal of this data center analysis is to create a predictable business environment for all stakeholders. The basis for all related discussions is one of mutual & professional respect for all stakeholders, collaborative analysis & decision making, a genuine spirit of compromise, and a strong desire to discern common ground and create mutually beneficial and clearly understood outcomes for all stakeholders

When Miscommunication Becomes Costly

Appropriate communication between Loudoun County and its data center partners is of paramount importance, given that misunderstandings in the County’s policies can have significant financial ramifications for various data center stakeholders. To this end, Kristen Umstattd, Supervisor (Leesburg District) on Loudoun County’s Board of Supervisors stated the following:

“I’ve already gotten a complaint from a property owner who had a contract with a data center [developer] to go on land that would be by-right in the Corridor. And when the data center [developer] listened to the Board’s discussion of data centers, it relied on the contingency clause in the contract, pulled out of the contract. So that property owner just lost at least a billion dollars in land value overnight. And I’m not sure that’s fair to that property owner”.

Note: by-right infers that data centers are a permissible use in the zoning district and are not subject to special review and approval.

Power in the Route 7 Corridor – Critical Issue

A key pillar of Loudoun County’s desire to prohibit data center development along the Route 7 Corridor is that adequate power connections are not currently built along the Route 7 Corridor. Therefore, major overhead transmission line extensions would be necessary to provide sufficient power.

As previously stated by Buddy Rizer, Executive Director of Loudoun County’s Department of Economic Development (DED): “Dominion Power would likely be required by statute to run high voltage power lines to this corridor, and it could be up to three miles of towers down Route 7, if even one data center was built on the Route 7 Corridor”.

Dominion Power

Following a recent meeting with Dominion Power, Michael Turner, Supervisor (Ashburn District) and Chair of TLUC also adds the following considerations regarding Dominion and the Route 7 Corridor:

“Dominion now considers any parcel that will allow a data center – there will be a substation on that parcel. That’s how they plan for it. There’s no longer ‘there might be a substation nearby and is it a distribution substation or is it an organic substation’. If there’s a parcel that allows a data center, Dominion plans to build a substation on that parcel, and they’ll wait to be proven otherwise”.

“They are required to provide power to customers. They do not have the option… They respond to customer needs, so if the customer needs power, they have to deliver power. They will work with the community and have community meetings trying to figure out ‘where are we going to route this power – but we have to provide power’”.

“They consider a small data center to be 30 to 60 megawatts. To give you some perspective… 1 megawatt can power about 200 homes. So, if you think we’re going to build 6,000 houses along the Route 7 Corridor, and you divide 200 homes into 6,000 – that’s 30 megawatts. You don’t need an overhead power line for 30 megawatts of power requirements along Route 7. You build one hyperscale data center of 280 megawatts on Route 7, you now need 3 overhead power lines… This is just the electrical requirements that are associated with our data center community”.

Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne, CoreSite Realty, QTS Realty, Switch Inc, Iron Mountain (NYSE: IRM), Cyxtera (NASDAQ: CYXT), and many more. Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing.

LEAVE A REPLY

Please enter your comment!
Please enter your name here