Loudoun County Advances Bill To Restrict Data Center Development

New zoning restrictions could soon make it harder to build data centers in the industry's most important hub.

Lawmakers in Loudoun County, Virginia, voted 7-2 last week to advance legislation that would eliminate by right zoning for data centers anywhere in the county. The pending zoning changes, first reported by Loudoun Now, would mean that every data center project has to be individually approved by the Loudoun County Board of Supervisors, effectively stripping entitlements from properties zoned for data centers that have fetched huge premiums from developers. 

If passed, the legislation would likely have a significant impact on the future of data center development in a county that is home to Data Center Alley and boasts the highest concentration of these facilities in the world. Although Loudoun’s political climate over the past 20 years has been famously friendly toward the data center industry, the political will to further regulate data center development has grown steadily in recent years as the market has become saturated.

The county is now scheduled to hold a series of public hearings on the proposed language ahead of a final vote on the measure later this year. If passed, six different zoning districts would see data centers removed as a by right use: Belmont Ridge, Route 28, Nokes Boulevard, Arcola West, Arcola East and Metro Area. By right projects already in development wouldn't be subject to the updated rules, supervisors said. 

The proposal to remove data centers as a by right use took the industry by surprise when it was first proposed in February, as Bisnow reported at the time. But the potential changes come amid a broader wave of legislation to restrict data center development across Virginia. 

More than a dozen pieces of legislation that would limit the development of data centers have been filed across the commonwealth at the county and state levels since the beginning of the year. This has injected new uncertainty into a market that, while remaining the world’s most important data center hub, is evolving into increasingly challenging terrain for developers. 

In neighboring Fauquier County, the board of supervisors passed wide-ranging regulations and development guidelines aimed at limiting data center growth that the Fauquier Times called “one of the strictest in Northern Virginia — and possibly the entire state.” Elected officials in nearby Stafford and Fairfax counties are also considering similar plans to manage data center development. 

While opposition to data centers in other parts of Virginia has been driven largely by concerns over their proximity to residential areas, their impact on the character of rural areas or environmental issues, the proponents of limiting new data centers in Loudoun County say their main goal is diversifying the county’s economy and tax base. Data center developers are often willing to pay huge premiums for land in Loudoun County, they say, and that is driving away other industries that the county wants to attract. 

“We are turning away other businesses, other commercial entities, in Loudoun County because they cannot afford to land here, because data centers are buying all the land up,” Board Chair Phyllis Randall said at last week’s board meeting, according to the Washington Business Journal. “If we do not make an absolute effort to allow other businesses in Loudoun County, we will be reliant on one source of commercial revenue ... [which] is never a smart thing.”