Inside Virginia’s billion-dollar data center boom—and what’s next for its Maryland neighbors

[00:00:01] Speaker 1: Loudoun County can bring big homes, big backyards, these days lower taxes. That's in part because data centers bring in close to a billion dollars a year to this community. But lately it's maybe too much of a good thing because they're starting to run out of space. And those data centers are getting awful close to those big homes. What's been the upside for Loudoun County? How much? [00:00:24] Speaker 2: They've almost matched their operating budget annually just in the revenue that they're bringing in from data centers. [00:00:31] Speaker 3: Data centers have become a hot topic of conversation all across our area, including in Prince George's County. [00:00:37] Speaker 4: Hey, hey, ho, ho, these data centers have got to go. There is a data center battle that's heating up in a small town in Frederick County, Maryland. We are very scared. We don't feel that we've had full transparency. [00:00:51] Speaker 1: But to counties that look at Loudoun and say, I want that, too. Yep. What is it you hope they think about at the same time? Let's be honest. It would be really hard to watch us right now without a data center somewhere. But it would be hard to send an email or post something on Instagram, order something from Amazon, use your debit card, check ChatGPT, or do virtually anything electronic these days without a data center. And through a combination of having great Internet connections and some early targeted tax incentives, Virginia, especially Northern Virginia, is full of data centers. A recent poll, though, from Emerson College show Virginians split on whether they want any more of them in the Commonwealth. The Richmond Federal Reserve said in 2023 that the data center market in Northern Virginia is bigger than the next five largest markets in the United States combined. Think about that for a second. And certainly there's been some competition since then. A lot of places want these data centers, including some of our neighbors. McKenzie and Company, the consultants, suggest data growth is happening where there is available power, water, land and a lack of opposition. So as some of our neighbors try to coax the next data center complex into their backyard, we wanted more context on what these places bring. Aside from loads of local tax revenue, higher electric bills for some and trade offs that a lot of neighbors have to make. This is for more context, your seat in the News 4 newsroom for a conversation about how we check facts, fight for answers, break stories and hold each other accountable. When's Virginia going to get tired of these things? [00:02:34] Speaker 2: When they stop paying. It is a gold mine. I mean, if someone was going to come up and offer you a billion dollars this year. Yeah. You'd say, what are we doing next year? And yet evidence shows construction of these new things is slowing. Construction has to slow. They can't keep up with it. [00:02:50] Speaker 1: Do you think they saw that at the outset of this thing 15 years ago? [00:02:54] Speaker 2: I don't think anybody could have. There's no way. How could anybody have known? Loudoun County in particular could have had no idea 15, 20 years ago that we would be today where we are. There's just no way. At the time there were not, there wasn't a concern about energy resources. There was a lot of fiber optic already run through the area because of our relationship with the national capital and some of the other companies that were already here. And relatively speaking, our land is fairly cheap. So they started moving in and then one company said, hey, this company built in this place called Loudoun County. They've got fiber optic. The land is pretty cheap. There's utility there. We should move too. And then pretty soon it is one of the largest concentrations of data centers in the entire world. What's been the upside for Loudoun County? How much? Almost a billion dollars a year. They've almost matched their operating budget just in data center revenue. The money. Say that again. They've almost matched their operating budget annually just in the revenue that they're bringing in from data centers. So what do Loudoun County homeowners pay? Less than they paid 10 years ago. Less than they paid 15 years ago, at least based on the rate. There is no other place. Ted, I challenge you to find any other place in the country, really, that's a major suburb that has lowered its real estate tax rate every single year for the last decade. I think most people would agree that Loudoun County, especially in the early years, went about it fairly smart. They found an area that was suitable for this, where it wasn't a massive zoning war. Right. And they could put these things in an area that didn't get a ton of public outcry, at least at the time. But now they've run out of that space. What's it like to live next to one? The people who live next to data centers do not love it. They fight tooth and nail with everything their neighborhoods and HOAs have to prevent them from coming. Why? Because they're ugly. They're ugly buildings. And they're large. Yeah. They feel boxed in. [00:05:01] Speaker 1: Absolutely. Right? Even a JV kicker could kick a field goal into that place. Absolutely. From that backyard. Yeah. [00:05:10] Speaker 5: I mean, it's close. I've got a neighbor whose deck is a mere 140 feet from the side of the data center building to their deck. Well, for those folks, honestly, they used to get the morning sunrise and they don't anymore. They've got a shadow. They've got a shadow that goes across the building. [00:05:25] Speaker 1: Yeah. Wait, wait, wait. The sun comes up behind the data center. Yeah. So they don't see the sun until an hour or two after it rises. Yeah. How long have you been here? So we moved in in 2014. And if we were here in 2015, 2014, what would we have seen? [00:05:40] Speaker 5: You would have seen essentially farm land. There were some horses roaming around and then an old red barn over in the corner. [00:05:49] Speaker 1: Can you still see that? [00:05:51] Speaker 5: Not today. We're quite a bit different today, actually. We're, I'd say, surrounded now by an industrial complex. Who is this? So we've got Amazon on the right and Microsoft on the left. And that's fairly common. There are some independents that are in and around, too, the area. But, yeah, we're certainly surrounded by the bigs. [00:06:11] Speaker 1: And what's the problem? [00:06:14] Speaker 5: Well, I didn't move into this, you know. How is this going to change once it's open? So what we don't know is the noise factor, right? I mean, these things generally hum. You know, they've got large amounts of HVAC. There's water circulation systems. There's all types of things that just make noise. And they go 24/7. So it's not like you get a respite. [00:06:37] Speaker 1: So Friday nights, Thanksgiving night, New Year's Eve, Christmas morning. Yep. [00:06:43] Speaker 5: All the time. Never turns off. [00:06:45] Speaker 1: Never turns off, right. Is there any pride in being in the data center capital of the world? [00:06:51] Speaker 5: Pride? That's an interesting comment. I would say that, first off, I'm in the tech industry. So, you know, for me, it's a logical home, I suppose. But I'd honestly like to have a respite in a place where I could recreate and not be around work. It's why you moved here. You got it. You nailed it. Exactly right. [00:07:11] Speaker 1: Tell me about your taxes. [00:07:13] Speaker 5: I'd like them to be lower. I can tell you that. But they've gone down year after year after year. They have. And there are positives to the industry. So I'm not going to say that there aren't. You don't mind your iPhone. You want good internet service. Right. Yep. You make your living in the industry. Yep. I think it's an industry we need. I think they're doing good things. But I think when it comes to the local municipalities and how you invite this industry in, it can be perilous. Where do they belong? Industrial zones. I mean, these are industrial complexes. So you'll notice we've got data center alley in Loudoun County. It's an often referred to item. Places like that where they're zoned appropriately, I think makes total sense. But putting them here is too disruptive. Too disruptive. It's not, where do you go? You know, how do you escape it all? But I didn't expect an industrial complex to creep up on my doorstep. The other surprising thing that I learned was we had what was called by right zoning. Okay. And that means that if a property was zoned a particular way, in this case for these facilities, it was light industrial, which these facilities qualified for. So there was nothing that the county had say over other than making sure. The county had no choice. They had no choice. That had to be built. Yeah. They had no choice to do that. They've since corrected that. [00:08:26] Speaker 1: But when this facility was built, they didn't need any approval from Loudoun County to put a data center 100 feet from that back door. Nope. Not at all. Yeah. How long did it take you to correct that? Don't be ridiculous. It's like 150 feet. But, you know. So you had dozens, if not hundreds of these things in Loudoun County. Yep. By the time they realized, hey, we should pump the brakes just a touch. 100%. Yeah, that's right. [00:08:52] Speaker 5: And it has been, it's been more of a, there's been more political recognition on that. [00:08:58] Speaker 3: The sign reads, home to future development. But exactly what development will go here at the old Landover Mall near FedEx field, still unanswered. Will the new FBI headquarters be built here or possibly a data center? [00:09:11] Speaker 1: Why are some people in Maryland so eager to have these data centers? [00:09:14] Speaker 3: I would say there's some elected leaders who are eager to have data centers because of the big amounts of money they're going to draw in. That's what they believe. There's a lack of money. And they say that they can bring in a lot of tax money, continue their priorities, do the programs that people want. They're like to do what we want to do. We need money. [00:09:33] Speaker 1: Look, and in Prince George's County, they're not lying when they say they need money. [00:09:37] Speaker 3: They absolutely need money. What they see, really at this point, is the money. That's really what the discussion has been about. There is a task force that's been in place for the last several months. So we're all waiting for the task force to complete its work, deliver its recommendations. That's why right now there's a pause on data centers in Prince George's County. The task force is supposed to deliver its recommendations by the end of November. [00:09:59] Speaker 4: Hey, hey, ho, ho, these data centers have got to go. [00:10:04] Speaker 3: But as far as the community, once the community started realizing, hey, this might actually be happening, they started coming out by the hundreds to say that they don't want it. But it's really an elected leader push. And some of the elected leaders have challenged opponents and say, okay, if you're against it, what do you support? What is your idea? To bring in money. Yeah. You want education. You want all these great services, amenities, and everything. How do we pay for it? [00:10:34] Speaker 2: Mack Haddow is one of the homeowners who spent the last two years fighting against the Prince William County Digital Gateway Project. You would have the data centers built there. The trees would be gone. Everybody looked at Loudoun County and said, oh my gosh, they're bringing in a lot of money up there. We've got some land. Maybe we could get a slice of that pie. It's going to be very hard to catch lightning in a bottle the second time. It's going to be difficult to catch lightning in a bottle the second time because a lot of people are paying a lot more attention to it now. And there are a lot of concerns about the energy consumption, about environmental impact, and just about where we're putting these big gray buildings that make a lot of noise. The energy demand alone is getting so outrageous that they simply, at least in Loudoun County, can't power these things anymore. You're not talking about political energy or you're talking physically the electricity. [00:11:23] Speaker 1: Electricity. Just not there. We're out of it. There's one study that said a third of all Electricity Dominion cells in Virginia is to data centers. It's a lot. That's a lot. [00:11:34] Speaker 2: And who's paying for that? Those of us who live in Virginia. Why? Right now we haven't figured out a way to have the data centers carry some of the burden for this electric cost. They're paying. They're paying a fee. They pay for what they use. They pay for what they use. [00:11:50] Speaker 1: But they're not paying for the infrastructure to get the power to them in the first place. That's correct. We talked to Drew about the electricity issues in Virginia. The data centers have created a huge drain on the electricity system in the Commonwealth. Is there any proof that Maryland has the electricity to run these things today? [00:12:10] Speaker 3: I would say no because I've been reporting on all the problems with energy generation in Maryland. And the rates have been going up. [00:12:21] Speaker 1: If you had a Magic Magic 8 ball, what would you ask it? Because I feel like there's a million unanswered questions in this debate. [00:12:28] Speaker 3: The Magic 8 ball, I would say, tell me where Prince George's County is going to locate data centers. And tell me how you're going to sell it to the community that lives there. That's the thing. You can put a dot on a map and say, yeah, that looks really good. But then the people who live there are like, we don't want it here. So that's where the problem is. [00:12:49] Speaker 1: Whether they're ready to say it on TV or not, do you feel like they have those answers? That the leadership has those answers? [00:12:56] Speaker 3: I don't think they necessarily have the answers, but I think they have some ideas of where it might work, where it's probably not going to work. [00:13:05] Speaker 1: And so in this pause, while Prince George's and maybe other Maryland communities try and figure out can we have this and where, the opposition has seen what's happened in other communities and has risen up, huh? [00:13:18] Speaker 3: All of a sudden, there was a task force meeting that came up recently and a bunch of people made social media videos on TikTok. And they're like, hey, everybody, this is going to happen. They're going to put a data center at the old Landover Mall site. And so many people saw that and they were up in arms and hundreds of people turned out for the data center task force meeting. So many people that they couldn't even get into the building. Tell me what they were saying. [00:13:45] Speaker 6: Want to make sure people are aware, want there to be public accountability for a, you know, a facility that has immense air quality impacts, water quality impacts. It's going to raise people's energy bills. And so people should be involved in, you know, how their land gets developed. [00:13:58] Speaker 7: So I don't want the data center in my backyard. I don't want to be breathing air from generators. I don't want to be having polluted water or any of those things. [00:14:07] Speaker 3: I think that the divide right now, there are elected leaders who support the concept of data centers. But going from concept to reality, to the details of where this is going to go, we haven't gotten there yet. [00:14:20] Speaker 1: Is it only Prince George's County that's dealing with this? [00:14:23] Speaker 3: No. And I did a story out in Adamstown. That's in Frederick County, Maryland, tiny, somewhat rural town. They do have some huge housing developments, but a residential community used to be a lot of farmland. Well, some of that farmland is turning into data centers. There are already data centers being built there, right adjacent to their community. But now there's a plan to expand it and make it a lot bigger. [00:14:46] Speaker 1: How's that going over? [00:14:48] Speaker 3: It's not going over too well. There was a meeting recently. 200 people showed up and many of them were against the project and very concerned. What is this going to mean? [00:14:56] Speaker 4: We are very scared. We don't feel that we've had full transparency. [00:15:01] Speaker 1: And how much of this do you think is informed by what they've seen in Loudoun County? [00:15:07] Speaker 3: I think that is a big factor. When people see what's happening in Northern Virginia with the data centers, seeing all the hundreds of people show up against it and it still got approved. Even the governor has expressed support, at least the concept of data centers and being a way to open up revenue. The state needs revenue. The counties need revenue. So that's the rub there. [00:15:32] Speaker 2: What Loudoun County wished it knew 20 years ago is that they would need to diversify their revenue portfolio a little bit. They leaned too hard into data centers. It's still bringing in a lot of money, but there's always a cap. So I think Loudoun went about it correctly for a while with smart growth, steady growth. Then it kind of blew up a little bit. And I think they were getting more projects than they could take in. They were running out of space. [00:16:03] Speaker 1: But to counties that look at Loudoun and say, I want that too. Yep. What is it you hope they think about at the same time? [00:16:10] Speaker 5: They need to balance their residents' inputs on that. I think there are certainly benefits. You know, Mike, the schools here are very new. The ball fields and all the places where we recreate. We've got some great parks that the county has put up. Not all of that has been funded by the data center business, but a lot of it has been helped out that way. So there's certainly positives. You can't deny that. But it's that balance that you've got to manage. And you've got to look at your zoning. Make sure that it's thoughtful and forward-looking. [00:16:43] Speaker 1: Is there any sign now that taxpayers are saying, you know what, I'll pay a little more. I don't want another one in my neighborhood. [00:16:50] Speaker 2: It's starting to encroach on residents' quality of life. And it's the type of thing that these homeowners did not expect when they bought these really expensive, very beautiful homes. And now the landscape of their largest investment, their home, is completely changing. And they feel like they don't have a lot of control over. And the homeowners wish that it would kind of stay in the area. That it was designed to be built in and stop encroaching on their quality of life. I think there are a number of homeowners who, when they see it come to their neighborhood, say, we need to slow this down. [00:17:23] Speaker 5: I think we're getting to the saturation point. But they seem to creatively find places to put these things. The county has clamped down on rezonings and that type of thing. But there is no capacity management that's happening. [00:17:38] Speaker 1: Finally, has anyone in Loudoun County said we regret doing this? [00:17:42] Speaker 2: There are a lot of homeowners who wish they saw this coming. At the county level, there are some people who maybe would have slowed it down a little bit. [00:17:52] Speaker 1: This is not a conversation that's going away. As our use and some say dependence on AI grows, the need for data centers does too. The trend is, by the way, to make these centers bigger and bigger and bigger. More of them are coming. The question is where and why and what effect it will have on you. If you like this kind of context, we'd love for you to check out more of it on the NBC Washington YouTube page. Like it. Subscribe to it. Tell us what you want to see in the comments. I'm Ted Oberg from the News 4i team. You can find me anywhere on social @TedNBC4. In the meantime, I'll be here working for you.