How One County Profited From Data Centers Amid a Growing National Backlash

Over the past two years, Virginia’s Loudoun County unveiled a sleek $102 million recreation center with multiple pools and hydro m***age chairs. It spent $22 million to convert the estate of former President James Monroe into a park. And it opened two new schools, with another under construction.

While many communities are in fiscal crisis, Loudoun is flush. The source of its riches: data centers.

A convergence of early fiber internet access and fast-track zoning has made Loudoun the data center hub of the world. Amazon, Microsoft, Google and others have built or are leasing more than 250 warehouses full of computer servers that are powering artificial intelligence and the internet. At least two dozen more are in the pipeline.

Two decades into its experiment, Loudoun has become a case study for the rest of the nation on how to make data centers pay off. Thanks to the proliferation of the warehouses, the quiet bedroom community 30 minutes outside Washington, D.C., has transformed into a tech destination with trophy schools and libraries, and freshly tarred roads.

A tax on computer equipment inside the data centers is expected to generate about $1.3 billion in revenue next year, or 40 percent of the county’s total tax revenue. That has allowed the county to cut property taxes for residents — who have the highest median income in the country — by about 30 percent over the past decade.

Officials across the nation, including in Pennsylvania, West Virginia and Delaware, have sought the county’s economic development staff’s guidance and toured its Data Center Alley, seeking to emulate Loudoun’s success. Members of the county’s staff have spoken at conferences and hearings nationwide about its road map.

But as A.I.’s rise drives the construction of data centers across the country, residents in Loudoun have started pushing back, mirroring a growing national backlash. Officials and residents say the county has become too dependent on the cash inflow.

“It’s gone way too far,” said Juli Briskman, a member of the Board of Supervisors in charge of the county’s land, zoning and economic policies, who proposed a moratorium on data centers in July. “We’ve become addicted to the data centers for their tax revenues, but at what cost?”

Other residents and county leaders maintain that data centers have been a gold mine that has made Loudoun one of the best places to live.

“I call this the great overreaction,” said Buddy Rizer, executive director for economic development in Loudoun, adding that data centers occupied just 3 percent of the land.

Loudoun’s success monetizing data centers runs counter to a nationwide trend in which communities court the computing sites with huge tax incentives, then experience buyer’s remorse as the centers guzzle water and electricity. Data centers typically create few jobs, and little revenue for a community.

Last month, New York paused data center development for one year, after an attempt by lawmakers to do so in Maine. In Virginia, state lawmakers recently p***ed a small tax on data centers based on how much energy they consume.

Even before the data center boom, Loudoun was an internet hub. In the early 1990s, the federal government installed fiber internet lines here, making it a magnet for tech companies. AOL made Ashburn, in Loudoun, its headquarters in 1996.

Four years later, a zoning official made the pivotal decision to categorize data centers as office parks, which require few regulatory approvals for development and construction. That helped fuel a building bonanza.

By 2007, the county had 29 data centers. That same year, the county’s Board of Supervisors hired Mr. Rizer to market Loudoun to tech companies as part of an economic plan to attract more data centers.

At the time, sales tax revenue on computer equipment in data centers — categorized as a business personal property tax — was nominal. Mr. Rizer’s successful bid to attract more tech companies fueled a spike in income that reached $1.1 billion last year, up from $150 million a decade earlier.

The windfall allowed the Board of Supervisors to reduce residential property taxes every year for the past decade to some of the lowest in the country. The board used the funds to increase budgets for schools, expand fire and emergency services, and improve roads, bridges and tolls.

“People understood that the data centers were the reason we were building schools and keeping taxes low and those kinds of things,” Mr. Rizer said, adding that the centers have generated about 15,000 jobs. “From the day we started with data centers to today, more than half of the people are new, so they don’t remember when we were struggling financially.”

He said he got frequent calls from economic development offices around the nation, wanting to replicate Loudoun’s success.

“We struck the right balance, and we are a model,” he said.

With a larger budget — $5.4 billion this year — and strong credit that has allowed the county to float big bond projects, Loudoun expanded recreational services. Last year, it opened a 117,000-square-foot exercise and community gathering space.

On a recent Monday morning, the Ashburn Recreation and Community Center bustled with older people at one end of the competition-size pool waving their arms in a water aerobics cl*** and children playing in a separate splash pool with slides and sprinklers.

“Loudoun is special,” said Sana Akbar, 39, a resident for nearly three decades and a frequent user of the recreation center. Her son’s school recently installed a new playground.

“Yes, there are many data centers — and some people say too many — but they’ve brought many benefits,” she added.

The public projects create jobs, said David Costello, head of Costello Construction in Columbia, Md. He said of the 250 employees on the Ashburn recreation center project, 40 percent were Loudoun residents.

“They keep building — it’s a perpetual thing,” Mr. Costello said.

But with 53 million square feet of data centers, the equivalent of 920 football fields of space, land and patience for more of the warehouses are running out.

When Greg Pirio, 75, bought his home in Sterling in Loudoun County 14 years ago, he said, his neighborhood was full of trees and birds. But in 2023, the data center company Vantage began construction nearby, transforming the neighborhood.

Now, two gray-and-blue data centers create noise and pollution about 200 yards from his town home. He and other neighbors have complained about the diesel generators and gas turbines used to power the facility.

“What is the quality of life for those who don’t even want to go outside because of the noise?” he said.

A Vantage spokesman said it had built the power plants because the local utility, Dominion Energy, would not give access to the grid, which was promised before construction began. Dominion disputed that claim. Vantage said it had put up more paneling and noise-dampening technology to reduce noise from the turbines.

Vicky Hu, a resident of nearby Ashburn, moved to her spacious home with her mother, husband and daughter in 2005. A greenbelt area of protected forest behind her home, which leads down to a creek, made it a place to retire.

Dominion Energy recently told Ms. Hu, 59, that it planned to put a 185-foot high-voltage electricity tower in her backyard to power new data centers.

“There are no boundaries” Ms. Hu, a real estate agent, said.

A Dominion Energy spokesperson said it was following orders by the state utilities’ regulator to serve the rising power needs of residents, public services and businesses, including data centers.

Some residents and environmental groups have demanded policy changes that would make it harder for data centers to open. And the county has made some major changes in response.

Last year, the Board of Supervisors voted to drastically slow data center construction by ending the zoning policy that considered them office buildings. The decision will not end development, but it will require data center projects for the first time in decades to seek approvals from the public and the board.

Last month, Amazon applied to build four data centers, which some board members said they would reject.

Hossein Fateh, the founder of CloudHQ, a data center maker and operator that has 15 data centers completed or under construction in Loudoun, is frustrated that the county has been caught in a national political debate.

“If you want to access Netflix, go on Instagram, make sure your email is working, or your Uber Eats or Google Maps operates, you can because of data centers,” he said.

In July, about 100 residents, data center employees and others attended a contentious town hall meeting to discuss data centers. Some wore light-blue T-shirts that said, “I Support Data Centers Because I Like: Lower Taxes, Excellent Schools, Better Job Opportunities and More.”

Bill Junda said his company, a civil engineering, landscaping and surveying firm, had grown because of data centers. Even when federal jobs were cut last year, which affected some of his business, the data center business covered any potential shortfalls in revenue, he said.

Other residents said tech companies had become so aggressive, they were being pushed out.

In a luxury residential community called the Regency, a company is trying to buy over 100 homes for more than $4 million each, said Mital Gandhi, 47, a resident and father of two. That’s more than double the value of the houses.

“At the end of the day, the data centers aren’t going anywhere, so why not create incentives for residents?” he asked, adding that he is trying to persuade neighbors to sell. “Make it a win-win.”