James City County is limiting data centers to industrial districts and will require permits for any looking to build.
The Board of Supervisors approved the update to the zoning ordinance on Tuesday and also directed staff to develop a policy for reviewing proposals.
It makes James City County the latest in a small but growing group of counties to implement more stringent regulations for future data centers. York County approved rules in June, which also limit where centers can be developed and require special permits, among other provisions.
“We need to recognize that, in our county, there are not really very many good places for this to be developed,” said John McGlennon, board vice chair representing the Roberts District. “It is important to keep an eye on what’s happening more broadly before we leap into this brave new world.”
Data centers are often in warehouse-style buildings filled with servers and computers used to store and process digital data for cloud computing, mapping applications and, increasingly, generative artificial intelligence products.
They’ve sometimes become points of controversy among their neighbors, who have issues with perpetual humming noise coming from the centers’ cooling systems and electrical equipment. It was one of several concerns raised by residents of Chesterfield County, which is the future site of a $9 billion Google data center.
The facilities need a lot of energy to operate, contributing to Virginia’s rising energy needs and costs, and are expected to use up to 12% of all U.S. electricity by 2028, according to Department of Energy estimates cited by the county. They also need a lot of water in their cooling systems, with one center averaging 18,000 gallons per day, according to Prince William County estimates cited by James City County; an average four-person household uses 360 gallons per day.
But data centers can also bring in big money. Although they don’t employ large staffs, their property value can provide a significant bump in real estate tax revenue. Prince William County used an increase in its data center tax to give millions more in school funding and offset a property tax increase; Henrico County put tens of millions in an affordable housing fund with its revenue.
It’s part of why Michael Hipple, board member representing the Powhatan District, suggested postponing the vote to give more time to consider the regulations and site requirements they’d include in their review policy.
“I don’t want to bring a problem into James City County,” Hipple said, “but I also don’t want to lock out an opportunity for our revenue that would give us enhanced money” to reduce the tax burden on residents.
Hipple suggested discussing potential water and energy consumption with more industry experts as technology advances. But Board Chair Jim Icenhour, Jamestown District, argued the vote couldn’t wait. If they didn’t update the zoning ordinance, data centers could be developed without special review in other business, industrial and mixed-use districts.
“It sounds as though we should have probably done the policy first, but then we kind of got ourselves in a fix,” said Ruth Larson, board member representing the Berkeley District.
A draft of policy provisions lists several standards that could be required of future data centers, ranging from restricting their size to 80,000 square feet, prohibiting the use of well water and requiring developers to ensure they build close to power substations and transmission lines.
Limiting centers to industrial districts leaves few places for developers to build. The bulk of that land is in the southern end. Chris Henderson of the BASF Corporation, which owns the former site of an acrylic fiber plant in the Grove community, called the property “uniquely suited” for a data center and said the cost for a special permit puts a project at a competitive disadvantage.
“If the county is serious about having data centers,” he said, “then it should be looking to remove barriers, not put them in.”
Henderson said the county needs the revenue as it looks to construct a consolidated government center, estimated at $250 million.
A group of Grove residents, though, doesn’t want a center in their community at all. Nearly 100 have signed Robin Wootton’s Change.org petition against them since July.
In her petition, Wootton described the BASF site as the last possible place to expand river access for residents after decades of development diminished local options.
“We want healthy development contributing to the public without the over-industrialization we have already lived with for decades,” Wootton said.
