OPINION: Data Centers Are a Potentially Transformative Opportunity for Fredericksburg
Weighing the costs and benefits of a data center in the city
By Will Mackintosh
Data centers are the talk of the town right now. Specifically, there is a proposal before City Council for a Technology Overlay Zoning District covering approximately 250 acres in Celebrate Virginia South. I am grateful to the FXBG Advance for allowing me the space to lay out why I think we need to pursue a data center in this location.
As with any difficult public policy decision, it is critical to conduct a careful cost-benefit analysis before making a decision. Let me lay out the costs and the benefits as I see them.
Data centers have real environmental impacts, including water usage, particulate pollution from emergency backup generators, noise, and energy use. We have some control over the first three categories of impacts.
We can mandate that data centers in Fredericksburg use the effluent water from our wastewater treatment plant—known in the industry as “purple pipe water”—for their cooling needs, rather than fresh water pulled from the Rappahannock or potable water pulled from our municipal water system.
This effluent is already thoroughly cleaned and treated before being dumped back into the river; we can divert it for data center use, which the end user would pay for. Any new water use has environmental impacts, but using “purple pipe water” represents a reuse solution that minimizes those impacts.
Data centers have backup generators that kick in when grid power is interrupted to keep the servers from going down. In routine operation, these generators operate only a few hours a year for testing and maintenance and are subject to emissions regulation, so the amount of particulate matter that they will emit is negligible compared to other development prospects for the site.
Like any other industrial use, data centers make some noise, but we can impose development setbacks and maximum decibel levels on them, enforced by both pre- and post-development noise studies.
Power usage is a different story, however. Data centers use a ton of power, so their energy usage—and the sources of that energy—are very real and pressing environmental concerns. However, they are not matters we can control on a local level, they are matters regulated by the state. Whether or not we get a data center in the city, we all need to be putting pressure on the state to make sure Dominion is meeting its carbon neutrality goals and charging data centers their fair share for new electrical infrastructure, not passing the costs on to everyday ratepayers.
Data center developers generally have aggressive clean energy targets, and we need to hold them accountable to those goals.
When considering the costs, it is important to compare a data center against realistic alternatives for the land in Celebrate Virginia South. It is unreasonable to expect that 250 prime acres in an area that has long been slated for development will remain forever undeveloped; something will get built on that land, whether or not it’s a data center.
Any development carries environmental impacts. Residential development in that area, for example, would use more potable water pulled from the Rappahannock than a data center. And either residential or commercial development would generate far more automobile trips, meaning that particulate pollution would be worse under alternative scenarios, too.
A data center’s power consumption would dwarf that of other forms of development, but it is important not to compare it to an unrealistic expectation of zero new development.
Now let’s turn to the potential benefits of bringing a data center to Fredericksburg. Data centers are expensive buildings full of expensive equipment, so they pay a ton of local taxes. A hypothetical 2 million square foot data center would generate approximately $40 million in annual tax revenue. That revenue will vary year to year, as data center equipment goes through a cycle of depreciation and replacement, but it is relatively predictable.
For a city with an annual budget of just under $128 million, this is a potentially transformative opportunity to make real meaningful progress on the goals we all share.
And this is something that makes the city unique compared to our surrounding jurisdictions; our budget is way smaller than theirs, so a data center would have an outsized positive impact for us. For Stafford, with a $1 billion annual budget, or Spotsylvania, with an $821 million annual budget, a $40 million increase in annual revenue is nice to have but not necessarily a game changer.
For the City of Fredericksburg, it would be a 30% increase to our annual budget, without asking for another dime in taxes from city residents. That’s not just a small increase, that is a potentially transformative increase. A data center would revolutionize what we could accomplish in the city, in a way that just isn’t true for our neighbors.
Folks I talk to in the community have no shortage of ideas about how to make Fredericksburg better. People want to see real investments in our City Schools to make sure we’re recruiting and keeping the best teachers, providing low teacher-student ratios, and giving students the resources they need to excel.
People want our city’s bike and pedestrian network to be better connected and fully built out.
People want affordable housing, and many of them realize we aren’t going to get new affordable housing on a meaningful scale without public investment.
People want to be sure that our great police, EMS, firefighters, and mental health providers are full supported and fairly paid.
People want to us to care for our historic properties.
And yes, people want to see the city meet its environmental commitments, whether it’s our commitment to renewable energy in city operations by 2035 or overall carbon neutrality by 2050.
These visions all share two things in common: they are critically important to making Fredericksburg into the best version of itself, and they require money. Lots of it. Of course, no one wants to pay more taxes—and keeping taxes as low as possible is important for working people, seniors on fixed incomes, and the “asset-limited income-constrained employed” (ALICE) community. A data center could be a piece of the solution to this challenge.
Data centers also provide a small but meaningful number of high-quality jobs. Our hypothetical 2 million square foot facility would employ more than 200 permanent full-time staff at good, family-sustaining wages, in addition to generating more spinoff employment for contractors.
These jobs would be for both college graduates and skilled tradespeople; indeed, we have heard from many skilled tradespeople in our region who would love to work closer to home rather than commuting to job centers up north. And with Germanna’s push into infrastructure training and apprenticeships, those good jobs represent a real opportunity for our young people.
So how do we, as a community, balance these costs against these benefits? Such a question is of course a judgment call; we can and will differ in how we weigh the decision. For me, the potentially transformative tax revenue and employment opportunities easily outweigh the costs, especially because at least some of those costs can be mitigated by thoughtful policy. We are lucky to have the opportunity to learn from the mistakes made in previous decades by the neighbors to the north, so we can impose setbacks, noise limits, and water use limitations on our data centers that will lower their impact.
But what really tips the scale in favor of data centers for me is the fact that we are going to bear the environmental costs of data center development whether or not we build one in the City of Fredericksburg. They’re already here in our region, using water and power, and more are coming. Rejecting a data center in the City of Fredericksburg will not protect the Rappahannock from impacts, nor will it protect the statewide power grid. If we say no, then we are asking our residents to bear the costs of data centers without experiencing any of the benefits that their tax revenue can bring. And that makes no sense to me.
Finally, I would like to say a word about the process. We are undoubtedly moving quickly. But open any newspaper and you can plainly see that now is the moment for data centers in our region; if we want to pursue one, we must strike while the iron is hot.
We’ve been discussing data centers since 2019, and our ongoing conversation is coming to its conclusion. I fear that if we miss our moment, we will end up in the unenviable situation I outlined above, in which we are paying the environmental costs but receiving none of the fiscal benefits. Policymaking usually moves slowly, which is often appropriate, but it also needs to be able to move quickly to grab the opportunities that are in front of us.
There are plenty of remaining forums for the public to weigh in on the costs and benefits of data centers. This evening, City Council and the Planning Commission will discuss the Technology Overlay Zoning District in a joint work session, which is publicly broadcast, and the public will then have an opportunity to give a comment at the subsequent Council meeting (if you sign up to speak before 3:30 p.m.).
Then, on January 22, City Council and the Planning Commission will hold a joint listening session at 5:30 p.m. in Council Chambers. Finally, both the Planning Commission and City Council will hold formal public hearings with opportunities for public comment, on February 12 and February 25.
I am also personally hosting a more informal coffee conversation on Saturday, January 25, at 10:30 a.m. at Curitiba Art Café at 919 Caroline Street. I’m looking forward to meeting with the community to hear what they think about data centers, and about how they judge the cost/benefit analysis of the decision we’re facing. I’m also happy to further discuss any of the points I made above, since I’ve already abused the FXBG Advance’s generosity by busting through their word limit.
This is a big decision for the City of Fredericksburg, but it is one that is full of absolutely transformational potential.
Will Mackintosh is a member of Fredericksburg City Council. He can be reached at wbmackintosh@fredericksburgva.gov.
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Will's excellent OpEd on the costs and benefits of a data center in Fredericksburg should be read by every voter. This city must act now if it does not want to be left out of this chance to improve its finances.