As Prince William leaders grow increasingly skeptical of the benefits of drawing more data centers to the county, a new tech industry report touts the facilities as adding $21.5 million to the county’s economy in 2016.
The Northern Virginia Technology Council, the trade association for the region’s tech companies, released research Feb. 5 suggesting that data centers have been so beneficial to the county’s economy that Prince William officials have been able to avoid additional property tax increases.
Produced by the Richmond-based firm Magnum Economics and sponsored by companies with major data center operations like Amazon Web Services and Microsoft, the report concludes that data centers generated $10.2 billion in economic output for the entire state in 2016, including $6.6 billion in Northern Virginia alone. The large facilities, filled with networked computers, are generally used to facilitate cloud computing operations.
In the region, the researchers found that Loudoun County (with its proximity to the world’s densest intersection of fiber networks) is the primary beneficiary of data center business, with Prince William running close behind. They estimate that Loudoun clearly leads the way with more than $3.4 billion in data center investments from 2000 through 2017, but Prince William has seen plenty in its own right, to the tune of about $671 million over the same period.
Prince William economic development officials estimated in December that the county currently boasts 3.5 million square feet of data center space, with another 1.5 million square feet of facilities in the development pipeline. Yet some county supervisors have grown wary
of pushing ahead with that sort of aggressive pursuit of data centers, over fears
that the massive facilities eat up huge tracts of available land without offering many jobs in return.
However, the new data center report offers the flip side of that argument, noting that because the facilities require so few employees, they offer hefty tax revenues to localities without a corresponding strain on government services and schools.
The researchers determined that roughly 252 people in Prince William worked at data centers in 2016, adding about $1 million in expenses to local schools and $1.5 million to other county services. But with the $21.5 million in tax revenue the data centers helped generate for the county (both directly and indirectly), the report suggests that the benefits far outweigh the expenses associated with the facilities.
Without those tax dollars, the researchers estimate, Prince William would need to draw another $3.5 million in state education funding and raise another $17.9 million in tax revenue to keep pace with its current funding demands. If county leaders chose to accomplish that by raising the real estate tax, they suggest it would require a 2 percent bump in the tax rate.
The report also stressed the role of government incentives in attracting data centers, with researchers pointing to Virginia’s longtime policy of exempting data center investments of certain sizes from the state’s sales and use tax as one important reason it’s so successfully courted the facilities.
The issue has become a controversial one, as some state lawmakers have recently weighed revisiting that tax exemption, and Prince William supervisors re-examine their creation of a “data center opportunity zone,” a 10,000-acre planning district the board created in May 2016 to ease zoning applications for projects within its boundaries.
Supervisors are set to discuss the issue in more detail at a March meeting.