I have been tracking the bills that pertain to Data Centers
in the current legislative session. Wednesday was cross over when the bills
that passed the Senate go to the House and vice versa. In general the bills to
control data center development have not been doing well. One bills in this
group is a special interest tax code bill written to benefit the landowners of
the Prince William Digital Gateway rezoning. It is carried by Senator McPike McPike,
a Democrat, who represents a large portion of Prince William County but not the
Digital Gateway corridor.
The PW Digital Gateway is a project in which QTS and Compass
Datacenters are planning to develop over 2,100 acres of greenfield land adjacent
to the Manassas National Battlefield Park for a massive industrial data center
development consisting of up to 34 buildings and over 22 million square feet complete
with fenced security, electric substations and backup diesel microgrid of hundreds
of industrial sized backup generators and transmission lines.
Through a land acquisition entity QTS, has contracted to buy
the Digital Gateway landowner's property for their development at life changing
valuations of millions of dollars. Those purchases stand to drastically
increase the value of the land, but the sale is contingent on two data center
zoning approvals being declared final and unappealable. In the meantime, the
current property owners are responsible for the property taxes and liens.
Several opponents of the PW Digital Gateway have sued. The data center companies
involved in the project, QTS and Compass Datacenters, filed a motion to dismiss
the lawsuit, but the PWC Circuit Court Judge Kimberly Irving
declined to dismiss the case. Saying she needed more evidence about a
key argument: whether Prince William County fulfilled
its legal requirements to properly advertise the public
hearing before the vote on the PW Digital Gateway rezoning, she
scheduled an evidentiary hearing for March 6, 2025.
Under the current state tax code the tax rate goes up and deferred
taxes for the five tax years of 2018, 2019,2020,2021 and 2022 become due immediately.
The recovered taxes are due to losses in agriculture and open space exemptions that
were previously granted. The Digital Gateway homeowners sued the county for tax
relief. However, the Circuit Court found that there is really no remedy under
the current tax code. Prince William County had already discounted the tax due by 75% for uncertainty though the increase in taxes was
eye popping- tens of thousands of dollars up to hundreds of thousands of dollars
due to the county.
Enter Senator McPike who despite not representing the
property owners has carried a bill through the state senate to change the state
tax code to benefit these property owners and others who may be engaged in having
their properties rezoned and then banking the property.
The Prince William Times reports: “So far, the county is owed at least $1.9 million in real estate taxes from Digital Gateway landowners because they are refusing to pay the full tax bills on their recently rezoned land, according to Nikki Brown, a county spokeswoman. McPike has received thousands in donations from data center interests, including the landowners who would directly benefit from his bill. In 2024, he received more than $20,000 from data center and construction interests. Since 2021, he has received an additional $15,000 from donors involved in the Digital Gateway, according to campaign finance reports.”
Look, I am thoroughly unhappy with the development of greenfield
agriculture land into industrial uses, the lack of management and planning for
the electric demand and power infrastructure (and water) needed for this
uncontrolled building of data centers and the intensity of industrial development.
I am angry about the way the project seemed to be rammed through, and I am furious
about the appearance that data center companies bought themselves supervisors and
state senators. However, I do not feel it is right to bankrupt our neighbors
who were tempted with life changing wealth to sign a bad contract. (Really, they
should have had better legal representation.) I do not want to destroy their
lives (though they seem not to care about the rest of us). I believe the bill
will pass if the performance in the Senate chamber is any indication. The scope
of this change in the tax code needs to be limited to this one project and let
the courts settle it. The bill and summary appear below.
UPDATE: Well I was wrong. The bill was laid on the Table in the House Subcommittee on Friday, February 14, 2025.
SB 1305 -
Local taxes; change to zoning ordinances, etc.
Patron: McPike
Status: Passed Senate< UPDATE Houses Counties Cities and Towns - Subcommittee #3 Voted to lay on the table.
A BILL to amend and reenact §§ 58.1-3237 and 58.1-3285 of
the Code of Virginia, relating to local taxes; zoning; assessments; ordinances.
SUMMARY AS INTRODUCED:
Local taxes; zoning; assessments; injunctions;
ordinances. Provides that for purposes of real estate subject to a
special tax assessment for land preservation by local ordinance, a change to
the zoning ordinance shall only be effective following (i) the approval of the
relevant modification in the zoning classification of real estate; (ii) the
exhaustion of the challenge or appeal period; and (iii) if pending, the final
determination of any challenge or appeal made within such period.
The bill also provides that for purposes of subdivided or
rezoned lots, the assessment or reassessment required by law shall only be
effective following (a) the approval of a modification in the zoning
classification of the subject real estate, an exception to zoning or
classification of the subject real estate, or a reclassification of the subject
real estate; (b) the exhaustion of the challenge or appeal period for such
approvals; or (c) if pending, the final determination of any such challenge or
appeal made within such period.
The bill also authorizes the circuit court to issue an
injunction to stay the collection of taxes during the pendency of any
application to the circuit court for an assessment correction upon a showing of
(1) a bona fide hardship caused by such assessment and (2) a bona fide
financial inability to satisfy such assessed tax obligation. Any injunction so
issued shall not remain in effect later than when a final determination is made
on the merits of an assessment correction application. Under current law, no suit
for the purpose of restraining the assessment or collection of any local tax
shall be maintained in any court of the Commonwealth, except when the party has
no adequate remedy at law.
Finally, the bill provides that any zoning ordinance enacted
after December 1, 2023, shall not become effective until the later of either
(A) the exhaustion of the period within which a decision of the local governing
body may be contested or (B) if pending, the date of final determination for
all actions related to a contested decision of the local governing body.