A division of Brookfield Corp. that develops data centers has dropped out of a large project in northern Virginia after encountering community opposition and state government resistance to providing tax incentives.
Compass Datacenters had planned to develop a data center complex on an 825-acre site near Gainesville, Virginia. However, an increasing number of cities, towns and counties are opposing the development of new data centers in their communities, according to Data Center Watch, which tracks proposed data center developments.
The Digital Gateway initiative in Virginia that included both the Compass proposal and a nearby project led by Blackstone subsidiary QTS was blocked in March by the Virginia Court of Appeals. The Piedmont Environmental Council and community associations had sued to stop both projects.
“Compass has reached the unfortunate conclusion that we cannot move forward with the Prince William Digital Gateway project,” AJ Byers, president of Compass, said in a statement from the company on Wednesday, referring to Prince William County, the location of the proposed Virginia data center.
Opponents claim data centers don't create enough jobs to warrant tax incentives that developers often get in exchange for building them, and that the projects contribute to air pollution through fossil fuel-generated electric power as well as raising energy costs for consumers, according to research project Data Center Watch. The issue is particularly salient in northern Virginia, the world’s largest data center market, according to JLL.
State lawmakers in Virginia this year reached a stalemate in a proposed reform of tax incentives awarded to data center projects, according to local media reports.
The issue raises a major obstacle for data center developers, as the rise of artificial intelligence requires data centers installed with computers that can process vast quantities of data.
The Compass project in northern Virginia faced an additional hurdle due to its location next to Manassas National Battlefield Park, a site that commemorates a major Civil War battle, a state forest and a private country club. Compass had sought approval to rezone the data center site from agricultural use to light industrial and office use, according to public records.
Financial backers of Dallas-based Compass include Brookfield Infrastructure Partners, a firm that invests in infrastructure projects, and the Ontario Teachers’ Pension Plan.
For the record
Cooley LLP was legal counsel to Compass on the Virginia data center rezoning request.