The Virginia Joint Legislative Audit and Review Commission (JLARC) released its report on data centers in Virginia on Dec. 9, 2024. During the 2024 Virginia General Assembly session, numerous bills were put forward that could negatively impact the data center industry. Most of those bills and related regulatory questions were referred to the JLARC for further study. JLARC kicked off its study in May 2024, and interviewed numerous stakeholders to craft its report on the industry.
The findings and recommendations touch on key areas such as energy costs, effectiveness of local land use authority and options for using the state’s data center incentive to implement policies or data center behavior. Overall the report outlined positives from the industry but identified current or future challenges. Key takeaways include:
- Data centers provide economic benefits and can generate substantial local tax revenues for localities and create thousands of jobs.
- While data centers are currently paying full cost of energy service, data center industry drives immense increase in energy demand, and building enough generation and transmission infrastructure to address them will be difficult.
- Changes in state sales tax exemption could address policy concerns related to energy efficiency, natural and historic resources, and local residential impacts, but changes could make the exemption a less effective economic development tool.
Many of the data center bills proposed last year will likely be refiled in 2025, and the JLARC report could guide the General Assembly as it addresses data centers in the coming year.
A copy of the JLARC report is available here, while a presentation on the report is available here.
Learn more about the data center industry capabilities of McGuireWoods LLP and McGuireWoods Consulting.
