Mecklenburg County, data center capital of Southside, learns lessons of development

There are about a dozen of the centers across the locality that’s roughly 56 miles east of Danville.

That figure includes ones in operation and those that have been rezoned and are now working through the development process, Mecklenburg County Administrator Alex Gottschalk explained to the Register & Bee last month.

The first was Microsoft, which has been around for about 15 years.

Mecklenburg, which resembles Pittsylvania County in respect to the rural landscape, has learned lessons over the years and reaped the financial windfalls of the data centers popping up.

There are some stark contrasts with the facilities down that way compared to what a Herndon-based company is looking to bring to an area near Chatham.

Balico Technology Campus wants to rezone about 750 acres in the Chalk Level Road area for a data center and power-generating units. It would move the land from a residential suburban subdivision and agricultural district to a heavy-use industrial district.

After being pushed off for two months, a public hearing and ultimate decision is planned for 7 p.m. Tuesday when the Pittsylvania County Board of Supervisors gathers for a monthly meeting.

The issue has ignited fierce debate in the community.

The first area of contention is the location. Balico picked this spot because of its proximity to the Mountain Valley Pipeline, which would fuel the on-site power generation for the electricity-hungry data centers.

In Mecklenburg County, most of the area’s data centers that set up shop were already industrial areas in nature.

“In fact, many of them were county-developed industrial sites that had been carved out for that purpose 20 years ago for some type of facility,” Gottschalk explained. “Of course, the type of facility that was envisioned in say, 2005, is much different than what may be there in 2025.”

With space running out in those areas, the most recent plans had to rezone agricultural land to industrial.

“But that’s only after all of the industrial sites have been taken,” he explained. “There isn’t really an opportunity for somebody to go into an existing industrial site because they have all been accounted for.”

While Balico wants to develop the site, it would then find an end-user for the data center while operating some form of power generation.

The rezoning request still includes a 3,500-megawatt gas power plant, which would be the largest in the state. Balico intends to get the project off the ground with mobile gas turbines.

Irfan Ali, the owner and founder of Balico, told the Register & Bee that no decision has been made concerning a full build-out of the power plant that was the center of community backlash when a larger plan was revealed to the public in October.

In contrast, Mecklenburg County hasn’t dealt with this kind of middleman.

Money bonanza

Money flows into the Mecklenburg County coffers from two areas: taxes on real estate and personal property.

“The buildings themselves, regardless of what’s in them, just the physical buildings are pretty substantive sized facilities, and so they carry a pretty substantial value to them,” Gottschalk said. “The real estate tax revenue is going to be a sizable amount on its own.”

Then there’s the pricey equipment inside that brings in the rest of the money.

There are different ways that can happen. One is to have an established tax rate. Otherwise, the state allows a specialized tax rate for computer equipment in data centers specifically.

“So there’s a lot of localities that have done that,” he said, in a preemptive way to try to recruit industry.

Recently, Mecklenburg County decided to go that route.

“There’s a lot of different ways of doing the taxes,” he said.

“The bottom line is the equipment is worth a lot of money,” he continued. “Even at a low rate you are still going to generate a significant return.”

A data center — in its simplistic definition — is a storage facility for computer information, oftentimes called “the cloud.”

That requires high-speed servers, which are expensive.

Those devices do depreciate over time, meaning the tax revenue may drop a year or two down the road.

“Now that being said, the computer equipment is replaced on a fairly regular basis,” the Mecklenburg administrator stressed. “When they put the new one in, the new one goes back up to a higher depreciation rate.”

For the financial picture, that means it’s a balancing act.

There are no tax breaks if a data center has a contract for a government aspect, he noted.

“The contract may be with a government entity, and there are in fact those, but the equipment is not,” he said. “The equipment is owned by the company that is providing the service.”

Gottschalk couldn’t peg an exact figure that the county gets from data centers when asked by the Register & Bee.

“It really depends on how you slice everything out and compute it,” he said, explaining there was no such thing as a data center fund for tracking the money.

Instead, all of the revenue makes its way to what’s known as the general fund, which is essentially a locality’s main pot of cash.

On the land side alone, about 40% of the real estate valuations in the county come from data centers.

However, the data centers make up a “significant portion” of Mecklenburg County’s overall budget.

When asked if the data centers have helped with money matters, without hesitation, he answered.

“Oh, absolutely, absolutely,” he told the newspaper.

It’s the reason Mecklenburg has been able to keep the real estate taxes so low. That county has the second lowest taxes of any locality in the state.

It’s also the reason they were able to build a new middle and high school a few years ago.

“So there is no question about it that we were able to afford the debt services that came along with that school in our baseline budget because of the increase,” referring to the data centers, he said.

In a social media post, Balico claims the project will bring in $162 million annually to Pittsylvania County. Over in Danville, Caesars Virginia — a new casino resort — is expected to funnel about $38 million a year into the city government.

The jobs

The number of jobs a data center could bring in has been a moving target since the project was first announced in October.

When Balico sought to rezone a mammoth 2,200-acre sloth of land, the company touted up to 700 jobs associated with the complex.

That has now dropped by more than half to 360. The power plant would bring 150 jobs, and 1,200 would be generated through construction, according to the company.

Gottschalk said the job figures are much higher than just the workers at the center.

“A lot of people fixate on the fact that there’s ‘not a lot of jobs with a data center,’” he told the newspaper.

He said that may be true when comparing it to Microporous, which is bringing more than 2,000 jobs to Pittsylvania County.

It’s all about perspective, Gottschalk said.

In Mecklenburg County, 60% of businesses employ between 1 and 4 people.

“If your data center is having 30 or 50 people per building, and they are going to be building multiple buildings on these sites, that’s going to be a pretty significant employer,” he said of the overall job pool.

“Even though it isn’t thousands, it’s a pretty good add to the employment opportunity mixture,” he continued. “And furthermore, a lot of them are well-compensated jobs, which is great for those people who are going to be able to obtain them.”

But there are other aspects of working with a data center that aren’t factored into the computer-savvy positions that often pop to mind.

“But it’s also a pretty diverse array of occupations,” he said.

For example, there’s upkeep and maintenance, giving landscapers a “great opportunity” to land a big commercial project.

“There’s going to be people who are working in environmental-related jobs on the site,” he continued. “There’s going to be security jobs.”

Also, there are opportunities in food services because people are going to be congregated in one area.

“There’s a ton of different job opportunities that come along with this industry, so it really touches a lot more people than one would presume,” he said.

“And it would create an enormous amount of opportunity for a lot of local small businesses,” he continued. “And I just think that gets lost a lot of times.”

The mindset

Amanda Sink Wydner, who’s been one of the most vocal opponents of the Balico project, doesn’t mince words when it comes to sharing her view of what would happen should supervisors approve the project.

“The entire region is pushing back hard because the entire region is going to be the victim of parasitic infestation-style development,” she said. “That is enviable.”

Wydner, like dozens of others interviewed by the Register & Bee over the last month, takes issue with the location of the proposal, which puts a data center and power plant next door to homes.

“We are active in the communities,” Wydner said. “If you don’t understand the commitment we have to land stewardship and to protecting where we live, then you won’t ever understand our passion behind the podium.”

That’s not exactly something Mecklenburg has had to contend with.

“We haven’t really had any that are built next to what you would view as a traditional neighborhood,” Gottschalk said, although some are next to places where residents live.

“There are homes, but none of them have been targeted in a way that they’ve been built adjacent to a large-scale residential community,” he said.

But in general, opinions have changed over time with data centers in Mecklenburg County.

“People recognize the positive revenue that it brings,” the county administrator said. “They recognize that we’ve been able to do things like the school project because of the growth that we’ve had because of the data centers.”

Also, residents work at the data centers, bringing another benefit.

“And it’s provided an avenue for people to stay here or come back here because there are job opportunities in the way there wasn’t before,” he explained.

But, on the flip side, there’s more site development, which creates problems that sometimes aren’t known during the planning stage.

“For example, we’ve had some sites that were located on secondary roads, and we found that those secondary road beds were not suitable for the heavy-weight vehicle traffic,” he said. “But it would have been any industry that would have located there that would have had the heavy-weight traffic.”

Some of the roads have come apart, causing an extra challenge for people who live there to “suffer through” during construction.

“That’s just one of the things that you don’t think about ahead of time if you don’t experience it,” he said.