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The Data Center Divide

Fredericksburg city

Pro-Data Center Policies

Fredericksburg city offers a lower tax rate on qualifying data-center equipment. In a limited area of Celebrate Virginia South, data centers are allowed without a special-use permit, subject to conditions including setbacks, water use, noise, and screening.

current law · County measure
This ordinance established a special personal-property tax rate and depreciation schedule for computer equipment and peripherals used in data centers.Virginia Ordinance 19-17 (2019)

What this means

The measure gives data centers a substantially lower tax rate on qualifying computer equipment: “$1.25 for every $100”, compared with the general rate of $3.40. It creates no new development or operating restrictions, so its main effect is to lower costs.

People behind it

  • Moved approval of Ordinance 19-17.

  • Seconded the motion to approve Ordinance 19-17.

Restrictions & requirementsHide restrictions & requirements1

  • The ordinance imposes an ongoing tangible-personal-property tax on nonexempt computer equipment and peripherals used in a data center at $1.25 per $100 of assessed value, effective July 1, 2019, creating an operating cost even though the rate is lower than the general $3.40 rate. computer equipment and peripherals used in a data center shall be taxed at a rate of $1.25 for every $100

Benefits & exceptionsHide benefits & exceptions1

  • Provides a reduced tangible personal property tax rate for qualifying data centers: computer equipment and peripherals used in a data center are taxed at $1.25 for every $100 of assessed value, instead of the general $3.40 rate. The reduced rate applies beginning July 1, 2019, and only to equipment and peripherals used in a qualifying data center as defined in the ordinance.

Sources

current law · County measure
This resolution amended the City’s comprehensive plan to address potential technology-center development in Celebrate Virginia South.Virginia Resolution 25-10 (2025)

What this means

The measure would make data centers allowed by right in a designated area of Celebrate Virginia South, removing the need for a special-use permit there (establishing the Technology Overlay District). That is a meaningful boost, though the area is limited and the proposal includes conditions on setbacks, water use, noise, and screening (200-foot setback).

People behind it

  • Moved approval of Resolution 25-10 and introduced the related Technology Overlay District and amended-proffer ordinances.

  • Seconded the motion approving Resolution 25-10 and the motion approving the amended proffers for the Neon Project.

  • Seconded the motion approving the Technology Overlay District ordinance.

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  • Planning and Building Services Director who presented the City’s proposal and explained the Technology Overlay District’s geographic scope.

  • Economic Development Director who presented the City’s proposal and discussed regional markets, fiscal impacts, utilities, and the approval process.

  • Deputy City Manager who participated in presenting the City’s proposal.

  • Attorney for the applicant who presented the applicant’s proposal for the Technology Overlay District and related proffer amendments.

Restrictions & requirementsHide restrictions & requirements11

  • The Technology Overlay District applies only to the specified Celebrate Virginia South parcels in the ordinance, rather than citywide.

  • Data center buildings must maintain a 200-foot setback from residences, regardless of the type of residence.

  • Buildings and related facilities must maintain a 25-foot setback from public rights-of-way.

  • City potable water may not be used for data center operations, except for temporary bridging and ordinary uses such as restrooms.

  • Groundwater, raw water drawn directly from the Rappahannock River, and quarry water may not be used for data center cooling.

  • A water service agreement must undergo a public hearing process.

  • Data centers may not create new discharges into the Rappahannock River; wastewater must be treated on site or redirected to the City for treatment.

  • Noise must be tested before construction and after construction, and operations must remain below the applicable decibel limit.

  • Generators must be Tier 4 or natural-gas generators, and the generators must be enclosed.

  • Data centers, surrounding buildings, and rooftop accessories must not be visible from the Rappahannock River.

  • The applicable activity regulated by Section 6C is limited to 9:00 a.m. through 5:00 p.m., rather than 7:00 a.m. through midnight.

Benefits & exceptionsHide benefits & exceptions6

  • Amends the Comprehensive Plan to address potential technology-center development in Celebrate Virginia South, creating policy support for data-center development in that location. amending the 2015 Comprehensive Plan

  • Establishes a Technology Overlay District for large assemblages of property and amends the zoning map to place part of Area 1 in that district, making the designated area available for data-center campuses and related uses. establishing the Technology Overlay District

  • Allows data centers in the designated overlay area by right rather than requiring a special-use permit, subject to the ordinance's rules and requirements. The overlay applies only to the specified Celebrate Virginia parcels, not citywide. by right with rules and requirements

  • Accepts amended proffers for the Neon Project in Celebrate Virginia South so a potential data-center project may proceed consistently with the Technology Overlay District. accepting amended proffers for the Neon Project

  • Permits the project to operate without using city potable water for data-center cooling, while allowing potable water for limited bridging and ordinary uses such as restrooms; cooling may not use groundwater, quarry water, or raw water drawn directly from the Rappahannock River. no potable water from the City would be used

  • Allows treated wastewater to be redirected to the City for treatment rather than requiring a new discharge into the Rappahannock River, providing an operating pathway subject to treatment requirements. no new discharge into the Rappahannock

Sources

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