DANVILLE, Va. – Danville leaders are studying the feasibility of data centers being built within city limits after being approached by multiple companies interested in building facilities in the area, according to a city memo obtained by 10 News.
The eight-page memo, sent to City Council in February, shows City Manager Ken Larking directed a feasibility study after inquiries from data center developers. Currently, Danville’s zoning code does not include provisions for data centers, meaning the facilities are not permitted.
That could soon change. The study recommends amending the zoning code to allow data centers, along with establishing specific guidelines for where they could be built.
City officials say the potential economic impact is significant and predict a data center could draw an initial investment of $10-15 million. The memo estimates data centers could generate tens of millions of dollars in tax revenue for the city every year after.
“I think it would bring more people to the area. Higher-trained people,” said Danville resident Stephan Jannach.
Jannach said he has seen steady improvement in the city since moving there in 2007, after the decline of the local textile industry.
“When I got here, the mills had closed. Things were very bad. Things have improved immensely since then,” he said.
However, the study also highlights major infrastructure challenges that could complicate development.
According to the report, only certain parts of the city’s electrical grid could currently support a data center. Expanding capacity would likely require building new substations or upgrading existing infrastructure.
Water capacity presents another hurdle. The study found the city has limited ability to supply the large volumes of water typically required for data center operations. Addressing that issue could take two to three years of infrastructure improvements to expand collection and delivery systems.
City officials did not provide a definitive answer when asked whether a data center project is imminent or whether such development could affect utility rates.
The study recommended a number of additions to the city’s zoning code, including defining what a data center is and placing specific restrictions on them, including a minimum lot size of 150 acres, banning them from being built in industrial parks and within 500 feet of residential areas and requiring all equipment to be kept indoors. The study also noted the data centers must follow all local noise ordinances.
In addition to zoning changes, the study recommends implementing a $1.25 tax rate on data centers to further increase potential revenue.
The city’s planning commission will review the proposed changes in an April 13th meeting.