Amazon stated Friday that it will invest $35 billion over the next 20 years to build its data center business across Virginia, creating at least 1,000 new jobs in the lucrative sector that has been expanding quickly in the state’s northern suburbs.
If Virginia lawmakers approve, the cloud computing division of the internet behemoth, Amazon Web Services (AWS), may get up to $140 million in economic incentives from the state and an extra 15 years of tax discounts for hardware and software.
Gov. Glenn Youngkin (R) said in a statement that “AWS has a major presence in Virginia, and they are happy that AWS has chosen to continue their growth and expand its footprint across the Commonwealth. Virginia will keep promoting the construction of these new types of data center campuses around the Commonwealth.
“Numerous places” are being considered for the new data center campuses, according to Youngkin’s statement, and will be decided upon at a later time. Neither AWS nor the Virginia Economic Development Partnership (VEDP) disclosed the number of locations under consideration or the number that would be chosen.
Northern Virginia, which is home to around 275 data centers and manages at least a third of the world’s online activity, has seen a boom in the data center business in recent years. Ashburn has earned the nickname “Data Center Alley” due to the area’s extensive network connectivity, business-friendly regulations, and simple access to land and energy.
Many municipal politicians have praised this rise, claiming that it raises local tax money without generating additional traffic or putting a significant burden on the public sphere. Hundreds of thousands of computer servers are housed in nondescript, highly secure facilities that serve as the physical home for cloud computing.
But there hasn’t been a universal agreement over their entry into the area. Some residents of affluent suburbs in Prince William and Loudoun counties have voiced concerns about noise, effects on water quality and property values, and the high-voltage transmission lines required to power the data centers as businesses like AWS have gobbled up space to meet rising demand.
The expansion of the company is intended to bring data center campuses to “small-town, rural Virginia,” where the industry has yet to take off in a similar fashion, according to Del. Mark D. Sickles (D-Fairfax), who is a member of the legislative commission that negotiated the economic incentives for Amazon.
Local legislators from each county or city that is being considered for a campus will probably be involved in choosing the site. Every one of them [data center campuses] will likely spark local discussion, he predicted, but he hoped it would be about how to make it work for everyone.
Data center corporations have established a few outposts in less developed regions of the state, with what appears to be minimal pushback from locals.
Microsoft committed roughly $2 billion in a sizable data center facility in Mecklenburg County, and it has plans to construct other facilities in other regions of Southside Virginia. Outside of Richmond in Henrico County, Meta, the parent corporation of Facebook, built a sizable complex.
Recently, Virginia Beach officials lowered their taxes in an effort to draw more data centers to the city, where new subsea cables to Europe and Africa offer unusually quick connectivity for data centers.
According to Sickles, the purpose of the 15-year tax break extension was to increase the Commonwealth’s competitiveness in the Amazon expansion process because other states offer permanent tax reductions for data centers.
The exemption from sales and use tax for data center equipment in Virginia is scheduled to end in 2035. The state’s agreement with AWS, which is awaiting approval in Richmond, would extend this exemption to 2040 for any business that makes an investment of at least $35 billion in data centers in Virginia and generates at least 1,000 new direct employment with an average salary of at least $122,300.
The tax benefits will last until 2050 if a business like AWS invests an additional $65 billion and creates an additional 1,500 direct job opportunities.
However, a few economic development watchdogs criticized the agreement. They noted that each data center only employs a small number of people when fully functioning and claimed it was doubtful that Amazon would choose to locate anywhere other than Virginia.
According to John C. Mozena of the Center for Economic Accountability in Michigan, the headline amount of money is really disassociated from the advantages that happen at the local level. If all those billions of dollars are going somewhere else, the state doesn’t gain anything from it.
The expansion will strengthen Virginia’s position as a leader in the cloud computing sector, according to Roger Wehner, director of economic development at AWS, and will also strengthen the company’s presence in the state.
Virginia is a global leader in innovation and cloud computing because it has invested in a strong, highly-skilled workforce and placed an emphasis on long-term public and private partnerships, the official said in a statement.
Wehner stated that since opening its first Virginia data centers in 2006, AWS has committed more than $35 billion to the region. With a potential additional $750 million in state subsidies, Amazon, one of the top private-sector employers in Virginia, is constructing its second headquarters in Arlington.
