Data Centers: A Guide for County Officials and Planners

Most county zoning codes were written before anyone proposed a building that draws as much electricity as a small city. A large data center campus brings a long list of questions at once: land use and compatibility with neighbors, new transmission lines and substations, water and wastewater demand, construction traffic, tax structure and incentives, and the long-term fiscal picture. NACo’s data center resource hub for counties is organized around permitting, infrastructure planning and community engagement.¹ The National Association of Counties (NACo) frames the core trade-off as whether the added revenue is worth the drain on electricity and water and residents’ complaints about noise and rising utility bills.²

The applicant usually arrives well prepared. Developers often work under a code name, have already met with the electric utility, and may have optioned land months earlier. Officials who learn about a project at the pre-application meeting are starting behind. The most effective counties decide in advance where data centers belong, what standards apply and what the approval path is, so the first application is judged against settled rules rather than writing them on the fly. Our guide for economic development organizations covers the recruitment side; this guide covers review and regulation.

Scale matters to every answer below. A 20 MW building on an industrial lot and a multi-building campus of several hundred megawatts are different land uses, with different power, water and traffic profiles. Many ordinances now set thresholds by building size, site acreage or electric demand so the review matches the project.

The fiscal case is real. A 2024 Virginia legislative study by the Joint Legislative Audit and Review Commission (JLARC) found that data centers can generate substantial local tax revenue for the localities that host them.¹² Loudoun County, the largest market, reported that data centers made up 38% of its general fund revenue and nearly half of its property tax revenue in its $4.7 billion fiscal 2025 budget.⁶

Three cautions apply. First, revenue depends heavily on how the state and county tax business equipment, and on any abatement, payment in lieu of taxes or incentive the county grants; see how data centers are taxed. Second, the revenue is concentrated in one industry. Loudoun staff have projected that growth in data center revenue will level off around the early 2030s, and the board has been planning its budgets around that.⁷ Third, JLARC found that data centers were paying their full cost of electric service at the time of the study, but that rising demand was likely to raise costs for other customers over time, an issue counties feel politically even though state regulators set rates.¹² Our guide to data centers and electricity bills explains that debate.

A sound fiscal review projects revenue over the life of the equipment, not just the first year, and sets it against the county’s own costs: road maintenance, emergency services, staff time for inspections and any county-funded water or sewer capacity. Ask the applicant for its assumptions in writing, and have county staff or a consultant test them.

The single most important zoning decision is the approval path. Under by-right zoning, an application that meets the code is approved administratively through site plan review, with little room for public input. Under a special exception or conditional use permit, the project goes through staff review and public hearings before the planning commission and the governing body.³ Loudoun County, which had allowed data centers by right in several districts for years, voted 7-2 on March 18, 2025 to make them special exception uses, with a grandfathering resolution for some applications already filed.³ Harrisonburg, Virginia, likewise removed by-right permissions and now requires special use permits in industrial zones.¹⁴

Overlay districts are the other common tool. The National League of Cities notes that overlays often add requirements on noise, aesthetics, setbacks and environmental impact on top of the base zoning.¹⁴ Our guide to data center zoning ordinances and overlay districts compares how jurisdictions have structured them.

Whatever path you choose, define the use. Codes that lump data centers into “warehouse” or “flex industrial” leave staff without a basis to apply specific standards. Also decide whether to treat substations and transmission lines serving the project as part of the application, since they often draw as much public concern as the buildings.

Counties do not need to start from a blank page. The Kentucky Resources Council’s model data center zoning ordinance is built from a review of practices across the U.S. and offers a menu of options so local officials can choose what fits their community.¹⁰ PennFuture’s model ordinance for Pennsylvania draws on ordinances from that state and Northern Virginia and includes provisions on water consumption, power consumption, noise and aesthetics.¹¹

Fairfax County’s 2024 amendment is a widely cited example of specific standards. It requires data center buildings to sit at least 200 feet from an adjacent residential lot line, places backup generators and similar equipment 300 feet away or behind the building, requires pre- and post-construction noise studies to show compliance with the noise ordinance, requires equipment to be enclosed or screened, and sets a one-mile minimum distance from Metro stations.⁴ The pressure for such rules is visible in the existing stock: JLARC found that 55% of Fairfax’s 20 data centers were within 200 feet of residential zoning and 70% within 500 feet.¹³

The City of New Castle, Delaware, offers a model for water and end-of-life terms: its ordinance asks for a letter from the water utility confirming adequate service and system capacity, a water management plan covering daily, annual and peak demand, sources of supply, conservation measures and drought contingencies, and decommissioning security.¹⁵

Counties rarely control the electric system. Rates, line extensions and who pays for upgrades are usually set by the state utility commission or the utility’s board, and the county’s role is land use. That role still matters: transmission lines and substations are often the most contested part of a project. In December 2025, Fairfax County adopted substation rules requiring a 100-foot setback for equipment from adjacent residential property lines, a solid wall or fence at least 12 feet tall facing streets or homes, a 50-foot landscaped buffer and a formal noise study for substations near residential zones.¹⁶

Water is where county and municipal utilities have the most direct stake. A Google representative told officials at a NACo symposium that a data center typically uses about as much water in a year as 1.5 to 3 golf courses, and NACo reported that Northern Virginia data centers used nearly 2 billion gallons in 2023, about 900 million of it in Loudoun.² Use varies widely with cooling design, so ask for the applicant’s cooling type and its projected annual and peak demand. Tucson staff have noted that zoning is limited in what it can regulate on water and energy use, and the city’s draft rules lean on its existing large water user ordinance.⁸ Our guide to municipal water and sewer capacity covers the utility side.

County authority also varies by state. Texas counties, for example, have little zoning power; Caldwell County’s commissioners have asked the legislature to study grid reliability, water use and fiscal effects and to give counties a meaningful role in land use and resource review.⁹ Know what your enabling law allows before promising residents a particular outcome.

Where zoning cannot reach an issue, counties increasingly use negotiated agreements. A development agreement can fix phasing, road improvements, water commitments and tax terms in a contract that binds future owners. Community benefit agreements add payments or facilities for the public.

Frederick County, Maryland, announced a community benefits agreement in 2026 worth more than $110 million in developer-funded investments, including $30 million for renovations at an elementary school and $40 million for a community center and recreation space, plus a commitment to cut potable water use by 80% once a reclaimed water system is running.⁵ NACo’s resource hub points to Cuyahoga County’s guide on zoning tools and benefit agreements and Susquehanna County’s decommissioning ordinance as examples counties can study.¹

Agreements work best when the county knows what it wants before negotiations start, ties payments to milestones the county can verify, and names who enforces each term. See development agreements for data center projects for the mechanics.

Before the hearing, staff should be able to answer each of these from the record:

• Peak electric demand at full build-out, the serving utility, and where new lines and substations will go.
• Cooling method, annual and peak water use, the water source and a capacity letter from the provider.¹⁵
• Noise modeling at the nearest residential lot lines, generator testing schedules and the post-construction testing plan.⁴
• Setbacks, screening and building heights compared with the code and with nearby homes.
• Construction traffic, haul routes and road maintenance responsibilities.
• Projected tax revenue over the equipment’s life, net of abatements, and the county’s added service costs.
• Decommissioning and abandonment terms with financial security.¹⁵

Hearings go better when residents have seen the facts early; our guide to public hearings covers what applicants are expected to bring, and moratoriums and local restrictions covers pauses some counties have used to finish their rules.