The news that a Colorado company with ties to data centers might be headed to Pittsylvania County — with a draft performance agreement that calls for it to create 2,050 jobs over 30 years — could have immediate political implications in Richmond, where tax breaks for data centers are at the center of budget negotiations.
It might also provide more long-term vindication for someone who was in Richmond until recently: former Gov. Glenn Youngkin, whose decision not to pursue a Ford Motor battery plant that was interested in the site has left the property open for a development that could produce more jobs and at higher pay.
For details on the Colorado company that’s in the process of buying 2,990 acres at the Southern Virginia Megasite — essentially all of the remaining site — see the story by Cardinal’s Danville-based reporter, Grace Mamon.
What I’ve got here are the potential politics of this development.
First, the data center angle.
The biggest hold-up in the budget negotiations between the House and Senate is whether to do away with the state’s tax incentives for data centers. (See Elizabeth Beyer’s story on that for more.) The Senate — mostly notably Senate Finance chair Louise Lucas of Portsmouth — sees those tax abatements as a giveaway that led to the state forgoing up to $1.9 billion a year in taxes. The House — led by Speaker Don Scott, also of Portsmouth — sees those tax breaks as an investment that leads to $48.6 billion in investment.
Most of the data center development in Virginia has been in Northern Virginia, where frustration with and outright opposition to more data centers is high. Only now are data centers starting to push into rural Virginia, often with an enthusiastic welcome from local officials eager for jobs and tax revenues. That has led some rural legislators to ask what the abolition of those tax incentives would mean for those parts of Southwest and Southside that want data centers. For some of them, the potential demise of those tax incentives feels like urban crescent legislators who have had their fill of data centers taking away an opportunity from a less affluent part of the state that hasn’t had an opportunity to cash in yet. (I dealt with that question in a previous column.)
This Pittsylvania development — if it really is a data center — would underscore that issue. If this deal comes to fruition the way it’s described in the performance agreement, this would be the largest jobs announcement in decades. It’s unclear how many decades because the Virginia Economic Development Partnership jobs announcement database only goes back to 1990; it would certainly be the biggest in that time. Not all those jobs would come right away, but this would still be an astonishing influx of jobs in a part of the state that’s been bleeding jobs for years.
Without Virginia’s current tax structure for data centers, would those jobs be coming? We don’t know, but it’s a question that certainly ought to be asked. If the answer is “no,” that’s an inconvenient answer for those who want to eliminate those tax breaks as nothing more than a taxpayer subsidy of a mature industry. Those on the other side point out that, yes, it’s mature in Prince William County but not in Pittsylvania. That’s why Danville City Council member Lee Vogler posted Tuesday on X (making sure to copy Lucas): “Ending these tax incentives early would be a massive mistake. This incentive was available for years while data centers were being built left and right in northern VA. Now as soon as rural localities in Virginia have a chance to get in the game,@SenLouiseLucas wants to pull the plug. Big mistake!”
Ultimately, the fate of those tax breaks involve philosophical questions, and only the Colorado company — which so far isn’t saying anything — can answer what role taxes played in its location decision. What can be measured more objectively is whether Youngkin made the right decision in telling Ford he wasn’t interested in pursuing its interest in locating a battery plant at the megasite. His rationale was that Ford was too closely tied to a Chinese company for its battery technology.
That decision was controversial at the time — what governor sends jobs away from Southside?
Ford eventually put the plant in Marshall, Michigan, where it’s expected to open later this year. We can now make some comparisons.
When Youngkin nixed Virginia’s pursuit of Ford, the company was looking at a facility that would employ 2,500 people. In Michigan, Ford downsized the plant to 1,700 jobs by 2028. The average pay of those jobs will be $53,040 per year, according to the Michigan news site MLive.
About a year later, the Tennessee-based battery plant Microporous announced it would locate at the Southern Virginia Megasite, pledging to create 2,015 jobs that would average “at least $58,090” per year.
Now, the documents on this deal show the Colorado company is promising to create 2,050 jobs — again, over 30 years — with an average salary of “at least $80,500.”
While Ford’s jobs would have arrived more quickly, the other two projects (Microporous and whatever this Colorado one is) would create more jobs — and at a higher pay rate.
It would seem that Youngkin’s gamble not to pursue Ford has paid off, by leaving the Southern Virginia Megasite available for other suitors, such as this Colorado one. Given the acreage involved, Microporous and Ford could have both gone to the megasite, but that would not have left the acreage that the Colorado company is now taking.
That means the real comparison shouldn’t be between Ford and Microporous but between Ford and whatever this Colorado company is — 1,700 jobs now at $53,040 for Ford vs. 2,050 jobs over time at $80,500.
After the Microporous announcement, I wrote that the deal could be “transformative” for Southside. Now, in quick succession, we’ve had the announcement of 1,500 rocket-building jobs come to Pittsylvania County and now this news. Transformative times three?
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