Lynchburg planners propose tighter rules, conditional review for data centers

Lynchburg’s Planning Commission opened a work session on April 22 to consider code amendments that would create a specific definition for data centers and tighten where and how they are allowed in city zoning.

Planning staff told commissioners the city currently lists data-processing and hosting under a broad business category and allows the uses by right in many commercial, industrial and institutional zones. The proposal under discussion would adopt a targeted definition —including servers and related supporting infrastructure such as on-site generators and utility substations— and require conditional use permits (CUPs) for most new facilities so proposals receive site-by-site review and public notice.

The move would narrow where data centers can be built. Staff recommended limiting by-right allowances and requiring CUPs in selected industrial districts (I2 and I3 were discussed), while commissioners pressed staff to consider institutional campus settings (for example, university or hospital facilities) as potential special cases. "The CUP process lets us evaluate: how far is it from a transmission line, is there water capacity in this area, would upgrades be needed and who pays for those upgrades?" the presenter said, urging a site-by-site approach.

Commissioners raised several recurring concerns: utility demand (large electricity and water use), noise and visual impacts from generators and rooftop equipment, the physical footprint of large facilities, and the limited number of jobs such uses typically bring. Staff noted state policy and tax incentives are a major driver: Virginia’s data center retail sales-and-use tax exemption for equipment purchases (about 5.3%) was cited as running through June 30, 2035 and as a factor behind significant statewide growth in data centers.

On municipal controls, the commission discussed setbacks and buffers — examples floated included minimums of 100, 200, 500 and even 1,000 feet — and recalled that the base industrial-to-residential setback in Lynchburg is currently 100 feet. Commissioners generally favored starting conservatively (using the existing district setbacks where appropriate) and using CUP conditions to require additional mitigation where necessary. Several commissioners argued for at least a minimum setback so a data center would not be built directly up to a residential property line.

Operational standards were also discussed: commissioners favored restricting generator testing to daytime weekday hours, screening rooftop and mechanical equipment, requiring enclosures for audible equipment where feasible, and adding monitoring or periodic reporting conditions so actual water, energy and noise usage can be compared to the applicant’s CUP testimony. Staff said some localities return permits for periodic compliance checks and that Frederick County’s code provided a useful template for several draft items.

Commissioners debated how to distinguish campus-serving facilities (for a university, hospital or large institution) from wholesale commercial data centers that sell capacity to third parties. Staff proposed refining the definition to emphasize the primary purpose of the facility and to list "associated infrastructure" in the definition so standalone utility substations are not automatically treated as data centers.

Next steps: staff will prepare draft ordinance text reflecting the commission’s feedback, brief City Council ahead of a public hearing if appropriate, and return to the commission at its next meeting with proposed code amendments and a public hearing date. Earlier in the meeting the commission approved the April 8 minutes (motion seconded; one abstention).