After more than two decades working in local government in northern Virginia, Robert Lazaro knows a thing or two about data centers.

Northern Virginia has the highest density of data centers in the world, and Lazaro was working for Loudoun County in the early 2000s when officials began courting data center developers to locate on thousands of acres of vacant industrial-zoned land.

“The county saw this opportunity and went after it,” Lazaro said. “The fiber was there, the water was there, the power was there, and there was an economic need.”

The data centers created construction jobs, along with a few new permanent roles, and allowed the county to lower its tax rate, Lazaro said. But they also sparked concerns from residents about their energy and water use.

Three years ago, Lazaro left Virginia for Leland. He joined the town’s planning board in 2024 and voted to recommend new data center regulations that were adopted by town officials last month.

Although there haven’t been any data center announcements in the Cape Fear region, some local planning leaders are preparing for their potential development by writing new regulations that address data center concerns and outline a process for their approval. Others in the region say they continue to monitor the dialogue around data centers, locally and across the state.

Data centers are centralized facilities that house computers, servers and other IT infrastructure, said Ahmed Saeed, an assistant professor in the Georgia Tech School of Computer Science, who’s studied data centers for more than a decade. Data centers can range in size from a closet or classroom to a campus of warehouses on a few hundred or thousands of acres.

“Whenever you Google something, that’s being answered in a data center. Video streaming, all of the data is being stored, processed and delivered from data centers,” Saeed said. “The main reason why they’re making headlines recently is their connection to AI.”
 
As the AI boom continues, Saeed expects to see more demand for new data centers. The industry is racing to keep up with demand, according to Dan Diorio, vice president of state policy for the Data Center Coalition, a data center industry advocacy group.

“Consumers and businesses are driving what is really now an exponential demand curve for digital infrastructure because of … the way that it is the backbone of the 21st-century economy,” Diorio said. “We’re on a very steep demand curve, and data centers are building out to accommodate that demand, but all indications are right now are that we are behind meeting that demand.”

“As data centers have continued to try to meet that demand, we’ve seen new markets emerge onto the national stage,” he added, “and North Carolina, I think, is one of those markets.”
 
 

DEFINING THE PROCESS

In Leland, adding a data center provision to the town’s ordinances was a staff-led effort, according to Ben Andrea, the town’s planning and inspections director. The town has not received any proposals for a data center, he said.

Conversations around data centers in other North Carolina towns, such as Matthews, initially brought the issue to the staff’s attention, Andrea said. Plans for the Matthews data center, slated for around 120 acres of residentially zoned land, were withdrawn last fall following public pushback.

“Just understanding that these data centers have some uses that could be impactful to the community, we want to be proactive about adding it as a use,” Andrea said, “and adding some requirements that we think would help mitigate the potential impacts of a data center.”

Under the newly adopted regulations, data centers would be permitted in the innovation district, a zoning only found in the Leland Innovation Park. Data center proposals would have to be approved through a conditional zoning process, which means they would go before the planning board and the town council for final approval and would be subject to public hearings.

The new regulations require a 500-foot buffer from homes, schools and parks, along with restrictions on generated light. At least 60% of the data center’s energy consumption must come from on-site renewable energy sources or renewable power purchase agreements, according to the ordinance text. The center must also operate on a closed-loop water system and limit noise to 60 decibels at the property line, a noise level similar to a person-to-person conversation, Andrea said.

He sees the regulations as a proactive step to define data centers and the steps for evaluating future projects.
“We’re not necessarily advocating for data centers to come to the community. We’re not advocating against them either,” he said, “but what we are doing is setting up a process and a set of standards that we think would mitigate the impacts if a data center was to be supported by the public and ultimately approved by town council.”

In January, Shallotte officials approved an ordinance amendment addressing data center development as part of another staff-led effort. According to town planner Brandon Eaton, the ordinance was a “preemptive measure to get ahead of an issue that is becoming more common in other areas of the state.”

The amendment allows data centers by right inside the town’s heavy industrial zoning district. According to Eaton, staff focused on potential impacts to residents and included a 1,000-foot buffer requirement from any residentially zoned site. 

It also prohibits data centers from locating in designated flood hazard areas and requires the development of an emergency response plan, among other stipulations. So far, Shallotte hasn’t received any data center proposals.

“While it is possible interest could emerge in the future,” Eaton wrote in an email to the Business Journal, “this amendment was adopted proactively to ensure the town is prepared and aligned with evolving development trends.”
 

PROS AND CONS

Bill Early, executive director of Brunswick Business & Industry Development, has “mixed feelings” about data centers. While they typically bring a significant capital investment and create large numbers of jobs during construction, they often offer a limited number of full-time jobs once constructed and require high levels of electricity.

“One of the issues that is being dealt with in the state is that some of these data centers are consuming our utility’s capacity for electric supply, which ends up limiting any other potential users,” Early said. “If you have a data center, they could, from an economic development standpoint, put you out of business if you can’t provide power to other potential manufacturing companies that would create a significant number of jobs.”

Data centers are contributing to a growing dialogue about energy usage and how it could affect rate increases for residents around the state, said Jackson Ewing, the director of energy and climate policy at Duke University’s Nicholas Institute.

“That whole (power) system is really under strain,” he said, “and there’s also the risk that, if not done wisely, the cost for building out this new electricity infrastructure will be borne not just by the data centers and the AI companies that are using them, but by the everyday ratepayers.”

How to navigate the increasing demand for electricity and any subsequent rate increases is being studied by the N.C. Energy Policy Task Force, which was formed last year.

Ewing said other states have found creative ways to build a “firewall” around large load customers, such as data centers, to ensure they’re paying for the energy powering their operations.

Early said he’s had some interest in data center development in Brunswick County, including several calls from developers about acquiring large tracts of land on speculation for data centers. Although the county has some tracts that could accommodate data centers, Early doesn’t see data centers as a good fit for certain parcels.

“In my professional opinion, our megasites are not ideal for going to data centers,” he said, “just because we lose lots of opportunity to bring in potential manufacturers with jobs that would be good-paying jobs.”

In 2023, Brunswick County adopted a text amendment related to data centers, specifying that data centers are permitted by right within industrial general zoning districts, areas that “include substantial buffers and setbacks designed to mitigate impacts associated with industrial uses,” Meagan Kascsak, the county’s communications director, wrote in an email to the Business Journal.

Brunswick County has not received applications or site plans for a data center, according to Kascsak.

Pender County hasn’t received any data center project proposals either, said Justin Brantley, the county’s interim planning director, but he’s keeping an eye on the issue.

“I think a lot of folks are still learning about the challenges and the concerns with these sorts of land uses,” Brantley said, “and we’re keeping an eye on those conversations.”