Leesburg Council Plans State Petition to Annex Compass Creek, Microsoft Land

The Leesburg Town Council on Tuesday voted unanimously to initiate an annexation petition to incorporate the entirety of the Compass Creek development, including a Microsoft data center campus. It also is laying the groundwork to allow more data centers in town.

According to the resolution, the town plans to apply to the Virginia Commission on Local Government to annex the land through the approval of a special annexation court that would be appointed by the state Supreme Court. 

The action comes a year after talks with county leaders on a potential deal to share tax revenues from covering the Microsoft data centers broke off.

The town and county previously agreed on two cooperative boundary line adjustments covering portions of Compass Creek, although only one has been completed. The second expansion, which would bring land that includes the Super Walmart and the At Home stores into the town limits, was approved in April, but has not moved to the Circuit Court for final approval. According to a statement by the town, the county “has been very slow in working with the Town to complete the second boundary adjustment and the Town has very little confidence it will ever be completed.”

At the core of its annexation petition, the town plans to argue that the Joint Land Management Area that includes Compass Creek was established to accommodate the natural expansion of the town. The draft resolution notes that the property, including the Microsoft land, is served by town water and sewer service and the town claims the data center project could not have developed on schedule without access to town utilities.

The tax impact of annexation has been a central focus of the negotiations. If annexed, the data center campus and other businesses on the property would be subject to both town and county real estate and personal property taxes. While the county would not lose revenue, the property owners would pay more taxes.

While raising the threat of a rare adverse annexation, the town “remains willing to reach a fair and reasonable revenue sharing agreement with the County regarding the data center parcels and complete the Walmart and At Home boundary line adjustment,” according to the statement.

After news of the annexation plan circulated last week, the county reached out to renew talks, Town Manager Kaj Dentler said. On Tuesday, the council agreed to assign members on a rotating basis to join Mayor Kelly Burk in meetings with county representatives. Town Attorney Chris Spera told council members that most annexation cases in Virginia are resolved through negotiation and never reach the trial stage.

The resolution lays out a series of benefits town leaders say would result from the annexation, including that the town will expand its tax resources, allowing it to provide existing and additional urban services to the town, the annexation area, and the surrounding region; development of the annexation area will create additional employment opportunities; the properties in the annexation area will benefit from a higher level of municipal services provided by the town, as well as lower water and sewer charges; the annexation will not have any material adverse effect on the county, as the county will continue to collect taxes from the annexation area, and the property in the annexation area will remain a part of the county; and the commonwealth and the county will benefit because Leesburg will be a more viable and vibrant locality with enhanced resources to provide high quality municipal services to its citizens and the surrounding region.

Also on Tuesday, the council directed the planning staff to begin the review of the town’s zoning districts to determine which are best suited for data center development and to begin a study of design guidelines that would assure the buildings are more attractive than those built in other areas of the county.

Council members acknowledged that at least three other properties in town, in addition to the Microsoft campus, are being discussed as possible data center locations—in Oak Lawn, near the Village at Leesburg, and along East Market Street near Battlefield Parkway.

While county government leaders have raised concerns that their operations are too depending on data center revenue, town leaders are looking to that industry to diversify the town’s tax base.

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