MANASSAS, Va. – A bank tenant inside a newly completed data center in Manassas has triggered a sweeping local tax exemption, upending financial expectations and leaving city officials blindsided.
At the April 30, 2025, Manassas City Council meeting, Commissioner of the Revenue Tim Demeria revealed that a tenant inside the new Brickyard data center, operated by Digital Realty Trust, had filed paperwork identifying itself as a bank. Under Virginia Code §58.1-1202, banks are exempt from local Business, Professional and Occupational License (BPOL) taxes and the business personal property taxes that typically bring cities millions in revenue from data centers.
The loss is significant. While the city will continue collecting real estate taxes from the property—reassessed from $6 million to $102 million, generating about $1.2 million annually—the bank’s exemption means Manassas will receive no tax revenue on the high-dollar computer equipment housed inside the facility, which officials had hoped would become a key source of income.
“This fundamentally shifts our expectations,” said one Council member. “We’re talking about millions of dollars in tax money that now won’t be realized. It challenges everything we were led to believe about the economic promise of data centers.”
The tenant’s identity only became known on April 14, when the business personal property tax return was submitted. By then, the data center had already received its certificate of occupancy, following years of planning and by-right development. City officials confirmed they had no authority to review or approve the tenant during the process, and landlords are not legally required to disclose who will occupy a data center.
“This caught the Council completely off guard,” said Councilman Ralph Smith. “We were expecting a major boost in revenue—now we’re left empty-handed.”
City Manager Steve Burke defended the process, saying the city followed all legal and zoning procedures and had not projected the equipment tax revenue in its fiscal year 2026 budget. However, he admitted that the exemption “does not benefit the city the way we had anticipated.”
The data center was built on the former Glen-Gery brickyard, which was used for brick manufacturing for more than 70 years. It was purchased by Digital Second Manassas 2 LLC, a subsidiary of Digital Realty Trust, in July 2018. After a prolonged period of inactivity, company representatives reconnected with the city through the Chamber of Commerce in January 2022 and began the by-right development process.
Burke said city staff only communicated with the property owner, not the future tenant.
Councilwoman Sonia Vásquez Luna called for a full review of the city’s zoning laws, suggesting that officials explore whether to place more restrictions on by-right developments and gain more control over who occupies future data centers.
“We cannot continue to allow development with no visibility into what it will actually bring—or fail to bring—to our city,” she said.
Others suggested lobbying state lawmakers to amend the bank exemption statute or require disclosure of tenants during rezoning and permitting processes.
State lawmakers are already taking notice. State Sen. Danica Roem (D-Manassas, Manassas Park) called the situation deeply troubling, criticizing the state’s lack of transparency.
“The General Assembly has been way too generous about what’s shielded from [Freedom of Information Act requests],” Roem said. “If we find that localities cannot maximize the tax revenue, we need to take care of the residents.”
Roem added that she would consider introducing legislation to require landlords to reveal tenant identities before rezonings—a step that could change how Virginia handles the ever-expanding data center industry.
Meanwhile, Del. Josh Thomas (D-Prince William County) blasted Gov. Glenn Youngkin’s recent veto of HB1601, a bipartisan data center reform bill that would have required developers and utilities to disclose noise and utility impacts and allowed localities to assess the environmental risks of future projects.
“HB1601 was about giving local governments the tools they need to protect their communities,” Thomas said. “The governor ignored hundreds of residents who asked for action. This isn’t the end—it’s the beginning.”
The Brickyard tax exemption comes as city residents are poised to pay more in both property taxes and utility costs. The Council’s FY2026 budget includes a 1.75-cent property tax increase, bringing the total to $1.22 per $100 of assessed value and generating $2.7 million in new revenue to fund employee raises and debt service.
At the same time, Dominion Energy is proposing a 15% rate hike, citing increased electricity demands from data centers. The average residential customer could see bills rise by $21 per month by 2027. Dominion plans to establish a special rate class for large energy users like data centers—a move critics say shields the industry while shifting costs to residents.
City officials are now re-evaluating future data center developments, including a proposed AWS facility on Dean Drive. With at least three more large centers planned, the Brickyard case has become a cautionary tale.
“We were promised tax revenue, and what we got was a loophole,” said Smith. “The next time someone tells us to welcome a data center for the money, we need to ask: money for whom?”
