But now, the tiny county in rural Tidewater is locked in a legal battle with the tech giant that could be a bellwether for a high-stakes standoff between state legislators and the data center industry over a state sales tax exemption that has helped make Virginia the global center of the industry.
The legal battle in King George, set to resume in court Monday morning, revolves around Amazon's vested property rights in zoning actions and a performance agreement that the board of supervisors approved in late 2023, only for a newly elected board majority to rescind the deal the next month and then threaten to undo its previous rezoning of agricultural land as part of the proposed data center development of a former power plant.
Instead of doing so in King George, Amazon is building data center campuses in four other counties in the greater Fredericksburg region — with centers already operating in Spotsylvania and Louisa counties — under an agreement it negotiated with Gov. Glenn Youngkin and the General Assembly. A Virginia law adopted in 2023 guarantees the state tax exemption for an additional five to 15 years, depending on the company's total statewide investment in new data centers.
"What company is going to build in a county that doesn't honor an approved performance agreement?" asked Curry Roberts, retired president of the Fredericksburg Regional Alliance, who worked with five localities for seven years to attract the Amazon investment through a strategy of uniform tax rates and other incentives. Roberts was Virginia secretary of commerce and trade under Gov. Gerald Baliles in the late 1980s.
Now, the King George dispute may be a harbinger of a larger political and legal battle over a budget proposal by the Virginia Senate to repeal the tax exemption entirely to free up to $1.9 billion in state and local tax revenue over the next two years. The proposal, strongly opposed by the House of Delegates and Gov. Abigail Spanberger, has led to an impasse in negotiations over a two-year state budget that will take effect July 1. Virginia has never begun a fiscal year without a budget in place to fund state government.
Amazon signed individual agreements with each locality where it plans to build data centers under the 2023 deal, as well as an umbrella agreement with the state.
“We deeply value our historical partnership with Virginia, and we want to be part of discussions that may have impact on our long-standing partnership and record of investing, creating jobs, and driving economic vitality in the state," said a spokesperson for the Seattle-based company. "Our investments across the commonwealth have been made possible by a framework built on shared commitments, and we hope the legislature remains open to finding a budget solution that continues to deliver for communities across the state while honoring those existing commitments.”
House Appropriations Chairman Luke Torian, D-Prince William, and Spanberger have said they will not approve a proposal that would break existing state contracts with data center operators, but Senate Finance Chair Louise Lucas, D-Portsmouth, made clear again last week that she won't budge from the Senate position.
"I'm still working to get a budget," Lucas said in a social media post Wednesday. "It is slow going trying to get the House and the Governor to see the light. I don't need to get into a closed room with the data center industry to negotiate their tax break."
Twice, Lucas has considered and rejected private proposals by the data center industry to generate up to $1.1 billion in new state revenues, but in return for an extension of the tax exemption. The exemption is scheduled to expire in mid-2035, except for data centers covered by the Cloud Computing Cluster Infrastructure Grant Fund, which the General Assembly approved in 2023 with extensions of the tax exemption by five or 15 years for companies that invest at least $35 billion and $100 billion, respectively, in new projects across the state.
Amazon said it has invested $119 billion in data centers across Virginia since 2010, when the state broadened a tax exemption that previously had applied only to economically distressed localities. The company said the sum includes billions of dollars of capital investment in the projects covered by the 2023 agreement, which another data center developer, STACK Americas, wants to use to build a $73 billion data center campus in Pittsylvania County that would create more than 2,000 full-time jobs. STACK officials say the project won't happen if Virginia repeals the tax exemption.
In King George, Amazon says it planned to invest up to $6 billion in 17 data centers in the full buildout of 869 acres at the site of the former Birchwood Power Facility north of the Rappahannock River on the east side of Fredericksburg.
The portion of the property north of state Route 3 was already zoned for industrial uses, but the previous board of supervisors rezoned about 500 acres south of the highway and bordering the river from agricultural to industrial uses. The county also adopted a special exemption, amended its comprehensive plan and accepted more than $2 million in cash proffers, as well as a promise from Amazon to deliver 600,000 gallons a day of surface water for public use.
After the board approved the performance agreement on Dec. 19, 2023, the company said it immediately purchased the property for almost $169 million and spent $6 million to advance the project, based on what it claims are its vested property rights in the county's actions.
A new board majority reversed the county commitment at its first meeting on Jan. 2, 2024. Shiloh District Supervisor Cathy Binder, who had voted for the rezoning despite her concerns about the company's control of a water intake on the Rappahannock, asked to reconsider the vote by the previous board. The tactical maneuver is common in the Virginia General Assembly, but Binder acknowledged in an interview that "it was unusual at the local level."
She declined to discuss the case because of the pending lawsuit.
On the same night that the board rescinded approval of the performance agreement, it replaced its county administrator and county attorney. State Sen. Richard Stuart, R-King George, who has emerged as a leading supporter of the Senate proposal to repeal the data center tax break, became county attorney and has led its defense in the pending lawsuit.
Stuart acknowledged in a recent interview that he ultimately voted for the legislation that approved the extended tax break in 2023, but said he now regrets it because he said the deal, which requires a 10% local match of state infrastructure grants, didn't benefit the county.
"I voted against it initially. I wish I had stuck with my guns," he told the Richmond Times-Dispatch last month.
He said the agreements between data centers and the state include a clause acknowledging that the General Assembly could change state policy.
"You can put legislation in the budget that trumps the code," Stuart said.
Amazon and its supporters say the project would benefit the county — more than $81 million in real estate, personal and business property and landfill fees over two years, according to a presentation in late 2023. The current county budget relies on $132.6 million in local, state and federal revenues.
About six months after approving the rezoning, King George threatened to downzone a portion of the property unless the company made further concessions. Amazon asked Zoning Administrator Matthew Smolnik — who was the new county administrator and acting zoning administrator — to certify its vested rights in the zoning actions and performance agreement. Two days after a state legal deadline for a response in 2024, he refused to answer, saying that "it is outside of my legal responsibilities to provide you my opinion."
Amazon appealed Smolnik's response to the King George Board of Zoning Appeals, which upheld the zoning administrator's decision, citing an unspecified difference of opinion between Smolnik and Stuart, the county attorney, about the obligation to answer the company's request.
The company filed a lawsuit in circuit court last May to appeal the zoning board decision, find that the zoning administrator was required by law to answer and missed the statutory deadline for doing so, "confirm Amazon's vested rights" and preclude the county from downzoning a portion of the property.
On Monday, Amazon and King George lawyers will appear in court to argue competing motions on whether the county is required to submit to discovery of documents and evidence in the case. Judge J. Bruce Strickland ordered "limited discovery" in January when the court confirmed its jurisdiction to hear the case.
King George has asked the court to reconsider its order, citing a new state law that the General Assembly approved and the governor signed last month that would change the terms of litigating Board of Zoning Appeals decisions and not allow discovery in those court reviews.
Amazon attorneys argue that the law won't take effect until July 1 and, even then, would not apply retroactively.
The trial, originally scheduled for this week, is now set for September.
© 2026 Richmond Times-Dispatch, Va. Distributed by Tribune Content Agency, LLC.
