It was a bonanza year for data center tax breaks in 2024, when three companies planning costly projects in one Rockland County town all scored waivers from the county’s economic development arm.
One by one those requests totaling $136 million were approved by the agency’s oversight board, according to public records examined by the USA TODAY Network. Most of that forsaken revenue was sales tax — money that the operators were spared from paying New York State and Rockland for years to come as they expanded their Orangetown facilities or bought huge amounts of computer equipment.
The motive for those breaks — and the added property-tax cut one project will get — was to lock down economic activity that might have slipped away to other states if not for those tax incentives. But by one obvious measure, the local benefits looked paltry: a total of just 16 new, permanent jobs were expected as a result of the three expansions.
That came on the cusp of a data center boom fueled by artificial intelligence, and before the backlash that is now rapidly unfolding.
Across New York, new plans are meeting stiff resistance from local citizens and environmental groups, all sounding alarms about the vast amounts of electricity that data centers use and other problems. That rising clamor culminated in a first-in-the-nation statewide pause on Tuesday, July 14, when Gov. Kathy Hochul ordered a one-year moratorium on state permits for large data centers as New York grapples with new regulations for the industry.
How tax breaks connect to NY data center moratorium
One strand of that new scrutiny involves tax breaks. Critics have asked why local agencies like Rockland’s should be giving up tax revenue to entice giant warehouses of computers servers that use lots of power and water but create few jobs.
“It’s basically corporate welfare as we view it,” Alex Camarda, senior policy advisor for the watchdog group Reinvent Albany, told the USA TODAY Network.
Reinvent Albany sounded off in April on a particularly stark case from Rockland: the $77 million tax break awarded in 2024 for a JPMorgan Chase data center expansion in Orangetown that was projected to yield just one permanent job. Camarda calls that an egregious example of a larger point Reinvent Albany hopes to make: that tax incentives, whether for data centers or other projects, are an ineffective way for economic development agencies to spur jobs.
“You can question whether this is even consistent with their mission,” he said.
Rockland IDA sees other payoffs from data centers
Two other data center projects in Orangetown besides JPMorgan Chase’s won tax breaks in 2024 from the Rockland County Industrial Development Agency, according to the agency’s posted documents.
CoreWeave, a company occupying part of a DataBank data center, was granted an exemption for up to $50.3 million in sales tax for its equipment purchases with a pledge of 12 full-time jobs. And an operation called 1547 CSR was spared $8.4 million in sales tax and $630,000 in county mortgage tax for an expansion that was expected to add three permanent jobs.
Steven Porath, executive director of the Rockland IDA, concedes the figures are eye-popping in comparison to past projects but says that is simply because of the data centers’ huge costs. JPMorgan Chase’s expansion, for example, is expected to cost nearly $1 trillion.
Porath stands by the breaks awarded in 2024. He says his agency uses the same cost-benefit for data centers that it uses with other applicants, balancing the tax savings they are seeking against the jobs and business activity that the host town and Rockland as a whole will gain.
“It’s ultimately a business deal: what are we giving and what are we getting?” he said.
Breaks and benefits dispersed over many years
What was gained from the data center projects, he argued, were hundreds of millions of dollars in equipment purchases, property taxes and a flood of construction jobs well into the future. Data centers replace their gear with upgraded models every few years, guaranteeing steady installation work for contractors, Porath said. JPMorgan Chase forecast 1,400 construction jobs over the life of its expansion plans, he noted.
“These projects are long-term projects,” he said.
Camarda questions whether the projects would truly have gone elsewhere if they were refused tax breaks, as companies always threaten to do when they apply for tax benefits. And he and Reinvent Albany raised another issue about the $77 million in sales tax that JPMorgan Chase was spared: half of that money would have gone to the state for all New Yorkers, yet it was waived by one county with no input from state officials.
The $77 million tax break was spotlighted in April by the news site New York Focus on the same day Reinvent Albany blasted it.
JPMorgan Chase will also get a property-tax reduction on its expansion, though the amount has not yet been settled. Under a 20-year abatement negotiated in 2017 for the initial construction, the company had so far saved $1.3 million in taxes to Pearl River School District and $450,000 in taxes to Orangetown through 2025.
Other tax breaks for NY tech projects
Reinvent Albany cataloged several other big tax breaks for tech projects in New York in April. JPMorgan Chase’s was the biggest by far when stacked against the single job it was creating and presented as a ratio of $77 million per job. But others with larger employment prospects were much bigger in total dollar amounts.
The proposed Stream data center in Genesee County has secured $801 million in breaks and is promising 125 jobs, a ratio of $6.4 million per job. And the huge Micron chip-making campus being built near Syracuse got a whopping $6.4 billion in tax benefits, but it’s also pledging to deliver 9,000 jobs. That comes to about $711,000 in taxpayer subsidies for each job.
Orangetown has a cluster of four data centers in its Orangeburg hamlet that have all had their sales taxes waived since 2013. JPMorgan Chase got a $35 million break in 2017 when it started its construction on the Rockland Psychiatric Center grounds. DataBank was awarded a nearly $8 million exemption four years later for its $93 million construction plans.
DataBank is already seeking to expand its operation and faces strong opposition from local residents and environmental groups, who celebrated a big win this month after the town planning board ordered a full environmental review for the expansion plans.
Chris McKenna covers government and politics for The Journal News and USA TODAY Network. Reach him at CMcKenna@usatodayco.com.
This article originally appeared on Rockland/Westchester Journal News: Data centers in one Rockland town got $136M in tax breaks | Exclusive
Reporting by Chris McKenna, New York State Team / Rockland/Westchester Journal News
USA TODAY Network via Reuters Connect
By Chris McKenna, New York State Team | USA TODAY Network
