Data center deal wrong on so many levels

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There’s growing pushback across the country against data centers. They’re energy hogs that are bad for the environment and the pocketbook of electricity consumers.

Except in Genesee County. There, the IDA is dangling $801 million in tax breaks in a package that works out to $6.4 million per job in an effort to bring a data center to its STAMP business park.  

To put this in context, the state spent $959 million to build a factory in South Buffalo for Elon Musk in exchange for 1,480 jobs. The data center deal: $801 million in tax breaks — plus likely discounted hydropower from the New York Power Authority — involves only 125 jobs.

The subsidy package, if adopted, would rank as one of the largest in state history. All for a project that one expert told J. Dale Shoemaker could get built without any public assistance.

Wrote Dale:

Pat Garofolo, director of state and local policy at the American Economic Liberties Project, said such massive subsidies for data centers aren’t necessary. He likened them to tax breaks for an Amazon warehouse: The company needs the structure to operate its business, meaning it would get built with or without a subsidy.

“It’s the same thing here. They’re going to build data centers. They need data centers,” he said. “You are subsidizing the necessary business infrastructure and getting nothing out of it.”

Stream Data Centers would develop the facility, but the ultimate beneficiary would be the technology firm that would lease the data center. You know, Apple, Goggle, Meta and the like. Like the tech bros need a handout.

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There’s also the matter of the project’s impact on the environment and the neighboring Tonawanda Seneca Nation.

The project requires a study of its environmental impact. The Genesee County IDA is poised to conduct it, despite a huge conflict of interest: If the project goes forward, the IDA would earn a minimum of $84 million in fees. No project, no fees.

There’s also the potential impact on the Tonawanda Senecas, who fear that round-the-clock noise and other disturbances from the data center could disrupt their hunting and gathering food and medicinal plants in the forest that abuts the industrial park. 

I mean, hasn’t the tribe been jerked around enough over the past 250 years?

There’s a move afoot in Albany to put projects like the data center at STAMP on hold. Politico last week reported state legislators are considering a measure that would place a three-year moratorium on data center construction.

Reported Politico:

The move would put New York on the front lines of a national reckoning over whether states can absorb the energy demands of the artificial intelligence boom without driving up electricity costs or destabilizing already strained power grids.

“Massive data centers are gunning for New York, and right now we are completely unprepared,” said Democratic state Sen. Liz Krueger, one of the bill’s sponsors and chair of the state Senate’s powerful Finance Committee. “It’s time to hit the pause button, give ourselves some breathing room to adopt strong policies on data centers, and avoid getting caught in a bubble that will burst and leave New York utility customers footing a huge bill.”

Unknown is whether the measure will gain traction.

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Finally, the Boondoggle newsletter details ways states are fighting back against data centers, starting with a repeal of subsidies.

A record number of data center projects were delayed or blocked in the second quarter of last year. Indeed, it seems very clear that the politics of data centers are shifting, and that going to bat for them is potentially becoming a political liability in states as diverse as Wisconsin, Florida, Virginia, Arizona, and Michigan.

Instead of promoting more data center development, legislators are looking for ways to assuage their constituents’ concerns, protect public resources from data center extraction, and stop some of the nefarious tactics data center operators and developers use to sneak projects past public opposition.

In short, what the IDA is doing in Genesee County is out of step with much of the rest of the country.

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