The renowned Supreme Court Justice Oliver Wendell Holmes said. “Taxes are the price we pay for a civilized society.” It is worth keeping that statement in mind when considering the huge tax breaks - $472 million! - offered by the GCEDC as an enticement to build a large data center at the STAMP site in Genesee County. Once built, the data center will be occupied by a tenant company. The firm building the data center currently has a soft commitment from a potential tenant: a Fortune 50 company (i.e., a very large, very wealthy company).
The GCEDC has argued that, since no cash is actually being exchanged in this deal, it’s really not as bad as critics make it out to be, but rather it’s just part of a win-win deal for badly needed economic development in a state that ranks near the bottom for business friendliness. Furthermore, they noted that it’s possible that Albany will push through tax relief legislation, so some or all of the taxes they propose to abate might just disappear. Sounds great, right?
There’s a bit of sophistry in this argument that needs to be sorted out. Tax abatements, whether they come from GCEDC or Albany, are dollars that the data center does not have to pay. It’s a huge win for the data center and a huge win for the GCEDC, which, interestingly, stands to collect tens of millions of dollars as a reward for the transaction.
But what about the rest of us, the taxpayers of New York? Well, that’s tax money that we’ll never see, money that might have been useful to support any number of worthwhile public projects. Adding insult to injury is the proposal to give the data center a price break on massive amounts of electricity, a move that is likely to result in higher electric rates for residential ratepayers.
The counterargument for all this is that the data center will spur economic growth in the area, thereby offsetting the tax breaks. But that’s not how data centers work. They need few workers (around 120 jobs, so about $3.9M in subsidies per job). What they need is 1) tons of electricity, enough to power multiple western NY counties, 2) clean water, and 3) a place to dump their sewage. That’s it. There is no way that a data center per se can be rationalized as a magnet to draw other companies to the site.
However, what a data center could do is pay for an electric substation, thereby accomplishing what Plug Power failed to do. Even though the net effect of a highly subsidized data center will be to put an additional burden on the taxpayers and electric ratepayers of New York, the hope is that electrifying the site will surely attract other companies that will create jobs and boost the economy. Thus the data center would be an expensive means to a desirable end.
Don’t believe it. STAMP is fundamentally flawed.
STAMP is tainted with the original sin of “bad location”. This is not news: twelve years ago (!) a detailed critical analysis of STAMP concluded that it was “a poster child for location inefficiency.” The very real economic, environmental, and ethical problems that plague the STAMP site are all related to the fact that it’s in the wrong place - in a remote, wet, rural area, lacking infrastructure, and nearly surrounded by protected and tribal lands. Yes, if you wave enough money at a company it may decide to accept the risk and build there (Edwards Vacuum, recipient of $18M of Sen. Schumer’s CHIPS money, is an example) but at what cost to taxpayers and ratepayers? This tradeoff is not worth making. The proposed heavily subsidized data center at STAMP is a terrible idea, clearly not in the interest of the citizens of New York.
Sooner or later the truth will come out, and STAMP will be recognized as a failure, not because it was poorly conceived or managed, but because it was poorly sited. If development at STAMP continues, the only uncertainties will be the amount of taxpayer money that will be sacrificed, and the amount of damage done to protected lands, tribal lands, and local waterways.
Economic growth is important and desirable, but it’s got to be smart, ethical growth. It is incumbent on thoughtful New Yorkers to make our voices heard, and express our disapproval of STAMP in general and the data center in particular.
David Giacherio
Kent, NY
