The advent of artificial intelligence has created a need to rapidly expand data center capacity. This rush is also evident in New Albany.
Companies like Amazon, Google, and Meta (Facebook) committed to spending more than $15 billion in data center investments last year. But this growth comes at a high cost to residents. Nearly all data center projects received full property tax relief, state sales and use tax exemptions, and payroll tax credits.
The full amount of these large tax cuts is rarely disclosed and the total amount is difficult to ascertain.
Ten years ago, Amazon chose central Ohio for its data center complex. Other tech giants followed suit. They primarily come to New Albany for existing infrastructure, cheap energy, and open, affordable land. These are the main factors that determine where companies place their data centers. But they knew they could extract generous public subsidies.
One of the most valuable subsidy programs for state-level data centers is a 15-year sales and use tax exemption on purchases. This program will cost Ohioans $127 million in fiscal year 2025 alone. The average cost per job for this program is an impressive $634,000.
Google’s 2018 contract is even more expensive. Each job costs an average of $1.4 million.
Property tax relief is also a huge subsidy. These are provided through Community Reinvestment Districts, which are fully abated for 15 years. Franklin County reports tax breaks by company, but not by project type. And there has been a lack of disclosure in neighboring Licking County, which includes parts of New Albany and where some of the largest projects are located and therefore receives the largest subsidies.
High data center subsidies have real implications for local governments. Thanks to Franklin County’s better-than-usual transparency, for example, an agency that serves people with developmental disabilities lost her $31 million in all business and development grants (including data centers). I know that.
New Albany projects include:
- In 2023, Amazon Web Services touted having invested $7.8 billion to build multiple data centers. New Albany approved the project with a 30-year property tax abatement (100% for the first 15 years, 75% for the next 15 years) and state tax exemptions and credits.
This is in addition to a 2014 deal that awarded Amazon at least $93 million in various subsidies.
- In 2022, Meta announced a $1.5 billion expansion. I couldn’t confirm the subsidy, but like Google, Facebook is notorious for hiding behind LLCs.
- QTS, a company that builds colocation data centers, or rents space and provides services to other companies, announced it will spend $4.4 billion to build 12 data centers in New Albany. The company received his 100% property tax abatement, full sales and use tax exemption, and payroll tax credits for 15 years.
It’s clear that businesses want to locate in New Albany. This town has AWS, Google, Meta, and QTS all nearby. This is an established technology cluster and there is no longer a need to provide subsidies to companies (if there are any).
New Albany residents pay property, sales, and income taxes to support the community. Some of the world’s largest companies are probably doing similar things.
Kasia Tarczynska is a senior research analyst at Good Jobs First, a nonprofit organization focused on corporate and government accountability in economic development. She lives in Washington, DC and can be reached at kasia@goodjobsfirst.org.
