As Ohio leaders consider spending taxpayer money on a private sports team’s stadium, a new report has identified server farms as the “new stadium scam,” wherein Ohio taxpayers are on the hook for millions lavished in tax incentives.
“Today’s stadium boondoggle is a server farm: shinier, techier, but often just as bad for taxpayers,” Reason Magazine reported. “Small towns (and not a few big ones) are bending over backward to lure data centers," writer Marc Oestreich said.
“Local economic development officials tilt the scales, suspend the rules, and give away the farm,” Oestreich added. The sales pitch is nearly identical to the stadium era: ‘It’ll create jobs. It’ll put us on the map. It’s worth the investment.’”
A server farm is a collection of “interconnected computer servers.” A data center is the facility housing the servers and related infrastructure.
All the major names in technology, from Amazon to Apple to Microsoft, have been linked to Ohio projects, with much of the focus on the Central Ohio city of New Albany.
Ohio offers a Job Creation Tax Credit and a Data Center Tax Exemption.
According to JobsOhio, the Job Creation Tax Credit “is a refundable and performance-based tax credit calculated as a percent of created payroll and applied toward the company’s commercial activity tax liability.” According to JobsOhio, the state’s Data Center Tax Exemption provides a sales-tax exemption rate and term allowing partial or full sales-tax exemption on purchasing eligible data center equipment.
Projects must meet minimum investment and payroll thresholds to be eligible, and the Ohio Tax Credit Authority must approve any tax exemption.
Last month, Microsoft announced it would no longer proceed with a project to spend $1 billion on Licking County data centers. The project would have had data center campuses in Heath, Hebron, and New Albany; Microsoft will continue to own the land.
According to Policy Matters Ohio, the authority signed off on a 15-year sales tax exemption that might total $72.5 million for Microsoft.
Additionally, the group said exemptions granted to Meta and Google originally called for creating at least 50 and 30 jobs, estimated to cost more than $1 million per job.
Amazon plans to spend $10 billion to expand its data center infrastructure across greater Ohio. According to Policy Matters Ohio, the company’s investment could result in a more than $500 million exemption between now and 2030.
The Columbus Dispatch previously reported that Amazon spent $102 million to buy two parcels of land in Jeffersonville for a 590-acre data center campus. The location is near Honda and LG’s Fayette County battery plant.
“We will continue to evaluate these sites in line with our investment strategy,” The Columbus Dispatch quoted a Microsoft spokesperson as saying last month. “We sincerely appreciate the leadership and partnership of Ohio government officials and the support of Licking County residents.”
According to DataCenterMap.com, the Buckeye State has 182 data centers in 13 markets.
The Ohio House Republican version of the state budget includes $600 million in taxpayer money to secure bonds for a new Cleveland Browns stadium in the Cleveland suburb of Brook Park. The team’s owners have spent heavily on some Ohio lawmakers.
The team wants $1.2 billion in taxpayer money to help pay for the new domed stadium, which could cost upward of $2.4 billion and open by 2029.
The plan calls for $600 million in state-backed bonds, which would be repaid using tax revenues. The bonds were included in House Bill 96, the state’s budget.
Separately, Ohio voters approved Issue 2 on May 6, a constitutional amendment to raise billions of dollars for the State Capital Improvement Program. Voters must approve the state’s authority to issue the bonds every decade.
Roughly two-thirds of Ohio voters cast ballots in favor of the question, allowing the state to issue $2.5 billion in bonds over the next decade. Voters first approved the measure in 1987.
