New Jersey datacenter expansion got $77m in tax breaks to create exactly one permanent job — JPMorgan's site already scored $35m and currently employs just 25 workers

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The deal moved forward with little opportunity for public scrutiny.

JPMorgan building
(Image credit: Getty Images)

Energy and environmental concerns are inevitably the first issues discussed whenever there are talks of making yet another datacenter. Subsidies, though, often don't undergo the same scrutiny, like when a JPMorgan datacenter expansion got a cool $77 million tax break against promising to create just one (1) permanent job, reportedly making it the largest subsidy-to-jobs ratio in the country.

According to NYF, $40 million would benefit the state directly, and the remaining would go to localities. The pre-buildout datacenter project already took advantage of $35 million in tax benefits, as well, and purportedly has just 25 permanent on-site jobs.

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One would think that this sort of money play would elicit vicious opposition, but that doesn't seem to be case. While strong protests against datacenters mount across many other locations, few people seem to be attending Industrial Development Agency (IDA) meetings where these deals are discussed, in an open forum available to most anyone.

The NYF reports that the Rockland County IDA considers that the deal will pay off, projecting that it would be a net gain with $100 million infused into the local economy. The IDA's executive director, Steve Porath, acknowledges that there are few permanent jobs, but claims the buildout itself would create 1,400 temporary jobs.

Porath understands the deal seems absurd when described as "one job for $77 million," but refers to that metric as outdated, and that the total economic impact should be evaluated. He reportedly remarks that he wishes that more people would show up to the IDA meetings, too, and notes the JPMorgan buildout site was otherwise laden with asbestos.

Orangeburg appears to be quite the datacenter hub, as it has 10 projects across four locations. Some of them actually saw some opposition, as was the case with Databank's location that is exceedingly close to a drinking water reservoir. While many of these datacenter installations are undoubtedly beneficial, it's not hard to say they should undergo closer scrutiny of all angles, including the financial aspect.

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Bruno Ferreira
Bruno Ferreira
Contributor

Bruno Ferreira is a contributing writer for Tom's Hardware. He has decades of experience with PC hardware and assorted sundries, alongside a career as a developer. He's obsessed with detail and has a tendency to ramble on the topics he loves. When not doing that, he's usually playing games, or at live music shows and festivals.

8 Comments Comment from the forums
  • hotaru251
    tax breaks shouldnt be a thing for giant corpo.
    They already legally rob the populace they dont need handouts.
    Reply
  • bigdragon
    I am so tired of private corporations receiving better benefits than individual US citizens. From data centers to stadiums, make the corporations pay their share of the burden.
    Reply
  • JamesJones44
    The whole counting construction as jobs has gotten out of control. There is zero guarantee the construction corp(s) will need to hire anyone, yet these get counted as "job created". What's worse is they count the economic uplift from zero, but if all of the people working on this project already have a job, then there is almost zero local uplift while costing money in road wear and tear, lane closures, infrastructure repairs/upgrades, etc.

    It's honestly really sad these type of people get elected all the time with zero understanding of general economics, yet it's a key part of a politicians job
    Reply
  • Syntaximus
    Not a fan of this crap in general, but a correction here:
    Rockland County is NY State, it's right on the border, but it isn't NJ (source article).
    Reply
  • derekullo
    To be fair, this is what AI promised.
    Now the facility only needs one guy to ensure peak slop production!
    Reply
  • jp7189
    Upfront incentives to attract longterm tax revenue without having to add tons of housing and burden to already overburden infrastructure like schools. What's the problem?
    Reply
  • bigdragon
    jp7189 said:
    Upfront incentives to attract longterm tax revenue without having to add tons of housing and burden to already overburden infrastructure like schools. What's the problem?
    That's how things are supposed to work, but that's not actually how they work in the real world.

    I live near a Lockheed Martin aerospace facility, large retailers, and several older data centers that constantly make plans to leave each time their tax incentives expire. They always threaten to put dozens to thousands of employees out of work and relocate to a state or county with lower taxes. Maryland usually throws a new or the same tax incentive at them to encourage them to stay. Meanwhile, the rest of us residents are here paying the tax burden and increased infrastructure costs these freeloading corporations aren't helping cover.

    The cherry on top is that most of these companies promise to create X number of local jobs and most of the incentives have job creation numbers as requirements. Then news will break that some number of jobs less than X were created, yet no penalties are applied. There have been a few times where a Walmart failed to get a new round of tax incentives, closed their store, and opened one nearby in a different jurisdiction with new tax incentives.
    Reply
  • jp7189
    bigdragon said:
    That's how things are supposed to work, but that's not actually how they work in the real world.

    I live near a Lockheed Martin aerospace facility, large retailers, and several older data centers that constantly make plans to leave each time their tax incentives expire. They always threaten to put dozens to thousands of employees out of work and relocate to a state or county with lower taxes. Maryland usually throws a new or the same tax incentive at them to encourage them to stay. Meanwhile, the rest of us residents are here paying the tax burden and increased infrastructure costs these freeloading corporations aren't helping cover.

    The cherry on top is that most of these companies promise to create X number of local jobs and most of the incentives have job creation numbers as requirements. Then news will break that some number of jobs less than X were created, yet no penalties are applied. There have been a few times where a Walmart failed to get a new round of tax incentives, closed their store, and opened one nearby in a different jurisdiction with new tax incentives.
    It sounds like youre talking about bytegrid, silver spring... which isn't hitting tax revenue projections, but since incentives are tied to revenue, they arent getting all the incentives either... seems fair to me.

    Down the way, the Adamtown campus, has already generated $55M.. mostly in recordation fees, but the first datacenter has even gone live. Adamstown is a bit unique because it has the location and doesnt need a lot of other inticements.

    In Maryland theres also legislation in the works to repeal the sales and use exemption and another one to tax IT services.

    All of which will make these multi-B datacenters monster revenue generators without the stress of needing to import a huge workforce and the resulting strain on infrastructure such as schools.
    Reply