Rhode Island Data Center Tax Breaks Face Scrutiny
Rhode Island lawmakers considered two bills related to data center tax breaks and electricity costs, both of which failed to pass. In Smithfield, a proposed data center development by Hanton City Investments and ROK LLC faced a town-wide ban and an application deemed incomplete, leading to an appeal by the developers. The debate highlights the economic trade-offs of data center tax incentives versus limited job creation and high demands for electricity and water.
Rhode Island lawmakers recently considered two bills pertaining to data center development incentives and costs, both of which ultimately failed to advance. Senate Bill 2346 proposed tax exemptions for data centers lasting up to 30 years, while Senate Bill 2776 aimed to require high-energy data centers to cover associated electrical infrastructure costs. Both measures were held for further study in March and did not pass the chamber.
Simultaneously, the town of Smithfield, Rhode Island, became a focal point of this debate. Hanton City Investments submitted an application on May 4 for a large business complex, potentially including data centers, on several hundred acres of woodland. This application was filed just one day before the Smithfield Town Council voted 4-1 to enact an ordinance banning data centers within the town.
Following the ban, the town issued a second certificate on June 11, finding the development application incomplete. This decision prompted an appeal by Hanton City Investments and ROK LLC, indicating ongoing legal and regulatory challenges to the proposed project. The events in Rhode Island reflect a broader national discussion, with a Good Jobs First report highlighting that data centers often receive substantial property tax breaks while creating relatively few permanent jobs, prompting concerns about lost tax revenue, grid strain, and water demands.