Critics push back against proposed tax breaks fueling data center boom
Critics are pushing back against tax breaks for data centers in Vineland, New Jersey. Residents are concerned about environmental impact and noise, and have filed a lawsuit against the data center owner, Data 1. A New Jersey Assemblyman has also proposed a bill to cancel future data center tax breaks statewide.
Flower farmer Michael Atkinson of rural Vineland, New Jersey, expressed frustration regarding a hyperscale data center under construction near his property, citing both environmental impact and a controversial tax arrangement. The Vineland City Council approved a Payment in Lieu of Taxes (PILOT) for the data center, allowing it to pay no property tax in its first year and a discounted rate for years two through five. Atkinson criticized this incentive, arguing the data center would have located there regardless.
Vineland's mayor defended the tax break, stating it would expand the commercial and industrial tax base and ultimately reduce the burden on residential taxpayers after the five-year period. However, public opinion remains strained, with a Gallup poll indicating widespread opposition to AI data centers in communities. Despite this, most states, with at least 38 identified by the National Conference of State Legislators, offer tax incentives for such projects.
Cara Bunder, state policy director for the Data Center Coalition, an industry group including Coreweave, argued that states risk losing jobs and development without these incentives. She highlighted the significant taxes data centers already pay and their role in supporting essential services like emergency communication and financial transactions, alongside entertainment. Conversely, New Jersey Assemblyman Andrew McCertie proposed a bill to revoke $4 billion in future data center tax breaks, reflecting a growing sentiment that communities have the upper hand in negotiations with developers.
Meanwhile, in Vineland, some of Atkinson's neighbors have filed a lawsuit against Data 1, the European owner of the data center, alleging irritating humming noise. Data 1 stated it takes concerns seriously, has invested in sound mitigation, conducted independent testing, and is implementing further improvements to comply with environmental standards. The company claims the project is creating over 600 construction jobs and will generate millions in future tax revenue, though residents like Craig Platania remain unconvinced, fearing diminished property values due to the noise.