Legality of banning tax breaks to data centers to be explored
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MAYVILLE - Due to legal questions, county lawmakers tabled a proposal that would prohibit the Chautauqua County Industrial Development Agency from providing tax breaks to future data centers.
The Democratic caucus had proposed a resolution titled "Adopting a Uniform Tax Exemption Policy ... Providing that the Chautauqua County Industrial Development Agency Shall Not Consent to Real Property Tax Exemptions, Mortgage Recording Tax Exemptions, or Sales and Use Tax Exemptions for Data Center Projects."
The resolution did not go before any committees before being brought up to a vote at its October meeting.
There does not appear to be any urgency on the matter. Currently the state is under a moratorium on any new data centers, which was issued by Gov. Kathy Hochul and runs through July, 2027.
During the legislature meeting, Legislator Bob Bankoski, D-Dunkirk, acknowledged the legal issues surrounding the topic.
"The county attorney believes that the county does not have the legal authority that the proposed resolution would purport to exercise," he said.
He recommended the resolution be sent to committee for further evaluation. The full legislature unanimously approved sending the resolution to committee.
According to the state Department of Taxation and Finance website, an Industrial Development Agency is a public benefit corporation established under state law (such as in New York) to promote local economic growth, job creation, and business investment.
Because of this, IDA legal counsel Milian Tyler questioned the resolution's authority, to which county attorney Nathan Harp acknowledged.
Before the decision was made to send the resolution to committee, Legislator Fred Larson, D-Jamestown, said data centers are very unpopular and the resolution should be seen as the legislature providing its own input.
"Americans today are reluctant to accept additional data centers in their communities," he said.
The only community that has had any sort of discussion on having a data center is the town of Portland, which local residents have strongly opposed. Town officials later said no formal proposals have been made.
During the public portion of the legislature meeting, Portland resident Carla Rodriguez, who is running for county legislator District 7, said she opposes data centers.
"I believe economic development is important. It must be beneficial to our residents and not place an additional financial burden to our taxpayers. Data centers consume a significant amount of electricity and often create very few permanent jobs," she said.
Back in 2018, the county legislature passed a resolution requesting the county IDA to approve no further Payment In Lieu Of Taxes agreements for wind energy projects larger than 5 megawatts rated capacity.
When the resolution was passed, George Borrello was the county executive at the time.
Following the 2018 vote, he acknowledged the issue with authority of the county IDA. "We do not have the ability to mandate policy. That being said, this body is certainly sending this recommendation, and I fully expect the IDA board to follow that recommendation," he said in an interview eight years ago.