Developing a master-planned data center campus requires significant capital investment from the private sector for buildings and infrastructure, construction, equipment, and ongoing operational expenses. With this level of investment, significant tax dollars will be generated that can support public safety, infrastructure upgrades, parks improvements, schools, and more.
Independent tax analysis prepared by EY (Ernst & Young) evaluates the potential long-term tax revenues generated by a data center development at Tuckahoe Technology Park under current real property, business personal property, and sales and use tax frameworks.
Any model must include a set of assumptions. This model is based upon the current best practices, and, where a range of value may be appropriate, has taken a conservative approach. Any change in those assumptions may change the model. This is the same for any modeling exercise.
Since the pre-application, the County reviewed the submitted analysis and requested several updates to the report. This information below reflects those requested updates and may differ from what was part of the pre-application and original CUP filings. It should be noted that this model is based upon data center industry standards, including equipment refresh cycles of approximately every 5 years, and estimated value of such equipment. A variety of factors could impact the model, including increases to the tax rates over time, which would increase the revenues. The tax analysis is not intended to be a commitment to an exact figure but rather provides an “order of magnitude” estimate of future taxes collected.
Please note that the model for the real property and business personal property taxes contains a series of assumptions, all of which are referenced in the report. To highlight key assumptions,
- Timing of the model provides a 20-year analysis, starting on the first year that a building is operational. It should be noted that the campus is expected to operate beyond 20 years.
- Timing of the model follows the current anticipated load ramp for power, 300 MW delivered in Operational Year 1, 300 MW delivered in Operational Year 2, and 300 MW delivered in Operational Year 3. Ifpower is delivered on a difference schedule, the delivery of tax revenue would adjust.
- The number of buildings associated with each power allocation will depend upon the final building configuration, user, and size and may vary for each operator.
The sales and use tax model is slightly more complicated by the fact that we have to factor the sunset date of 2035 for the state exemption into the model. The model assumes that at Operational Year 6. Depending on when Operational Year 1 occurs, this timing may shift. Additionally, if the state elects to extend, shorten, or change the current exemption, the model would also change.
While precise figures will depend on final buildout and equipment investments, the analysis indicates:
- Real property tax revenues of over $150 million over the first 20 years of data center operation, reflecting the substantial increase in land and building value when developed with high capital facilities.
- Business personal property taxes from data center equipment that remain robust over time because equipment is typically refreshed every five to seven years, effectively “resetting” assessed value, assessed at the new tax rate of 0.44%, of over $600 million over the first 20 years of operation.
- Additional revenue for state, county and regional sales tax streams associated with certain construction expenditures of over $3 billion over the first 20 years of operation, with over $500 million going to the County. (NOTE: This assumes that the current sunset date for the state sales tax exemption remains in 2035.)
Compared to alternative land uses, Tuckahoe Technology Park delivers exceptionally high tax yields with relatively low service demands, particularly for schools, public safety, and general County services.
Why are these figures different from previously provided?
The County requested that the tax analysis be revised. This included a revision to the per square foot value of a proposed data center. Market data and industry experience indicate that this would be $1300 per square foot, which was previously provided by the County Assessor and is what was modeled originally. The County Assessor has now lowered that value of $440 per square foot. While the Applicant does not agree with this valuation, the model was revised to reflect the County’s request. Importantly, the amount of tax revenues anticipated by this project are substantial with over $750 million over 20 years.