Open Letter to NY Leaders Regarding Data Centers: Lead Don't Follow

Two of the most dangerous traits a person can have are a loose grasp of facts and a blind willingness to pursue whatever is popular in the moment. As a parent you try desperately to drive these instincts out of your children, yet we seem to routinely elect politicians who seem to hold these as defining qualities.

It is these qualities that get us into wars, close our local economies and schools because of a flu outbreak, push every flavor of the month nonsensical ideology on our children from gender norms to anti-American racial propaganda, and so on and so on. Otherwise well-intentioned politicians, of course having no knowledge of what the facts are or where any of these ideas come from, take a poll and go with the flow. It would be a comedic sideshow if this were simply your crazy Uncle Eddy telling another wild story at Thanksgiving, but these people have their hands on the levers of power that ultimately dictate the world around you, your quality of life, and the price of gasoline at the pump. It is no laughing matter.

The latest flavor of the month is why we should stop the construction of data centers. As I will demonstrate, there is precedent to point to about what happens to communities that have built data centers, and the effects are the opposite of what you are being told.

There is no shortage of propaganda available on the internet about why AI is good or bad, and why the underlying data centers that support AI are good or bad for your community. As an investor in this space, I can tell you that on the first question very few industry professionals know where AI is going, or what impact it might have on America or humanity as a whole. One could make a logical argument for slowing down the pace of innovation to ensure safety for humans, and avoiding any number of calamitous outcomes that are clearly possible if this AI bet goes wrong, but the truth is that our enemies, namely China, are not going to cooperate with any slowdown effort, so we are very much living in a real time nuclear arms race very similar to what you see in the movies about World War Two. Someone is going to have the bomb, and it is likely best that we either beat them to it, or at the very least, have one of our own when they get there. If you understand where AI is headed, the prospects are scary, and we are going head first into that abyss whether we like it or not. And importantly, our politicians are not educated on this subject, and probably should get some industry execs in the room when making policy decisions on the matter. Kudos to the Trump administration for doing exactly that.

Once you understand that AI is going to be built, the question becomes whether your community should host a data center. Again, there is infinite propaganda available about why this is good or bad. Much of it is flatly false. Poisoning the water, noise issues, electricity bills, etc. are all distorted into nonsensical arguments that are simply false. The state of New York and Brookhaven Town have implemented moratoriums to “study” these issues. On one hand it is perhaps worthy of praise to be cautious about important decisions. It is bizarre, however, that this one issue gets uniquely slowed down when every other flavor of the month gets passed without hesitation. It’s almost as if our elected leaders watch what is trending on Twitter and make policy accordingly.

Here are some facts about what has happened in Suffolk County over the last 10 years: - Despite being some of the highest rates in the nation, electricity prices, on a per KwH basis, are up approximately 30%, and presently stand at approximately $0.25 per KwH - Total county government expenditures are up over 30%, largely driven by pension costs and other employee compensation - This increase in expenditures has been largely financed by increased sales taxes, while also reliant on increases to property taxes and state aid (financed by your state income taxes) - An offshore wind farm was constructed which has had the effect of INCREASING your electricity bill as LIPA pays an above market rate to the private owners of the wind farm - The state has continued to block fracking which would clearly have the impact of driving tax revenue, creating jobs, and reducing the cost of electricity to its residents. Ironically we pay some of the highest electricity prices in the nation in large part due to regulatory decisions made by our elected officials, and those same elected officials are now blocking data centers, in part, because of the impact they suggest data centers will have on electricity prices. Comical. - While not unique to Long Island, the cost of living pressures have driven many native Long Islanders off the island to other parts of the country where prices are cheaper

There has never been a locally imposed moratorium to study the impact of the next employee wage increase, the construction of the latest wind or solar farm, or to study the disastrous consequences of restricting access to the states abundant natural gas reserves. These things are actually strangling the state, but they go on without hesitation. The Twitter-sphere loves solar farms, so proceed gentlemen.

But when a bunch of social media accounts say that a data center will somehow poison your water supply, these same trusted elected officials spring in to action and are suddenly prudently cautious.

Here are some facts about what has happened in Loudon County, VA over the last 10 years. Loudon County is one of the nation’s first counties to lean in to data center construction and is now the nation’s data center capital: - Electricity prices are up 34% over the last 10 years and presently stand at approximately $0.15 per KwH (40% lower than Suffolk County) - Total county expenditures have grown 130% over the last 10 years (again, Suffolk County has only grown 30%), with the increase in spending going to schools, government salaries and capital projects like roads and parks. Amazing growth and one of the fastest in the nation. Wow. - The increase in government spending on schools and parks has been ALMOST ENTIRELY FUNDED BY TAX REVENUE FROM DATA CENTERS, which has gone from $100 million per year in 2016 (7% of the local budget) to $1.2 billion this year (42% of the budget). - The remainder of the increase in the budget is being funded by an increase in the tax base on the local economy which has grown substantially during that period. - Perhaps most astonishing of all is that because the county has an excess of data center tax revenue, the county HAS LOWERED PROPERTY TAXES from $1.145 per $100 of assessed value in 2016, to $0.801 per $100 of assessed value in 2026. A 30% DECREASE!!!

YOU READ THAT RIGHT. PROPERTY TAXES ARE DOWN 30% IN LOUDON COUNTY OVER THE LAST 10 YEARS BECAUSE OF THE MASSIVE COLLECTION OF TAXES FROM DATA CENTERS.

Here is the simple truth that we all know. We are living in a world of crushing inflation. The cost of living is bordering on unbearable, and the poorest among us are the ones getting squeezed the hardest.

Data centers are funded and operated by the richest companies on Earth. We are talking about Google, Amazon, Microsoft. When the richest guy on Earth wants to be a customer of your store (and that’s what companies are to the state and county – customers), you don’t say no. You don’t wait and think about it. You say yes, as quickly as possible.

The state and county already have laws and regulations pertaining to water safety, noise, and the environment. These companies will be beholden to the same laws that the TopGolf on the expressway needs to follow, just with 100x the tax revenue.

And the best part of the whole situation, which is lost on our elected officials, is that these massive, rich data center companies are desperate to build data centers as fast as possible, and will quite literally sign any set of terms and conditions you put in front of them if it means beginning construction quickly. There will literally never be a better opportunity to fundamentally alter the prospects of the Suffolk County economy than this.

Data centers will create jobs. And importantly they will drive a massive and permanent increase to the local tax base that has the potential to reduce costs for the rest of us. We don't need to guess what will happen here - we need only look at places like Loudon County to see it in real time.

We have grown accustomed to our elected officials following the herd and pursuing whatever asinine policy is popular that afternoon. I am begging our leaders: Kathy Hochul, Ed Romaine, Dan Panico, step forward and be bold on this one. This is a once in a millennium opportunity to help your constituents. In 18 months this opportunity might very well have passed. Jump on this now, and correct the broken trajectory of our state.

Be a leader. Please.