Find a better way to attract data centers
Late Tuesday, after previously listening to strong public opposition at two hearings, the Groton Town Council voted 5-1 with three abstentions to end discussions with businessman Thomas Quinn about his proposal for a data center complex. Groton's experience points to the need to reform the state's efforts to incentivize the development of these facilities.
Operating as NE Edge LLC, Quinn had sought approval to pursue the development of multiple data centers on about 150 acres of land south of Interstate 95 off Hazelnut Hill and Flanders roads. But residents expressed numerous concerns, arguing the development would detract from their quality of life and needlessly remove forested land. Some questioned the fairness of the tax breaks being proffered.
The state legislature would be better off packaging incentives in a manner that encourages the development of these centers in former industrial sites, existing industrial parks, or by repurposing warehouses. This would be far preferable to razing woodlands, as proposed in Groton.
If the local experiences are any indication, the existing approach appears to attract real estate speculators. If they can gain the necessary local approvals, they possess a valuable asset to pitch to a data-center company. If things go badly, a speculator can walk away from the train wreck, personally insulated from litigation by limited liability company status.
And face it, these guys have no long-term interest in these proposed projects or the communities hosting them. They just want to get a deal done with the best terms they can cut. Quinn, for example, scrambled to try to sweeten his proposal to keep it alive. The council didn't bite.
Last April, Groton officials signed a host agreement with another data-center pitchman, Nicholas Fiorillo, for such a facility on Route 117, operating as Gotspace LLC. Where did the name Gotspace come from? Fiorillo took it from his self-storage operations in the Boston area, an industry not exactly associated with high-tech enterprises. There has been no groundbreaking.
Fiorillo and companies he created have been the target of much litigation. He and Quinn have a history. Quinn was previously listed as the CEO of Verde Group — an LLC, of course — which pitched a data center project in Montville. It received approval and was to get underway in 2019. It didn't happen. Its collapse is the subject of litigation.
Legislation should be amended to require that applicants seeking the tax breaks document, in advance, that they have the financial standing to carry a project forward.
Additionally, the state could benefit from aggressive outreach to data-center companies with records of success and good local relations, rather than letting LLC speculators take the lead.
Data centers are necessary to operate in a digital age. Filled with routers, servers, switches and storage systems, and protected by firewalls and other software safeguards, they allow massive amounts of information to be immediately accessed, shared and stored.
Powering these systems and keeping them cool and operational require a tremendous amounts of energy, with backup generation sources needed to assure uninterrupted service. They are responsible for significant greenhouse emissions, as critics at the hearings argued, and will do so until carbon-free renewable energy systems are in place to power them, along with other energy-hungry technologies Americans enjoy and rely on.
But data centers do have the saving grace of eliminating energy use in other ways, including by allowing meetings to take place virtually without participants using energy-consuming transportation, by transferring information electronically rather than by fossil-fueled vehicles, and by helping all sorts of infrastructure to operate more efficiently.
They allow you to check the latest sports scores, post your new dance move, dish about celebrity silliness, and engage in all sorts of other trivial pursuits.
Data centers are not going away, instead rapid growth is forecast. Research and Markets, among the top sources for churning out market research and forecasts, issued a report in 2020 predicting that data centers would grow from an estimated $59 billion market in 2020 to $143 billion by 2027, an annual growth of more than 13 percent.
Little wonder, then, that the Connecticut legislature — presiding over a state that is at a disadvantage because of high electricity costs — would join other states in offering incentives to try to attract this growth industry. In Connecticut those incentives include waiving local property taxes, leaving it to towns and cities to negotiate revenue deals in lieu of those taxes.
But the incentive program and the state's marketing of it, or lack thereof, needs improvement.
The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Managing Editor Izaskun E. Larrañeta, staff writer Erica Moser and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.
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