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New legislation could help get more data centers built in eastern Connecticut

Local and state leaders mostly praised legislation passed by the state Senate on Monday that would allow for tax breaks for Connecticut data centers.

H.B. 6514, An Act Concerning Incentives for Qualified Data Centers to Locate in the State, is important to eastern Connecticut, a potential landing spot for data centers. During a public hearing last week, Randy Collins from the Connecticut Conference of Municipalities said he’s had conversations with Groton, Montville and Norwich about considering such facilities in Connecticut.

Sen. Cathy Osten, D-Sprague, said an interested developer has "talked to" Norwich, Groton, Montville and Ledyard officials. She said the eastern Connecticut delegation and several others met with state Department of Economic and Community Development Commissioner David Lehman to ensure the towns weren’t left out of a deal.

On Monday, Lehman said that, beyond job creation, the two main benefits of developing data centers are growth in a town's grand list and income tax revenue.

"When you have state-of-the-art data centers, you generally are going to have financial and technology jobs that want to be proximate to those data centers,” he said, noting that this legislation will not impact existing data centers unless they decide to do a large enough renovation or new construction.

Groton Town Manager John Burt said there are no imminent plans for a data center but "I am very supportive of the bill that cleared the Senate and is expected to be signed by the Governor. The Town of Groton would be thrilled to host data centers presuming that we can arrive at a satisfactory host municipality fee agreement."

A qualified data center is defined in the legislation as a facility that houses networked computer servers in one location, centralizing the storage and dissemination of data.

Norwich Mayor Pete Nystrom said Tuesday that there are no immediate plans for a data center in the city, but he mentioned that city officials were approached by a real estate broker a few years ago about the potential to host a large data center. He said it was the same broker who was making the rounds among local towns.

Some legislators said they think the 30-year period is too long for the tax abatement program established by the legislation, though Sen. Heather Somers, R-Groton, another ardent supporter of the legislation, said without 30-year agreements, data centers likely won't come.

“There is an industry standard that you have to meet or data centers will not come here. It’s very simple,” she said.

Nystrom said he did not support the initial concept of offering any such development a 30-year free ride on property taxes without involving the host towns, calling it a bad deal for municipalities. He credited Osten, whose district includes Norwich, Ledyard and Montville, for working with the CCM to secure the interests of municipalities in the legislation passed by the Senate on Monday.

“The language in the bill is designed to put the cities and towns in the driver’s seat,” Nystrom said. “If they can’t come up with a host town agreement, they don’t get the tax break.”

Nystrom said the concept was presented by the broker as a $300-million construction project, with $300 million in high-tech computer equipment that would need to be upgraded about every three years. He said the host town initially was offered just $500,000 in compensation — 1/32nd of the potential tax value. “How do you accept that?” Nystrom said. “You don’t. It’s crazy. I don’t find it really workable.”

Nystrom was skeptical of the viability of a 30-year tax abatement on a project so reliant on technology, which could undergo dramatic changes over time that would make the facility obsolete.

Montville Mayor Ron McDaniel is more supportive of the bill.

“I believe that the passage of the bill will in fact encourage data center developers to take a hard look at Connecticut,” McDaniel said. “Montville is poised to be a good candidate for this development as we have put all the pieces in place from the regulatory and zoning side. I have long believed it could result in a domino effect in southeastern Connecticut due to the availability of land, geographic location between New York City and Boston and availability of fiber network.”

Montville has had plans for a data center in place since 2019, when the Planning and Zoning Commission unveiled and unanimously approved the site plan for the first phase of the project. Developer Verde Group LLC hopes to build two large data storage buildings — at 87,000 and 166,000 square feet, each with an office, electrical room and data hall with computer and networking equipment — on 65 acres, with room for potential expansion on a 300-acre site.

Town Director of Planning Marcia Vlaun said the Verde Group still is ready to develop the data center between Route 32 and the Thames River but hasn’t taken the next step.

“It’s just not been very active,” Vlaun said of the project. “They have their site plan approvals. If it gets off the ground, there’s some other specific things they’ll have to come in for. The permits they have are good for a number of years; they have until 2024 to stick a shovel in the ground.”

The Verde Group did not respond to requests for comment.

Osten said another change in the proposed legislation tightened language to ensure host towns could claim a place in line in any foreclosure or bankruptcy proceeding should the data center company “walk away.”

The change would treat the property “like any other property that’s being foreclosed or being in a bankruptcy proceeding,” Osten told senators during the floor debate on the bill Monday.

She spoke at length about other benefits of the bill.

“Data centers want to come to eastern Connecticut because we have cheap land and cheaper utility rates. The benefit to us is utility revenue,” Osten said. “With this legislation, developers have to negotiate with municipalities, and they won’t get anything unless they meet with the municipalities.”

Day Staff Writers Claire Bessette, Erica Moser and Kimberly Drelich contributed to this report.

s.spinella@theday.com

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