The state’s quest to bring large-scale data centers to Connecticut under a 2021 tax-incentive plan hailed as a “once in a generation opportunity” has not always gone smoothly.

One data center project has been approved for Windsor. Several have been proposed but have not moved forward in southeastern Connecticut, though one is in the works in Waterford.

The state has been trying to attract large-scale data centers ― which are facilities for computer servers that store, manage and transmit data ― that could serve financial and technology companies, for example, and provide better connectivity for future industries.

The proposals have brought local opposition from residents concerned about the noise data centers could generate, along with interest from community leaders in the revenue and economic development they could create.

The southeastern Connecticut proposals have also brought a legal battle in United States District Court for the District of Rhode Island, with one data center developer suing a former business partner who has another data center development company, among a long list of defendants. Local landowners are among the defendants and local towns are also named in the lawsuit.

Incentives to draw data centers to Connecticut

The state enacted a law in 2021 to create incentives for data centers to be built in Connecticut and enable the state Department of Economic and Community Development to sign long-term tax incentive agreements with developers that pledge to invest millions of dollars in the state, according to a bill analysis.

In submitted testimony about the bill in 2021, former DECD Commissioner David Lehman wrote that data center investments would become “a part of Connecticut’s core infrastructure, serving existing financial service industries, new and existing technology companies, as well as the future connectivity requirements needed for emerging industries.”

Lehman called it a “once in a generation opportunity to signal to the data center industry and the rest of the country that Connecticut is open for businesses and leading the charge for 21st century jobs.”

As part of the program, the companies must sign “host municipality fee agreements” to provide revenue to the host communities. The agreements also allow the municipalities to set parameters for the data centers, and proposals need to go through the local land use permitting process.

Under the new program, the state Department of Economic and Community Development has approved so far one data center in Windsor in December of 2022 that Cigna applied for, according to DECD Spokesman Jim Watson.

Southeastern Connecticut

In southeastern Connecticut, Waterford is taking steps to bring a data center to town under the new state program.

Waterford First Selectman Rob Brule said the town has approved a Host Fee Agreement with NE Edge LLC for a data center on the Millstone Nuclear Power station land, but has not yet received any land use applications for the data center. The town would receive more than $231 million in lieu of taxes over a 30-year period.

NE Edge proposes two buildings, two stories high with a 568,000-square-foot footprint and says more than 1 million square feet of space would be available for cloud and data storage servers.

The proposal drew concerns from neighbors, and more than 1,000 people signed a change.org petition called “Protect Waterford from Data Center Noise Pollution.”

“Our local families, health, and property values are at stake from Noise Pollution from the proposed Data Center in our neighborhood,” the petition states.

George A. McLaughlin, III, co-manager of NE Edge, said in a phone interview this past week that the company signed a deal with Dominion Energy and is meeting with the neighbors and moving forward with its study of the property and siting of the data center. The company has hired engineers, architects, and contractors and is committed to addressing the noise concerns raised by neighbors to everyone’s satisfaction, he said.

Lawsuit between developers, others

Meanwhile, Gotspace, LLC., a Boston-based company, and its CEO Nicholas Fiorillo filed in December in U.S. District Court for the District of Massachusetts a lawsuit against NE Edge LLC., whose principal Thomas Quinn is his former business partner, and a long list of defendants that include Boston officials, large technology and communication companies and limited liability companies, and land sellers.

Fiorillo filed a voluntary dismissal of the case and recently filed a similar complaint in the U.S. District Court for the District of Rhode Island.

In the Rhode Island lawsuit, Gotspace accuses NE Edge of making “repeated unlawful attempts to abscond with all of the Plaintiffs’ intellectual property, real estate purchase contracts and assets and exclusive rights to develop the Gotspace New England data corridor, including Bozrah and Groton, Connecticut, in clear multiple violations of the Racketeer Influenced And Corrupt Organizations Act (RICO),” the lawsuit reads. Gotspace said it has a master plan for developing data centers in Connecticut.

The lawsuit includes accusations of “Interference with commerce by threats or violence in addition to numerous federal law claims of breach of loan, investment, extortion, loan sharking, wiretapping, electronic eavesdropping and unlawful vexatious debt collection activities.”

Thomas Quinn, co-manager of NE Edge, called the lawsuit a “vexatious, meritless suit to try to leverage or extort us and others to back away from him and/or pay him something, which we're never going to do.”

In a phone interview this past week, Quinn, a former Gotspace partner who was involved with lobbying for the state legislation, alleged that Fiorillo came in with a promise to provide funds to the business, but then reneged on the promise after a very small investment.

Quinn alleged that “when we told him that we’re going to default you,” Fiorillo filed paperwork to remove Quinn from his own deal.

According to court filings, Gotspace, among its requests for relief, is seeking $30 billion and to prevent any interference in its proposed data center sites. Gotspace also wants an injunction to prevent the sale or disposition of property in Bozrah, as well as property in Yarmouth, Mass.

Fiorillo said by phone and in a follow-up email this past week that Gotspace Data has contracts and is continuing to move forward in the development of the proposed New England data corridor. He said the company plans to announce its first data center development this summer.

Groton, Bozrah

The Town of Groton, the Town of Bozrah, and members of the Bozrah Board of Selectman and Bozrah town attorney are named in Fiorillo’s Rhode Island complaint in a separate section, following the list of defendants, and are being called “reach and apply defendants.”

Jeffrey Londregan, a town attorney for Bozrah, said by email that he and the Town of Bozrah selectmen were never served. He declined to comment on the case.

Bozrah in April 2021 approved a host agreement with Gotspace for several properties, primarily on Haughton Road, Bozrah First Selectman Glenn S. Pianka said in a phone interview this past week. The agreement remains in place, but Pianka said it hasn’t moved beyond that. He said a host agreement gives a company the opportunity to apply for a data center, but doesn’t give any entity an exclusive.

The town held last year a public hearing on a proposed host agreement from NE Edge LLC., with the town attorney reviewing some of the public comments and the town offering some modifications, Pianka said.

Pianka said he expects NE Edge will return to Bozrah with a rekindled host agreement proposal, and ultimately any decision will go to the townspeople at a referendum.

“It’s a decision that’s going to affect the way we do business in town because of the potential tax benefit,” Pianka said. He pointed out that a data center agreement allows the town to have some say on how the property is developed, versus the potential for another type of development that may not be beneficial to the town visually or monetarily. The town would also receive 60 acres for open space, he said.

Pianka said he’s generally in favor of a data center, but he wants to make sure concerns about noise are addressed.

The Groton Town Council last year decided to cease negotiations for a host agreement with NE Edge LLC. for a proposed data center between Hazelnut Hill Road and Flanders Road, south of I-95, amid concerns from neighbors about noise and other issues. The town last June implemented a one-year moratorium on data centers so it could craft regulations.

Groton previously signed in 2021 a host agreement with Gotspace, seeking to develop data centers for properties off of Route 117 for a five-year term.

Host agreements are the first step, so data center proposals still need to obtain local land use approvals from towns to move forward.

Town Manager John Burt said by email that the host agreement with Gotspace is still active, but the town has a moratorium in place on applications for data centers, while the Planning & Zoning Commission crafts regulations. He said the town has not heard anything from Gotspace concerning the property in years.

“If Gotspace obtained ownership of the required properties, which appears unlikely at this time, and if regulations permitted data centers, then there would be a chance that they would be allowed,” Burt said. “We’d want our attorneys to review however to see whether that is the case.”

According to court filings, Gotspace’s attorney filed a motion to dismiss the case and it noted that the defendants have not been served. Fiorillo moved to continue the case, which was granted.

The lawyer representing Fiorillo than filed a motion to withdraw from the case, with the lawyer citing that he made the motion to dismiss the case after learning of inaccuracies.

“Until the Town is served, the Town is not part of a lawsuit,” Burt said.

Burt said there are no accusations against the town. Burt said the filings appear to be saying that if the town were to pay NE Edge any funds and Gotspace were to succeed in court against NE Edge, then those payments could potentially be owed to Gotspace. However, he said, there are no funds owed by the town to NE Edge.

In addition to Groton and Bozrah, Fiorillo said Gotspace also executed host agreements in 2021 with Griswold and Wallingford.

Wallingford Mayor William W. Dickinson, Jr. could not immediately be reached by phone for comment. When asked if Griswold had any data agreements and what they entailed, Griswold First Selectman Dana Bennett said the town is not able to comment on this.

Elsewhere in Connecticut

Data centers also are being considered in other parts of the state, such as New Britain.

New Britain Mayor Erin Stewart said New Britain “had previous plans to put a data center powered by a massive fuel-cell farm known as ‘energy and innovation park’.”

“The data center is a third phase of the project,” Stewart said by email. “The city has certainly given their blessing for the project, but further than that, we are still in the construction phase for the fuel cells. That being said, there has been a lot of concern that the state is not welcoming to data centers.”

She said New Britain fears that unwelcoming attitude will adversely impact its ability to compete for a data center in Connecticut.

k.drelich@theday.com