Groton ― The owner of land on Hazelnut Hill and Flanders roads, where a developer unsuccessfully tried to locate a large-scale data center is suing the town.

The potential seller, listed in the complaint as 327-449 Hazelnut LLC of Mystic, had an agreement to sell the land for $5.25 million to data center developer NE Edge, and is seeking more than $2 million in damages from the town.

John P. Holstein is the principal of 327-449 Hazelnut LLC that owns about 168 acres of land at 327 Hazelnut Hill Road, 351 Flanders Road, 0 Flanders Road and 449 Hazelnut Hill Road, according to the Secretary of the State.

Under state law to incentive data centers, developers must first sign a host agreement with a town, before pursuing land use approvals for a proposed data center. The Groton Town Council in March 2022 voted 5-1, with three abstentions, to discontinue efforts to pursue such an agreement with NE Edge “for properties generally located between Hazelnut Hill Road and Flanders Road, south of I-95, with prejudice.”

Nearly 50 residents, most opposed, spoke out against the data center proposal at a previous meeting. The property seller’s lawsuit alleges the Town Council failed to take public comment on additional offers from the developer and consider how they would benefit the town.

Mary Mintel Miller, the attorney for the land owners, said NE Edge offered to pay $250,000 each to Ella T. Grasso Technical High School and Robert E. Fitch High School annually for 25 years, donate 50 to 70 acres of land to the town, build a dog park and playground, and extend water and sewer infrastructure along Flanders Road, but the town never scheduled a meeting to discuss the offers or demand more.

The complaint also alleges the town failed to include NE Edge in discussions regarding the development, failed to follow its own standard procedures, failed to engage in negotiations with NE Edge or follow legal advice regarding the language of a motion to discontinue negotiations. The motion passed by the town was specific to the streets where the seller’s property is located, though it didn’t list the exact street numbers.

The complaint also alleges the council failed to yield authority to the Planning and Zoning Commission to determine the suitability of the property for the development of a data center.

The sale agreement was allowed to be terminated if the host agreement was not obtained, according to the lawsuit. The land owner alleges in the lawsuit that the value of the property without the data center option was “significantly lower” than the $5.25 million it would have received.

According to Mintel Miller, her client intends to show that the “data center would have been built on only 13 acres of the 168-acre total, and this kind of development was allowed under the zoning regulations at the time.”

But Groton Town Manager John Burt said “It appears to me that the council was well within their rights to take action as they did on the data center host agreement.”

After a moratorium on large data centers, the Planning and Zoning Commission in June of 2023 approved regulations that restrict the size of a data center to 12,500 square feet, far smaller than the NE Edge plan.

k.drelich@theday.com