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CT Construction Digest Thursday May 27, 2021

By Luther Turmelle for The Local 478 Operating Engineers

WALLINGFORD — Town officials are negotiating a deal with a Groton-based company to bring one or possibly two data centers to the area along the Interstate 91 corridor.

The project could mean development for more than 250 acres and hundreds of thousands of square feet of facility space, and the company is looking at additional sites in Connecticut, as well.

Gotspace Data LLC is looking at two sites, according to Tim Ryan, the town’s economic development coordinator.

One is 57-acre tract off Williams Road near the Interstate 91 and Route 68 interchange, where the company wants to build a two-story, 157,000-square-foot data center. The other is a 205-acre site on North Farms Road bordering Meriden, Tankwood Road and Route 15, where the company would build a 313,672-square-foot data center.

Gotspace Data’s website lists eight data centers the company is exploring building in Wallingford, Groton, Bozrah, Norwich and Griswold — all towns with municipally-owned electric companies, meaning the cost of electricity typically is less expensive.

Gotspace Data’s principals are Rhode Island-based developer Thomas Quinn and Nick Fiorillo, a property manager from the Boston area. The company was founded earlier this year in Boston.

Quinn and Gotspace’s local attorney, former state senator Len Fasano, appeared before the Wallingford Town Council in a special meeting last week. Fasano said having a data center located in a community gives the municipality “a business advantage” in terms of attracting other businesses.

“This is an opportunity for Connecticut to be a hub ... for something that will produce revenues for at least 20 to 30 years,” Fasano told council members.

Quinn said having multiple data centers in Connecticut would fill a void between Boston and New York City. And building the facilities in Connecticut communities with municipal power companies is cheaper than doing it in Massachusetts, he said.

“The cost of power in Massachusetts is $15 million to $17 million more,” he said. “We believe we have a good opportunity for Connecticut to become a new corridor for data in the region. What’s very nice about the Wallingford area … is you have fiber (optic) cable all along I-91.”

Joseph Mirra, chairman of the community’s Economic Development Commission, said the centers would create about 70 permanent jobs in addition to the construction jobs that would be created were an agreement reached to build the facilities.

Both Mirra and Ryan said Quinn told the council that if the data centers were built, other business likely would come to Wallingford, multiplying the project’s economic impact.

Ryan said the commission is “supportive (of the plan) and encouraged by the amount of opportunity” that is expected to come with it.

“But there is a fair amount of due diligence that still has to be done,” Ryan said. Among the considerations town officials have to explore, he said, are the environmental impact the data centers would have as well as noise levels associated with around-the-clock operation of the facilities.

About a half-dozen residents raised concerns about Gotspace’s plans.

Ed Bradley and Jessica Polansky said both proposed sites are located very close to residential neighborhoods.

“You right on the back of residential areas that are in the water protection district for Wallingford,” Bradley said. “It is within the watershed for MacKenzie Reservoir; the Muddy River runs through your site and its the largest water supply for the town. That watershed supplies 94 percent of town’s water supply.”

Quinn said if Gotspace decides to build a data center at the Williams Road site, “it will be a clean, contained site.”

“Everything there will be the best of the best,” he said.

Jeff Kohan, a member of the town’s Planning and Zoning Commission, said he is concerned the company is a startup that is building the data centers “on spec,” meaning Gotspace doesn’t have any companies committed to the facilities.

“You don’t have any customers right now,” Kohan said

Fasano said Gotspace is actively “talking to people” about taking up the space in the data center.

“There is a hosting agreement that is being negotiated in real time with the the town,” he said. “You can’t go out and make firm deals unless you’ve got these other things in place.”

Mirra said the town and Gotspace “are close to a deal.”

“They are still working on the parameters, but it looks good that we may be able to get something done,” he said of the negotiations.

Quinn said Gotspace has not started construction on any of the Connecticut towns that it is considering for data center locations.

“We can not build six buildings at once,” he said. “I would anticipate that we would start (construction on) a single building and then a second building within six months after that.”

A data center is a facility that used to house computer systems and components that make it work, and allows networking with other computers. It includes such components as telecommunications equipment and storage systems.

Department of Economic and Community Development Commissioner David Lehman told Hearst Connecticut Media in February that Connecticut already has between five and 10 data centers, but the existing one largely are aging facilities.

Data centers essentially are an element of cloud computing, which allows data to be stored away from a user’s computer; users access the data through the internet.

Ryan said Gotspace officials have committed to pay for all of the infrastructure improvements associated with getting the facilities up and running. Mirra said that will involve what he termed “major improvements to the town’s facilities.”

Data centers typically use large amounts of electricity, so the town’s electric division likely would see an as yet undetermined increase in revenues for providing the power to the data centers if they are built, according to Mirra.

But because of new legislation signed into law by Gov. Ned Lamont in March, the main way revenues would flow to the communities where data centers are located would be through host agreements with Gotspace rather than traditional taxation methods.

Fasano said the “hosting agreement is in lieu of property taxes.”

“But the hosting agreement is much greater than the property taxes,” he said.

The legislation Lamont signed into law was House Bill 6514. According to an analysis done by the General Assembly’s non-partisan Office of Legislative Research, it provides the following incentives:

Sales and use tax exemptions for certain goods and services purchased or used by the data center.

Property tax exemptions for certain real property and equipment used by the data center.

An exemption for financial transactions taxes that the state may impose in the future.

The new rules also authorize the Department of Economic and Community Development to enter into agreements with data center developers. DECD may enter into tax incentive agreements with qualified data centers for 20- or 30-year terms, depending on the size and location of the data centers, according to the analysis of the legislation.

To qualify for these incentives, data center developers must agree to make an investment of at least $50 million if the data center is located in an enterprise zone or a federal opportunity zone, or $200 million if it is located elsewhere.

The legislation also requires the creation an Office of Data Infrastructure Administration and Security within DECD. Officials in the new agency would oversee the application process and assist applicants.

The office will be funded by annual payments from qualified data centers.



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