Facing Budget Squeeze, Bozrah to Decide on Approving a ‘Hyperscale’ Data Center

Bozrah, Connecticut


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BOZRAH – The first selectman made clear that the town badly needs the $3.5 million in revenue from a proposed hyperscale data center, but town residents pressed back with concerns regarding noise and potential costs to the town if the center is built.

NE Edge is proposing to build a 980,000-square foot building — an area equaling about 22 football fields — to house a data center on more than 280 acres of land under contract in Bozrah, with an entrance planned for Haughton Road off of Route 2. 

Seeking to capitalize on a state incentive program that lets large data centers avoid paying local property taxes if they agree with the town on an annual fee in lieu of taxes, NE Edge proposed paying Bozrah $3.5 million a year, plus a 2-3 percent annual escalator that would be tied to the consumer price index.

At a public hearing at Fields Memorial School on Wednesday night, residents questioned how the $3.5 million fee was decided. First Selectman Pianka told them that was the number NE Edge proposed to the town, and that the properties NE Edge is under contract to buy currently contribute about $1,800 a year in taxes. 

Jim Rossman, NE Edge’s project engineer, said the “average” hyperscale data center would require between $200 million and $800 million in investment. To qualify for a 30-year tax agreement at least $400 million would need to be invested in the center.

Rossman said they would optimistically expect construction to begin in 2025 after several rounds of state and local approvals, and that the construction would take about 18 months – though he acknowledged that could be delayed. The first payment would be due a year after the center received its certificate of occupancy.

Several residents questioned why the fee was not higher than $3.5 million. While that represents a significant increase to the town budget, it is a fraction of what a $400 million development would pay in property taxes, and residents said they expected some of the revenue would have to pay for things like new fire equipment that would be needed to cover such a large development.

Christopher Regan, head of acquisition and planning for NE Edge, said the developer is responsible for paying for all of the costs of development and infrastructure upgrades – including any new electrical infrastructure like a substation that could be needed to power the facility. Rossman said those costs have to be borne entirely by the developer and can’t be passed back to Bozrah electric customers.

Regan said $3.5 million was the same fee the company agreed to pay Griswold in a fee agreement signed about 10 days ago. So far, Griswold is the only town that NE Edge has an active fee agreement with, Regan said. 

The Connecticut Department of Economic and Community Development is tasked with reviewing those agreements and verifying that the proposals meet the requirements for the tax break, and have funding lined up. Developers must complete an agreement with a town before applying for state approval, and no agreements have been approved by the state at this point.

“We treat every town the same,” Regan said.

Pianka – acknowledging that he was putting his reputation on the line by backing the proposal, said he couldn’t envision another opportunity that could bring this kind of revenue into Bozrah. 

He said that revenue is badly needed because the budget is already tight, and the town is facing future capital expenses and the possibility of having to transition from a volunteer to a professional fire department because of lagging volunteerism. 

Pianka also emphasized that the data center wouldn’t have the obvious environmental impacts of the large chicken operations that are another major taxpayer in town.

“It’s always been said at our various board and commission meetings – Bozrah wants clean business,” Pianka said. “We do want clean business. And it doesn’t get any cleaner than this. I know I sound like a salesman, but it truly doesn’t. What do we complain about  every year? Flies, the smell of manure, the droppings and all those kinds of things.”

But residents pushed back on the idea the environmental impact would be minimal. Many were concerned about the constant noise the data center would produce. Neighbors of data centers around the country have complained about noise from the massive centers.

Bozrah residents were concerned about what impact noise from the proposed NE Edge center would have on its neighbors, including the Odetah Camping Resort – another major taxpayer in the town.

Rossman said the facility would use diesel generators, but only as an emergency backup if there was an outage on the electric grid and for monthly exercises. The agreement says generators cannot be used for peak shaving.

Pianka and the NE Edge representatives pointed to the requirement for a sound monitoring protocol in the proposed agreement – something that wasn’t included in the GotSpace agreement. It requires NE Edge to retain a noise control engineer to develop a “sound monitoring protocol.” 

They would measure the baseline noise levels at the property line of nearest residences – or closer if they received permission from the neighbors to measure on their properties – then propose controls for sound and vibration that would need to be approved by the town.

Rossman said the “acceptable” noise levels would be worked out between the company and town in the zoning process, where neighbors could weigh in. Rossman said that restriction is enforced through the contract, and the town could seek damages in court if that restriction was broken.

Many residents were not convinced by Rossman’s assurances, continuing to question him about noise throughout the two-hour meeting.

Pianka gives full support, but residents to decide

This is the second effort by a company to develop a data center in Bozrah after the Connecticut General Assembly approved new tax incentives for data centers to locate in the state last year. 

The Board of Selectmen approved a fee agreement with GotSpace, but the company stopped participating in the zoning process amid internal strife, and its application for a floating zone to allow its development was rejected without prejudice as a result.

Pianka told CT Examiner that GotSpace could have re-applied for zoning approval, but has not. And now NE Edge – led by former GotSpace CEO Thomas Quinn – has stepped in, seeking an agreement to try to develop a data center on the same property, he said.

NE Edge and Gotspace have tried to gain approval for data centers in Wallingford, Bozrah, Griswold, Norwich, Groton. The common denominator is that they are served by municipal electric utilities, not the state’s two dominant, corporate utilities – Eversource and United Illuminating, Pianka said.

Bozrah is served by Bozrah Light and Power, a subsidiary of Groton Utilities. 

“It was that way when Liquid Carbonic – also known as AirGas – came to Bozrah because of the [lower] electric rates 30-something years ago,” Pianka told CT Examiner. “They came here and we had the same hue and cry back then. And it’s proven to be a very strong taxpayer.”

The main difference between the agreement the Board of Selectmen previously reached with Gotspace and the proposed agreement with NE Edge is the fee each company would pay to Bozrah. 

Gotspace would have paid $1.5 million a year, while the NE Edge agreement proposes a $3.5 million annual fee for a 980,000-square-foot data center facility

Pianka told CT Examiner that fee is why the Board of Selectmen is supportive of NE Edge’s proposal. Without looking at options to limit the tax burden of the town, Pianka said Bozrah’s budget is “dead in the water.” 

This past year, he said the town used “every single method we can” to cut or refinance spending. Now it’s out of tools other than an inevitable tax increase, or a new taxpayer, he said.

Combined, the top ten taxpayers in Bozrah pay about $890,000 a year, Pianka said – a fraction of the payment NE Edge would make each year. The $3.5 million payment would also equal about a third of the town’s total budget including schools, he said.

“It’s not something I look at lightly,” Pianka told CT Examiner. “There are some issues that go along with it – nothing is for free – but it’s definitely something the Board of Selectmen endorses wholeheartedly, only because of the ultimate tax burden otherwise. We see nothing else on the horizon that’s going to help alleviate the inevitable tax increases.”

Pianka told the residents at the meeting on Wednesday that the Board of Selectman would consider their comments and make any necessary changes to the proposed agreement before bringing it to a town meeting and a town-wide referendum.

If the town votes to approve the fee agreement, it would be the first step towards NE Edge developing a data center. The company would still need zoning approval – including a zoning text amendment to allow data centers in a commercial zone, inland wetlands review, and a site plan approval. 

“There’s a bunch of hurdles beyond this host agreement that would have to be met for this to move forward,” Pianka said. “This wouldn’t be the green light if this host agreement was signed.”