Gov. Ned Lamont has signed into law a measure that incentivizes data center operators to locate their supercomputing facilities in Connecticut.
The law, which goes into effect July 1, allows the operators of data centers built in Connecticut and who meet certain requirements to forgo state taxes on property, financial transactions and other state fees for 30 years after construction. Under the law, qualified data centers may also avoid paying taxes on construction, rehabilitation, renovation, repair and operation of the facilities.
“It’s a new opportunity that could help reshape the landscape of Connecticut,” said state Sen. Heather Somers (R-Groton), who co-sponsored the bill. “People think of the cloud as something invisible, but it’s actually in a building.”
Data centers are buildings that house groups of networked computer servers in one physical location to centralize storage.
For example, the Massachusetts Green High Performance Computing Center in Holyoke, Mass. provides massive computing power to drive research into everything from designing drugs to climate change for five Massachusetts colleges and universities including Harvard University, MIT and the University of Massachusetts.
In order for data center operators to qualify for the tax breaks, they must invest at least $50 million in the data center within its first five years of operation, and $400 million (or $200 million if it’s located in a designated Opportunity Zone) for the tax breaks to last the full 30 years.
Incentivizing the construction and operation of data centers in Connecticut through tax cuts makes sense because they create construction jobs, Somers said. These centers require consistent upgrades to the buildings (usually every three years) when computers are upgraded or replaced — in addition to construction jobs necessary to build the facility on the front end, she said.
Somers said data centers often create about 2,000 construction jobs (in addition to IT and 24-hour security jobs) per building, which is in line with a Chamber of Commerce report estimating they create nearly 1,700 construction jobs. The availability of these jobs could make Connecticut less economically dependent on defense contractors like Pratt & Whitney in East Hartford and Electric Boat in Groton.
“We’re looking at this as a new burgeoning industry,” Somers said.
