The developer of a $1 billion fuel-cell powered data center in New Britain, slated to begin first-phase construction this fall, has secured a state tax break worth up to $55.2 million.
The quasi-public Connecticut Innovations (CI) last week approved the 10-year sales-and-use tax exemption for EIP Investment LLC’s purchase of capital equipment for its data center, to be housed in redeveloped buildings on the historic Stanley Works manufacturing campus.
It’s the largest benefit of its kind ever granted under the CI-administered relief program, which dates back well over a decade.
The benefit will technically flow to EIP’s eventual tenant or tenants who would be purchasing the computer servers, though the exemption also benefits EIP by making its project more attractive to lessees.
Mark Wick, a partner with EIP, said in a statement that the exemption is similar to what other states offer.
“This will put us on par with 23 other states that are competing every day to attract national data center operators to their sites, and it will apply only to the computing equipment after nearly $400 million is spent on the bricks and mortar,” Wick said.
The data center would be the second phase of the project, costing an estimated $300 million, according to EIP.
The $100 million first phase, to begin by early fall and wrap up next year, is the installation of 44 fuel cells manufactured by Doosan in South Windsor.
The state gave the project its first public boost when it selected EIP, after a competitive bidding process, for a 20-year contract to sell the fuel cell power to utilities.
The contract was officially signed late last year.
Gov. Ned Lamont was also quoted in EIP’s announcement on Monday.
“High performance computing centers fuel the 21st century economy and attract many other IT companies to their campuses,” Lamont said. “Given Connecticut’s proximity to major metropolitan areas and the needs of our municipal, state and private sector business clusters for these high performance computing services, we can now compete with other states and transform an underutilized industrial complex into a modern IT campus that will generate significant local and state tax revenues, and high paying IT and related service jobs.”
Since it proposed the project in early 2018, EIP has said it would generate more than $200 million in state tax revenue over a 20-year period, in addition to $45 million in local tax revenue. The company said Monday that those estimates were still accurate.
“There was always the expectation that the sales and use tax exemption would need to occur in order to get to a level playing field with other states and [sales and use] was never included in the state revenue number,” Wick said.
UConn economist Fred Carstensen, who has been a longtime vocal supporter of the data center project as an economic booster, hailed the tax break as good news, as growth of the state’s information sector has lagged behind other states.
“Connecticut has been, at best, inattentive to the critical importance of the IT backbone — high speed fiber and large data centers — for the competitiveness of the state, both to retain business here and to attract new business,” Carstensen said Monday afternoon. “We appreciate the importance of our transportation infrastructure and everyone accepts the reality that we need make major investments to improve its quality and reliability. But communication infrastructure is every bit as important.”
He said the New Britain data center, along with a planned data center in eastern Connecticut’s Montville (proposed by Verde Group, according to The Day), should help “bend the curve and put Connecticut into a much stronger competitive position.”
This story has been updated with comments from UConn economist Fred Carstensen.
