9.12.21 Will CTs race to attract data centers pay off

Will CT’s race to attract data centers pay off? For some, it’s unclear
by Erica E. PhillipsSeptember 12, 2021 @ 5:00 am
One of over 290 Digital Realty data centers across the world is
located in Trumbull, Connecticut. It is the highest-profile data
center currently in Connecticut. CREDIT: YEHYUN KIM /
CTMIRROR.ORG
As more and more businesses have shifted IT operations to the
cloud, state leaders around the country turned to data centers —
the giant server warehouses that power the internet — as one way
to rejuvenate their economies coming out of the Great Recession.
Over the past decade-plus, more than 30 states have created tax
breaks or other incentives for data center construction, and the
technology sector’s biggest players, from Facebook to Google and
Amazon, have taken full advantage.
This year, Connecticut joined the race.
In late February, state lawmakers passed emergency legislation
allowing the Connecticut Department of Economic and Community
Development, for the first time, to offer tax incentives to certain
data center developments.
Specifically, the state will waive sales and property tax obligations
for 20 years for data centers that invest at least $200 million in
Connecticut — or just $50 million if the facility is located within a
state-designated enterprise zone. The tax exemptions could be
extended to 30 years if a $400 million investment is made, or a
$200 million investment in an enterprise zone.
But with so many other states offering incentives, and Connecticut
arriving relatively late to the game, the legislation’s expedited

passage through the Assembly struck some observers as odd. The
bill obtained emergency certification — sending it immediately to
the floor for a vote, with no committee referrals or public hearings.
DECD Commissioner David Lehman said that was all because of one
particular detail: Connecticut agreed to waive its right to impose a
financial transactions tax on any qualifying data centers. At the
time, New Jersey lawmakers were considering passing a $0.0025
tax on every financial transaction processed electronically in the
state. Given how much of Wall Street’s exchange server
infrastructure is located in New Jersey, the proposed tax had
massive implications for the finance industry.
“We were moving very quickly,” Lehman recalled. “The governor,
myself and others were having conversations with these companies
around potentially relocating their exchanges to Connecticut … This
legislation was really important if they were going to make the
move.”