Data center clears hurdle
Waterford officials agree on payment terms for project at Millstone site
— The town has taken Waterford the first step to bringing data centers to the region.
The Board of Selectmen, in a joint meeting Wednesday with the Representative Town Meeting, agreed to become the host municipality for a data center project, the first of its kind per Attorney William McCoy, who represents the developer, NE Edge, LLC.
The town is set to receive more than $231 million over 30 years from the developer, including nearly $18.6 million in the first year of the deal. Payments would increase annually and would make NE Edge the second-largest taxpayer in town behind Dominion Energy, LLC.
“This revenue will serve as a cushion to help us ease the tax burden for our property owners and help fund critical fire, police, school, public works, recreation and other human services our town relies upon,” First Selectman Rob Brule said.
“In a word, this project has great potential for keeping Waterford more affordable,” he added.
The project calls for a pair of two-story buildings to be built on Dominion’s Millstone Nuclear Power Plant property, one with a footprint of 568,000 square feet, and the other with a footprint of 214,000 square feet. The structures would occupy 4.8% of the more than 500-acre parcel.
Both buildings will be used for cloud and data storage servers and would be directly supplied by Dominion’s two nuclear power facilities on the site.
Under legislation passed by the Connecticut General Assembly in 2021 to attract projects such as this, towns cannot tax data centers’ equipment or buildings but are allowed to negotiate fees in lieu of such taxes as part of a host municipality fee agreement.
If NE Edge were to back out of the agreement prior to the 30-year mark, which McCoy said he does not fore
see, the buildings would automatically become taxable at the end of the agreement.
The agreement does not mean that the entire project has been approved, as explained by Town Attorney Nick Kepple, but rather is an agreement for the payments. The rest of the project is still subject to local, state and federal reviews and approvals.
Kepple called the host fee agreement a “door opener” for the entire project.
“The only question before Waterford right now is does Waterford want to become a host municipality under this recent legislation,” Kepple said.
In a letter to RTM Moderator Paul Goldstein dated Feb. 16, Kepple explained that although the Board of Selectmen acts on all town contracts, the RTM has the ability to terminate the contract if there were to be a default in payments. The RTM was limited to an “up or down vote” meaning it either supported the Board of Selectmen’s decision or not. It unanimously agreed with the board and voted to hold onto its right to terminate the contract, instead of delegating that power to the board.
No impact on Millstone operations
Millstone Site Vice President Michael O’Connor explained at the meeting that the power plant entered a memorandum of understanding with NE Edge. He called the developer a “good partner to have.”
He added that the piece of land proposed would go unused if not for the data center proposal and confirmed the project would have no impact on the plant’s day-to-day operations.
“To continue to operate Millstone we have been in the business of ensuring that we have off-takers for many, many years to come,” he said.
O’Connor said the 10-year purchase power agreement involving the state, Millstone, Eversource and United Illuminating from 2019 was incredibly important for the power plant to stabilize operations and revenue stream. He said the current licenses of the plant extend to 2035 and 2045, and Dominion has the ability, later this decade, to extend those licenses to 2055 and 2065 for the two units. He added that Dominion is currently working with the state to extend the purchase power agreement past 2029.
O’Connor said that safety is top priority at Dominion, and this partnership will bring in funds to allow the plant to continue to upgrade its units as required. He mentioned a recent addition of a $100 million main generator on Unit 3 to allow it to run for another 30 years and plans to do the same on Unit 2. The project stands to use 200 to 300 megawatts of the 2,100 the plant produces.
“What the plant needs, the plant gets,” he said.
Five-year construction project
The project would generate between 1,500 and 2,000 construction jobs, which union representatives such as Keith Brothers, the general vice president of Connecticut American Federation of Labor and Congress of Industrial Organizations and Chris Bachant, a council representative for the Carpenters Local 326 Labor Union, strongly supported. McCoy said the construction is expected to take five years to complete and will start with the larger of the two buildings.
Brothers added that Waterford residents and military veterans will have priority for the construction jobs. Fourth-District Representative Michael Bono, a technology teacher at Waterford High School, said he has students who would be willing to take those jobs “right now,” and called the project “forward thinking and responsible.”
The back wall of the meeting room was lined with union trade workers.
Selectwoman Beth Sabilia said between the money coming back to the town, the jobs created and the ongoing relationship, this project would allow the town to take a step forward.
“I can’t see how, as the Board of Selectmen, we could say no to pursuing this fee agreement,” she said.
Once completed, the data centers would require anywhere from 200 to 500 fulltime employees. McCoy estimated it would be at least a year before construction would begin due to the process of acquiring permits and going through state and federal agencies.
Fourth-District Representative Susan Driscoll noted the average of $7.8 million per year in payments is a lot less than if it were to face regular tax burdens. She asked Brule if he negotiated the best deal possible.
Brule said that, due to the legislature in place, it was “irrelevant” to argue tax figures. Instead, he said he spent the better part of two months of negotiations trying to double what other host municipalities agreed. He called the deal “fair” and a “win-win.”
“I feel very comfortable I represented the town of Waterford and its taxpayers very well,” Brule said.
Noise and traffic experts
The chief concern from critics of the project is the noise created by the data centers. This was such an issue when NE Edge proposed a similar project in Groton that the town chose to discontinue the effort and enact a one-year moratorium on such projects.
Brule said the agreement calls for a noise analysis conducted by NE Edge. A baseline will be established over a week’s period to determine the level of noise that currently exists. The town will hire its own expert to review the study’s results and confirm that the results meet its standards.
“This provision of the agreement with the developer of these data centers puts the town in charge of the adequacy of measures to be taken to assure these buildings will be good and quiet neighbors,” Brule said.
McCoy explained that the application and permit fees in this process will total roughly $9 million, funds the town can use on a noise and traffic consultant. He said NE Edge will hire a project coordinator to assist the town as well.
NE Edge Co-Founder Manager George A. McLaughlin III is a career attorney who has spent the last 32 years investing in real estate projects where he purchases, develops and sells properties. His counterpart, Thomas P. Quinn, who was not in attendance Wednesday, has more than 33 years of experience as a property owner, developer, broker, investor and designer.
Though neither partner has experience with data centers — as pointed out by Fourth-District Representative Dan Radin — McLaughlin compared it to his days convincing juries on subjects he previously had no experience in. He said the plan is to surround the development with experts in the field, such as Turner Construction, to get the job done.
McLaughlin said that he is not concerned about the hurdles in the project’s way. He called the project “cutting edge” and “not for the faint of heart.”
“If you can put a man on the moon, you can solve a traffic problem,” He said. “You can solve a noise problem.”