State leaders weigh a statewide pause and tax incentive changes
By late October 2026, local officials across Connecticut had restricted data center development before most proposed facilities had reached the application stage. The Connecticut Mirror’s review of public meetings and records found around half a dozen municipalities had adopted temporary moratoria or complete bans. The measures came in communities the publication described as big and small, suburban and rural. New Haven passed a one-year moratorium in September with an exemption for the city’s existing quantum computing hub. Morris, a town in the Litchfield Hills with fewer than 3,000 residents, adopted a two-year ban. East Lyme had already imposed an indefinite prohibition, while Cromwell, Colchester, Bristol and Beacon Falls were handling individual facilities or proposals that officials said remained early in development, disputed or inactive.
Subodha Kumar, a professor of statistics, operations and data science at Temple University’s Fox School of Business, said, “The Connecticut case is quite interesting because many other places in the country, when we see these protests and opposition, either something has started or something is already there.” He said Connecticut’s political opposition had formed well ahead of actual development plans. “Connecticut has never been that attractive, frankly speaking, for data centers,” Kumar said. The report separately said development of large “hyperscale” data centers in Connecticut, and to a greater extent in New England, has been stymied by the high cost of electricity, access to utility infrastructure and large plots of land needed for thousands of servers, which can easily cover several football fields.
The East Lyme Zoning Commission voted unanimously earlier in October to adopt an indefinite ban on all data center development, one of the first such blanket prohibitions in Connecticut. The ban took effect on Saturday before anyone had announced a plan to construct a data center in the coastal town. Chairwoman Anne Thurlow said during an August meeting, “It seems like all over the country, they’re trying to figure out the effects of pollution, energy consumption, chemical runoffs.” She added, “I think it’s a good thing to ban them until we know more about them.” Thurlow said, “It could always be reversed if the town wanted to.” Thurlow said East Lyme’s effort was driven, in part, by a proposal to erect a massive new data center facility next door in Waterford, home to the Millstone Nuclear Power Station. The planned facility would have drawn power directly from Millstone in an arrangement known as co-location. Local opposition and years of delays ended the project, according to Waterford First Selectman Robert Brule, who told The Connecticut Mirror last month that he and the town were no longer interested in hosting data centers. “We’d rather produce the energy now than produce a project that sucks up the energy,” Brule said.
Connecticut lawmakers fast-tracked legislation in 2021 to attract data center developers, promising to waive sales and use taxes for projects investing at least $200 million in the state, or at least $50 million for projects in designated enterprise zones. To date, the only project to take advantage of the exemption had been Cigna’s $386 million renovation of an existing data center in Windsor. The Department of Economic and Community Development, which oversees the data center tax incentive program, said it had reviewed only two applications since the program began and none this year. The credit has become an issue in the gubernatorial election, with Republican candidate Sen. Ryan Fazio arguing the tax incentive should end. A spokesperson for Gov. Ned Lamont said the governor was open to discussing changing or eliminating the credit. The spokesperson said the incentive was never intended for large AI data centers and “should be clarified to ensure it is never used by a hyperscale data center and that data centers bring their own power.”
The law also exempted qualified projects from local property taxes but required developers to enter host fee agreements with municipalities where data centers would be located. Randy Collins, a lobbyist at the Connecticut Conference of Municipalities, said developers argued it would be “economically unfeasible” to invest millions of dollars into necessary equipment without offsetting some of the taxes. Despite a handful of towns successfully negotiating host fee agreements, Collins said developers had been slow to use the tax breaks. “If you look at the resources and requirements going in, they’re not just going to be popping up everywhere,” Collins said.
Democrats in the state Senate said the moment required new policy. Senate Majority Leader Bob Duff announced this week that he intended to introduce legislation next session creating a statewide moratorium on new data centers, following a proposal initially outlined in a September Connecticut Mirror op-ed. At a Thursday morning press conference in Groton, Duff said, “We think there should be rules of the road. We think there should be a moratorium.” He added, “We think we should better understand what electric and water and other types of problems are.” Duff said public concern was worth listening to. “We’re seeing people across our state and across our country who are really upset over the proliferation of data centers coming in, literally in people’s neighborhoods,” he said. “We should not have these in people’s neighborhoods.” Duff described a clear partisan divide, but Senate Minority Leader Stephen Harding, R-Brookfield, challenged that assertion. Harding said he would support some sort of pause in data center development and repeal of the 2021 tax incentive. In a Friday interview, he said, “Clearly, there’s a lot of questions that are unanswered regarding data centers.” Harding said, “I don’t think we should be siting them currently without further information on the energy they’re going to use and how they’re going to impact the communities where they’d ultimately be sited.”
The Connecticut Mirror characterized the agreement between the two leaders as perhaps a sign of how quickly public sentiment toward data centers had turned negative, a trend it said was unfolding nationally. It described public reaction to even the mention of prospective data centers as swift, vastly outpacing actual construction or even applications. The report noted that in some places, opposition had followed realistic development plans. In interviews with The Connecticut Mirror, state residents said even if a large number of data centers was unlikely to emerge, communities could not afford to wait for more projects to be introduced. They said concerns about potential impacts, no matter the size, should be taken seriously. Developers countered that many projects, often less than 40,000 square feet, were being unfairly grouped with larger data centers. They said the facilities would have minimal environmental effects and could redevelop formerly blighted properties and contaminated sites. Collins said the Connecticut Conference of Municipalities had not taken a formal position but generally favored more local control. The dispute was also fueling debate about the pace of technological growth, the advent of artificial intelligence technology and the role communities should play in economic development.
In Cromwell, energy developer Global Common had publicized plans for a 300-megawatt facility, about 550,000 square feet, on land occupied by agricultural fields and a former gravel distributor. Chief executive Bob Foxen said the site was chosen to take advantage of a buried gas transmission pipeline to power fuel cells expected to provide all the electricity for the data center. He said the property’s more than 150 acres would allow setbacks to reduce visual and noise effects and preserve some land for farming. “I’ve seen the pictures of some data centers, and I think maybe some of them don’t look very pretty,” Foxen said. “But I think ours, you really are not going to see much of anything from the road.” Before Global Common filed formal site plans with town officials, residents objected that the project was out of scale with the surrounding neighborhood of mostly single-family homes. Social media posts accused officials of secretly agreeing to “fast track” the project, and an online petition against it drew more than 1,500 signatures.
Cromwell Town Manager Anthony Salvatore said in an interview this week that he had been introduced to Foxen once, following a meeting with the town’s economic development coordinator. “The bottom line is, I really don’t have enough info regarding them, and it would not be my approval they need, it’s planning and zoning,” Salvatore said. In September, the Cromwell Planning and Zoning Commission considered and rejected a proposed one-year moratorium. Allan Wilson, one of the residents who spoke against the moratorium, said researching ways to limit water use and air pollution, including through fuel cells, had eased some of his initial concerns. He said town officials should have discretion to approve individual projects if they took appropriate steps to limit negative impacts, but remained opposed to the Global Common proposal because it was close enough to his home for him to worry about noise. “The only benefit to the town is taxes. It’s not like a store you can get anything at,” Wilson said. Foxen declined to provide specific host fee figures but said any agreement would provide “millions” in annual revenue and would likely make the data center Cromwell’s biggest taxpayer. He also said, “I don’t know enough to know if data centers are going to cause the end of the world. That’s beyond my knowledge.” Foxen said the United States faces global competition from countries such as China in developing AI and added, “Even if we ban data centers, our adversaries are not going to ban them. So there’s that side, and I think they need to be designed in a way that is consistent with the local community and local needs.”
Beacon Falls, an old manufacturing center along the Naugatuck River, was another community where discussion of a proposed 100-megawatt data center had moved ahead of active development. “There is absolutely nothing pending, in conversation, on the table, nothing at all for Beacon Falls,” First Selectman Gerry Smith said. The confusion stemmed from a four-year-old memorandum of understanding between the town and local developer O&G Industries to facilitate a smaller 32-megawatt data center on a former gravel quarry adjacent to Route 8. Under the agreement, the data center owners would have paid $2.5 million annually in taxes, with increases for inflation. According to a copy shared with The Connecticut Mirror, that revenue could have allowed the town to reduce its tax rate on other properties by more than 13%. Smith said the project never came to fruition because the developers could not find a buyer. The tax agreement expired in 2023 before the town could formalize a host fee agreement. Smith said O&G Industries contacted him over the summer about a second agreement covering a revised proposal. He said he remained open to the idea but had not heard back with any specific plans. “The last time they had serious conversations was four years ago,” Smith said.
Marketing materials from the New York real estate firm the Agency had advertised the O&G project as an upgraded 100-megawatt facility of about 294,000 square feet powered by on-site fuel cells. The project website said, “The development is designed to accommodate the rapidly evolving requirements of artificial intelligence, machine learning, GPU-intensive computing, cloud infrastructure, and enterprise digital workloads.” Representatives from O&G Industries and the Agency could not be reached for comment that week. About a dozen residents attended a Beacon Falls Planning and Zoning meeting in August to raise concerns about data centers and call for a moratorium, according to meeting minutes. In an interview, Smith said he was frustrated by both the protests and the developers, who had failed to engage the town proactively. He said he still saw potential benefits in data center development but believed obstacles might outweigh any incentives. “I was told Connecticut wanted to be the data center capital of the world because all these lucrative developers were moving south and west,” Smith said. “It sounded fantastic — but the cost of doing business in the state of Connecticut is still high. Even if you waive all the taxes, it’s still too expensive.”
Colchester and Bristol both had ReNew Developers as the power provider for their proposals. John Matheson, CEO of ReNew Developers, a real estate firm that listed the two Colchester sites and a third Bristol property as “available listings” on its website, said public reaction to the project had misconstrued his company’s role. ReNew was only responsible as a power provider, the properties were owned by other parties, and the company would not be involved in construction of a data center. Matheson said the projects differed greatly from the hyperscale facilities discussed nationally. “They’re the size of a garden variety Tractor Supply building, or even a CVS,” he said, adding that the owners intended to operate the sites in environmentally safe ways. “These are not big, large, impactful buildings that are being suggested.” In Colchester, days before the Planning and Zoning Commission’s regularly scheduled Oct. 21 meeting, rumors circulated online that the meeting would focus on approving two data centers proposed for Old Amston Road, a remediated brownfield that once served as an auto parts salvage site. Residents were encouraged to attend the meeting in force to tell the town that a data center was not wanted. Liv Pike was one of the residents who answered that call.
Pike lives on the road where the proposed data centers could be placed. She said she cared deeply about the environment and believed a data center, and the artificial intelligence technology it could support, would create new harms. Research she had done in recent days had added to her fears. She said most cooling water used for AI data centers could not be reused because it contained salt and other chemicals. “I found out that most of the water that is used to cool down these AI data centers we cannot reuse because they have salt and other chemicals in it. It doesn’t go back into the river system,” Pike said. She added, “If we did that, we are bringing not just Connecticut and Colchester — we are bringing the world closer to ending, in my opinion.” Other residents came prepared to speak about noise and quality of life, and some said a local moratorium on data centers was needed. When the meeting began on Wednesday evening, commission members said the project was nowhere near that stage. No application had been filed; filing one is the first step before further planning, zoning changes or public hearing discussions. First Selectman Bernie Dennler said the project had been around for years and predated his time in office. “It’s important for people to understand this is not a Town project,” Dennler said in an email. “Private applicants have the right to submit their proposals to the town, but the town is not a party to this private proposal.” Should an actual application be filed, he said, “both the applicant and residents have a right to be heard in the process.”
In Bristol, a long-simmering proposal for a facility on Riverside Avenue had raised concerns among residents, with tensions reigniting that spring. The proposal, like the one in Colchester, counted ReNew Developers as a power provider, and residents cited concerns about its construction and placement so close to the Pequabuck River. Mayor Ellen Zoppo-Sassu released a statement intended to clear up public perceptions; in it, she explained which administrative steps the project had already cleared and described what the proposed facility would do. She said the center was far different from a hyperscale data center, referring to it as a “micro-cloud building” designed to do something different than an AI-supporting data center. “Smaller data centers that bring their own power can be designed for greater sustainability, resulting in a lesser environmental impact and serving as a productive building within the community, which is a goal in Bristol,” Zoppo-Sassu wrote. She said the building would use less water than local grocery stores or high schools and supported changing local zoning ordinances to prevent large data centers in the future.
Connecticut’s debate was moving through two tracks: local boards were using moratoria and zoning changes to control anticipated impacts, while state lawmakers considered a statewide pause and revisions to the tax incentive. Developers described smaller facilities that could occupy contaminated sites, while residents and officials raised concerns about electricity, water, pollution, noise and community change. Colchester had no application on file, Beacon Falls had no specific revised plans, and the statewide moratorium remained a proposal for the next legislative session.
The original report said artificial intelligence was used in researching the story and that Connecticut Mirror reporter Angela Eichhorst contributed. It was originally published by The Connecticut Mirror and distributed through a partnership with the Associated Press.