Data center pact with Wallingford binding, but projects contingent on further action



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WALLINGFORD — Although there’s no legal way for the town to withdraw from an agreement with a data center developer that the town attorney said is having “internal issues,” the Town Council may have stumbled upon a way to stall the project indefinitely.

At the council meeting Tuesday, Councilor Joe Marrone raised the issue of whether the town should rescind its host agreement with Gotspace Data Partners LLC.

Gotspace sought and received a municipal host fee agreement with Wallingford, approved by the Town Council by a vote of 5 to 4 in June.

Town Corporation Counsel Janis M. Small issued a recent memo which stated that there is “no legal basis for ‘rescinding’ the agreement,” which is “a legally binding agreement.”

The agreement describes the terms of the annual payment-in-lieu-of-taxes from Gotspace to the town, which could be as high as $1.5 million per building, with each site potentially housing multiple buildings.

Data centers house a network of computers for central storage, management and dissemination of electronic information — the place where information stored in "the cloud" is actually kept.

Marrone, who did not vote in favor of accepting the host agreement, became concerned after land use officials in Bozrah — another town Gotspace secured a host agreement with — rejected a proposed change in zoning regulations in October to create a zone that would allow data centers.

Town Attorney Gerald Farrell said Tuesday that the reason the Bozrah Planning and Zoning Commission rejected the proposal was because no owners or representatives from Gotspace attended the meeting.

“Gotspace has some internal issues going on within itself,” Farrell said.

Company representatives could not be reached for comment.

The opportunity for the town to terminate does not occur unless Gotspace has not applied for a building permit for the project within 36 months after execution of the agreement.

Before Gotspace builds in Wallingford, the company must enter into an agreement with the state Department of Economic and Community Development commissioner, a power supply agreement with Wallingford Electric Division and appeal to the town's Planning and Zoning Commission to change the local zoning regulations to allow data centers.

The power supply agreement stalled at the Public Utilities Commission. Farrell did not bring that agreement to the Town Council due to Gotspace’s internal problems, he said.

“I had become aware of the internal issues, and I felt I wanted to see them solve those issues before the town approved our agreement,” he said. “I didn't want to be involved in their internal issues.”

Farrell declined to elaborate, saying the issues were “a discussion between the parties involved.”

He added that Wallingford’s host agreement does not preclude Gotspace from assigning the agreement to another entity, should the internal problems persist.

Further action

A murmur ran through the meeting audience when Councilor Chris Shortell asked Farrell whether a council veto of the power supply agreement would stop the project.

“If the council were to vote that down, that would kill the whole thing,” Shortell said.

“It would,” Farrell said.

Shortell asked if there would be any legal repercussions if council members rejected the power supply agreement based on their own convictions rather than pointing to a violation of town rules.

The Planning and Zoning Commission, for example, “has to vote based on how (an application) complies with the regulations in planning and zoning,” he said. “Planning and Zoning can't just vote against stuff if they don’t like it.”

Farrell said that when a councilor votes “no” — he or she doesn’t have to say why.

“If your whole idea was, you just want to kill it, just vote against it, period,” he said. “You’re here as fiduciaries. If you want to vote against something, I don't think it opens up a lawsuit to the town because you chose to kill it through voting against the power agreement.”

Furthermore, Farrell added, if the PZC chooses not to add data centers as a permissible use just because they don’t want data centers, that doesn’t open up the town to a lawsuit, either.

Councilor Jason Zandri said he was concerned that the host agreement allows Gotspace to assign the agreement to a third party entity without the council’s approval because he believes Gotspace is having some difficulties putting together its financing.

Zandri said via email Friday that he made that statement based on the fact that its creditors, Gotspace Data Equity Fund One LLC, have the same owners and registered address as Ocean Development Partners LLC, a defunct company that was was collapsed under a Chapter 7 court order in March, according to the Newport Daily News.

“They're sitting on something very valuable now, if they can transfer this with the money exchange,” he said. “That that causes me some concern.”

Council purview

Gotspace is considering two potential data center campuses in Wallingford, consisting of separate parcels of undeveloped land and farmland with various owners.

One property is 205 acres located behind North Farms Road, and one is 138 acres near Northrop Road.

Residents of the east side neighborhoods asked about the details of the agreement, and spoke about the disagreements that have sprung up between neighbors who want to sell their land and the ones who don’t want data centers in their neighborhood.

Jessica Gannon Polansky, 1039 North Farms Road, had pointed words for Councilor Christina Tatta, saying she felt Tatta “voted against” her own neighborhood when she voted in favor of approving the host agreement.

Tatta lives on North Farms Road, south of Route 68. The proposed data center locations are roughly 1.5 miles north of her residence.

“It’s terrible to constantly feel like you have to be on the defense in your town against people who are supposed to be serving the community,” Polansky said. “When you’re dealing with potential heavy industry that is going to destroy the quality of our life, that’s a really big deal.”

Tatta responded in an email to the Record-Journal.

“The only aspect in The Council’s purview was the financial host agreement,” she wrote. “Planning and Zoning has total control over the data center regulations and can work with the neighbors to address their concerns beyond what the Council already added to the host agreement. The farms are going to be sold, and many of the allowed uses in that industrial zone would not give the neighbors any leverage at all, but this will since the regulations are being formed from scratch.”

LTakores@record-journal.com203-317-2212Twitter: @LCTakores



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