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Verizon (and 8 others) sued over proposed data center

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Local officials' efforts to land a Verizon data center are now the basis for a lawsuit.

The next bit of news most were expecting on the Verizon-data center-in-Niagara County front was word on whether the company had made up its mind about coming to New York. Judging from the sources I’ve spoken with, Verizon’s answer of “yes” was all but assured.

This story is not about that “yes.” Instead, it’s about a lawsuit. Attorneys representing the land owner from across the proposed site of the data center allege that public officials have rubber stamped the project, in an effort to grease the wheel for Verizon’s arrival locally. In particular, the land owner takes umbrage with the fact that the Somerset Town Board ruled the project did not warrant an environmental impact study. Remember, this is the largest construction project in western New York in nearly 60 years.

Environmental studies can take months or years. That kind of delay could kill the momentum local officials were trying to create to pin down a commitment from Verizon. Let’s review:

In exchange for locating a data center in Niagara County and creating 200 jobs, Verizon has been offered:

  1. Tax breaks worth more than a half a billion dollars.
  2. A coveted allocation of hydropower, worth more than $90 million in savings.
  3. A cheaply-priced parcel of land that’s been rezoned to fit the project’s specifications.

These are generous incentives. According to the Buffalo News:

The incentives approved [amount to] nearly $3.1 million per job. The only other subsidy deal in the region that comes close to the Verizon deal is the $268 million in tax breaks and power discounts provided to Yahoo to build a data center in the Town of Lockport. That deal worked out to $2.1 million per job.

Just six weeks ago, Verizon appeared ready to break ground by mid-November in Somerset. When Verizon asked the Niagara County IDA for tax breaks and exemptions, company officials were eager and trumpeted the project’s potential benefits to the area (of which there are many, including an eventual investment of more than $4 billion).

Verizon’s tone has changed, and now the company is saying construction on the data center (wherever it ends up) would begin within a year. Niagara County IDA officials crafted a tax package with the impression that construction would begin before the end of the year, and 200 jobs would arrive by 2013. Now the 200th job would not be created by 2018.

Verizon remains mum on the lawsuit, with officials saying they need time to review it before commenting. The first court session in the lawsuit’s life will be January 12.

WBFO/Western New York reporter for the Innovation Trail.