Verizon Scraps Plans for Massive NY Data Center

Verizon has scrapped plans for a 900,000 square foot data center near Buffalo, citing delays in acquiring the land and a lawsuit from a local resident seeking to block the project. The data center could have meant more than $4 billion in investment over the next decade at a site on the shores of Lake Ontario in Somerset, N.Y.

The huge communications company had secured an option on 160 acres of land about a half a mile north of Laramie. But on Thursday Verizon told local officials that it was no longer interested in developing the site, citing difficulties in completing the deal with the property owner, AES Corp. A complicating factor was a decision by AES to sell its land in Somerset, a move that left Verizon unsure about ownership of adjacent land.

A second factor was over a lawsuit from local resident Mary Ann Rizzo,who owned a parcel adjacent to the proposed Verizon site. Rizzo filed suit against the Niagara IDA and six other agencies because she felt a proper environmental review was not conducted.

"All of this took us past the time we needed to finish this deal," Verizon spokesman John Bonomo told Business First Niagara. “For this project, that location is now off of the table. There were just too many delays and uncertainties."

Wyoming or Elsewhere?

Verizon said it was also looking at properties in other states. The company has bought an option on land near Laramie, Wyoming for potential use as a data center. But local officials say Laramie was competing with alternate sites in Colorado and Idaho, which would suggest that the Wyoming site search was related to a different requirement than the project in upstate New York.

The proposed data center campus in Somerset would have been one of the largest in the world. Verizon had outlined plans to spend $500 million to build 900,000 square feet of data center space, which it will fill with up to $3.4 billion worth of equipment over the 20-year life of the facility. Combined with land, utilities and other costs, the project represents a total investment of about $4.5 billion.

While the land negotiations were a key factor, local officials expressed anger over the delays caused by the lawsuit.

"Quite frankly, the lawsuit took it over the edge," Henry Sloma, Niagara County Industrial Development Agency chairman, told Business First Niagara. "It is absolutely tragic. We finally land a major, transformative project and we can’t bring it home."

The region offers several advantages to data center operators, including the ability to use fresh-air cooling (free cooling) virtually year round, along with the availability of hydro-electric power from the Niagara River. The Somerset site is approximately 20 miles from Lockport, N.Y., where Yahoo is nearing completion on the first phase of its newest data center, which employs an energy-efficient design known as the Yahoo Computing Coop.

It's not clear if Verizon's plans to acquire Terremark for $1.4 billion factored into the decision. Verizon's plans in Somerset were announced in October and the Terremark  deal was announced in January (but has yet to close). Terremark operates more than 1 million square feet of data center facilities.