Cigna plans $386M renovation of Windsor data center

Photo | CoStar Cigna headquarters in Bloomfield.

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Bloomfield-based health insurer Cigna Corp. hopes to tap tax incentives enacted by Connecticut in 2021 for a $386 million renovation of its Windsor data center.

Windsor’s Town Council, on June 20, unanimously endorsed a local tax agreement with the insurer. It was an easy sell, as the agreement will see no reduction of the added local tax revenue coming from the project.

A “host municipality agreement,” however, is required before data center owners or operators can tap the state’s relatively new Connecticut Data Center Tax Incentive Program for projects worth more than $200 million, according to an explanation presented to the town council by Windsor Economic Development Director Patrick McMahon.

Cigna maintains a data center at 9 Griffin Road North, in a 153,462-square-foot building built in 1982.

According to the town, the company plans to spend $100 million on software and another $286 million on taxable personal property over the coming five years.

The state’s Data Center Tax Incentive Program allows investments in data centers to qualify for local and state tax incentives, including sales and use tax exemptions on goods and services; property tax exemptions; and exemptions on future state financial transaction taxes.

To qualify, owners or developers must spend – within five years – $50 million on data centers in an enterprise zone or federal opportunity zone, or $200 million if located elsewhere. That spending can be for the creation, upgrade, acquisition or operation of a data center.

Cigna agreed to no abatement of its increasing tax obligation to the town, McMahon wrote.

The company did not respond to requests for comment.

The tax incentive agreements with the state Department of Economic and Community Development generally carry 20-year terms but can be extended up to 30 years for investments of at least $200 million in enterprise or opportunity zones, and $400 million if elsewhere.

Cigna’s project will come with significant tax benefits to Windsor, but those will be short-lived due to rapid depreciation of data center equipment, McMahon wrote. The town is projected to reap an additional $1.3 million in taxes in the project’s first year, rising to $3 million in additional tax benefit in year five. But depreciation will quickly see that revenue fade, beginning in year six, McMahon wrote.

“Absent additional investment beyond year five, estimated tax revenues in years six through eight are projected to range from $1.9 million in year six to $860,000 in year eight,” McMahon wrote.