The Town of Lockport Industrial Development Agency (IDA) claims that Yahoo! breached a contract over land originally meant to be used for a data center in New York.

The search and advertising company had planned to build a facility on the New York state land, but failed to do so. Now, it has offered to return the land per its contract - but added stipulations on what the land can be used for to protect an adjacent data center.

– Sebastian Moss

Yahoo first came to Lockport way back in 2009, building a $150 million (now closer to $175m) passively air-cooled data center on 30-acres it acquired. Over the years, it added a call center, and was given nearly half a billion in state subsidies as it grew in the town.

Then in 2014 it acquired an adjacent 18-acre parcel from the IDA for $271,800 to build another data center, but ultimately failed to do so after years of declining market share.

But the contract included clawback language allowing the IDA to repurchase the land at the contracted sale price if a facility was not built after seven years. In late 2021, the IDA told Yahoo that it would exercise those rights.

Several months later, the IDA claims, Yahoo (by this point known as Oath) delivered a deed transferring the rights to the land. However, the agency alleges, it included changes that made the property “unmarketable.”

According to the IDA's lawsuit, first reported by WIVB4, the deed now prohibits using the property in any way that would “diminish the air flow or quality” of the adjacent data center.

The deed prohibited anything that would create noxious odors, dust, or smoke in the air beyond normal levels, and any other use that Oath believes would interfere with the data center.

The IDA rejected the deed, and asked for Yahoo to change it. With no resolution, it has now filed a lawsuit in the Niagara County Supreme Court.