JAY — A plan to convert the former Androscoggin Mill into a data center that was hailed as major economic opportunity for the region is now on hold.

Town Manager Shiloh LaFreniere wrote in an email Thursday night that the group Sentinel Data Centers has said it does not intend to move forward with the project.

That information, according to LaFreniere, came from JGT2 Redevelopment, owner of the mill, which had been planning to partner with Sentinel on the $550 million project.

“JGT2 is pursuing conversations with other interested parties but the data center project is currently on hold,” LaFreniere said, “future plans are yet to be determined.”

LaFreniere shared the news with the Jay community early Thursday night. A groundbreaking for the project had tentatively been set for July.

Tony McDonald, a partner in JGT2 Redevelopment, could not be reached for comment.

JGT2 purchased the mill property in Jay in December 2023 and has since demolished roughly 425,000 square feet of unusable buildings and worked with environmental regulators to clean the site, McDonald said in an earlier interview.

The facility planned for Jay would have operated as a co-location data center, hosting multiple smaller systems rather than a single large-scale computing operation, he said.

McDonald has been a key force behind the project, saying it would bring jobs and tax revenue to the town without straining local resources.

The opportunity led Gov. Janet Mills to veto a bill that would have created a temporary statewide ban on new data center permitting. She said she couldn’t support the bill if it didn’t carve out an exemption for the project.

The veto was hailed by county leaders, who said the governor showed “courage” in backing the Jay project.

Environmental groups, however, said the veto went against the wishes of legislators and most residents, and left Maine vulnerable to data center projects that waste resources and cause pollution.

“We feel for the residents of Jay, who were promised tax revenue and jobs from this redevelopment project,” said Maureen Drouin, executive director of Maine Conservation Voters. “Across the state, communities are wrestling with the impacts, speculative nature, and lack of transparency of large-scale data center proposals.

Drouin said economic development for Maine communities “should not come at the cost of clean water or higher electric bills.”

“We remain committed to working with lawmakers, community members, and other advocates to protect Maine people, their wallets, clean water, and the environment from the demonstrated negative impacts of large AI data centers,” she said.

State Rep. Melanie Sachs, D-Freeport, who sponsored the moratorium bill, said Friday that legislators asked the developers and the Mills administration for evidence backing up the claims related to jobs and tax revenue.

“Unfortunately, neither was supplied, and the bill did not become law, in part because of the promises that were made about the jobs and tax revenue it would generate,” she said. “Because of that decision, Maine was left with no statewide framework in place to regulate data centers — leaving every community to fend for themselves against the potential harm that they may bring to our environment, natural resources and electric grid.

Ben Goodman, a spokesman for the governor, said Mills supports a temporary moratorium on data centers and would have signed the bill had the Jay project been exempted.

Mills recently established the Maine Data Center Advisory Council, which Goodman said “will help policymakers responsibly balance the benefits of data centers, especially for economically disadvantaged communities, with the risks of higher energy costs and potential environmental impacts.”

The governor signed a law barring data center projects from being eligible for the state’s business equipment tax exemption or the Dirigo business incentive program. Those programs reduce the amount of property and state taxes businesses need to pay.

Mills will continue to help town and county leaders redevelop the site of the former mill, Goodman said.

“The governor is disappointed that the project in Jay, with all the jobs and significant tax benefits it would provide to the community, is on hold,” he said. “She remains committed to the redevelopment of the Androscoggin Mill, and her administration will do everything it can to support the town of Jay as it promotes investment and job creation in the community.”