Illinois lawmakers propose incentives to court data center business

June 24, 2019
Written by Folake Dosu

cloud-computing-illinois-data-centers

Illinois lawmakers are making their case for the state to be a new data center hub.

The Associated Press reports that this spring, House Republicans made the push for business-friendly initiatives in state budget legislation that is now in the hands of Democratic Governor J.B. Pritzker.

Illinois hopes to get a piece of the data-center development pie by offering incentives that 30 other states already do, including Midwestern neighbors such as Iowa and Indiana. 

Both states have attracted big business, with Apple signing a 2017 deal to build a $1.4 billion data center outside Des Moines, and New York City-based Star America Infrastructure Partners announcing a 105,000 square-foot (9,800 square-meter) data center in Hammond, Indiana.

“When you talk about cloud computing, this is where a lot of that is. Your Instagram photos, your Word documents, Netflix, Minecraft, it’s all stored somewhere in a data center.”

“When you talk about cloud computing, this is where a lot of that is. Your Instagram photos, your Word documents, Netflix, Minecraft, it’s all stored somewhere in a data center,” said Tyler Diers, legislative relations director for the Illinois Chamber of Commerce.

Estimates from the Illinois Chamber project that a massive development could result in $522 million in economic output, with $20 million in state and local tax revenue over the facility’s life.

The potential benefit is evident from the participation threshold. Investment over five years must top $250 million, a not-outrageous sum considering that in the data-center world, size yields economies of scale and efficiencies in terms of security, climate-control and electrical systems, said Jon Lin, president of the Americas for Equinix, a global data center and business-to-customer connection firm operating five Chicago-area data centers housing 770 clients.

“It’s a runway into the future,” said Jon Lin, president of global data center firm Americas for Equinix, of the Illinois plan. “We spend close to $2 billion a year on new data center construction, so having that incentive package and giving us certainty around that certainly makes it more attractive for us to continue to develop more aggressively.”

Companies taking advantage of these incentives can receive a 20-year sales tax exemption for equipment needs from computer servers to climate-control materials. Building in an underserved or impoverished area earns a 20% income tax credit.

“This is not an exemption that is going to apply to someone who puts in a couple of servers,” said Deputy House Republican Leader Tom Demmer of Dixon. “What we’re trading off in potential sales tax revenue we’re making up with a construction project of that size.”

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