‘Backbone of the digital world’: Karis details plans for Naperville data center development

Elk Grove Village has declared itself the data center capital of the Midwest.

In nearby Hoffman Estates, the former Sears’ corporate headquarters has been razed to make way for a sprawling Compass Datacenters campus.

And another developer, Karis Critical, is proposing a relatively “boutique” data center development on the north side of Naperville. The city’s planning and zoning board is set to review the proposal Wednesday.

“It’s the backbone of the digital world and digital economy, and so I think having one in the right spot in your community has the benefits of infrastructure as well as the benefits of revenue creation for the city itself,” Karis CEO Jake Finley said.

The site previously held a glass-and-steel office building near the northwest corner of Naperville and Warrenville roads. The property is within the city’s Interstate 88 technology and research corridor.

“It’s, we believe, a great way to reenergize the corridor, get that process moving and … put something exciting on a piece of property that’s been empty for almost a decade,” said Greg Strom, executive vice president of strategy and operations for Karis.

The property originally was part of a larger site that was home to Bell Labs, which opened in the 1960s, according to the development application. The former office complex was designed as part of Lucent Technologies’ expansion project. Nokia acquired Alcatel-Lucent about a decade ago. To the north of the proposed development are the remaining buildings from the Nokia campus.

“The data center use is absolutely consistent with the historic research and development associated with telecommunications that’s been happening on the campus for the last 60 years,” said Russ Whitaker, an attorney for the developer.

Karis proposes two data center buildings. The first — toward the southwest portion of the site — would be constructed in two parts. A new electric substation would be developed with a Phase 2 building, according to project documents. The construction of Phase 2 depends on the availability of electric capacity. Each building would be roughly 211,000 square feet.

“While it could be a single user in the facility, it’s being designed with the flexibility and the future proof-ness to be a co-location facility where multiple enterprise users — think about banks or technology firms or cybersecurity firms — could all lease a portion of the building,” Finley said.

However, city staff finds that the second building “cannot be adequately served by public facilities at this time and recommends approval of only one data center,” subject to a set of conditions. Staff recommends the developer submit a new conditional use application for Phase 2 at a future date, once adequate electrical power is available and any unforeseen issues that may arise with Phase 1 have been addressed, a city memo said.

Naper Commons residents and an online petition also have raised concerns about power demand, water usage and area forest preserves, among others.

“We are not against progress or technology, but we believe it must be placed responsibly, away from sensitive ecosystems and residential areas,” one person wrote the city.

The first phase of the Karis project calls for 36 megawatts, Whitaker said.

“It is a small-scale data center in the grand scheme of the 5,000-plus data centers that have been built across the United States,” he said.

Finley and Whitaker said the facility would use significantly less water than the roughly 600,000-square-foot office building that used to be on the site. They also tout the projected revenue.

The electric utility tax revenue alone is estimated to range from $1,868,900 to $3,058,100 annually at build-out, according to a fiscal impact report by Gruen Gruen + Associates submitted to the city. That comprises about 95% of the direct fiscal benefit to the city of Naperville, the report said.

Following full build-out of both data center buildings, Naperville Unit District 203 is estimated to receive more than $998,000 in annual property tax revenue.

“We’re talking about a facility that could be one of the largest tax generators in the city of Naperville,” Whitaker said.

The Forest Preserve District of DuPage County has submitted a formal comment letter to the city. As with other development reviews, the district did not take a position for or against the project, but provided comments related to potential environmental impacts, according to a spokeswoman.

The district suggested the developer refrain from using asphalt sealants that contain coal tar products and follow International Dark Sky Association recommendations.

Whitaker said the developer’s lighting expert will testify at Wednesday’s hearing that the project is dark sky compliant.

Data centers top a list of conditional uses in Naperville’s office, research and light industry zoning district, which is applicable to the I-88 corridor.

“We're not coming in and looking to change the zoning,” Whitaker said. “We’re seeking a conditional use within the existing industrial zoning classification.”