Proposed East Dundee annexation deal would allow future data center

A proposed agreement under which 74 acres of property would be annexed into East Dundee includes a provision that would allow a data center to be among its future development options.

Plote Properties has no immediate plans to build on the site, located west of Beverly Road and south of Route 72, officials said. The annexation agreement is “still in negotiations,” Village President Dan Pearson said.

The land is part of a larger 253-acre parcel owned by East Dundee-based Plote, a portion of which was annexed into the village in January 2025 and zoned for manufacturing so that Plote could continue its mining operations and have space for truck parking.

Under the proposed annexation agreement, the village would agree to create a tax increment financing (TIF) district for the area.

The agreement for the eastern portion of the land is similar to the one for the western portion approved in 2025 — with a few additional provisions, Assistant Village Attorney Stew Weiss said at a public hearing for the deal held as part of a recent village board meeting.

One provision would require the village to provide financial incentives for the development of the full 253 acres, Weiss said. A “qualifying development,” or any development of 100,000 square feet or larger, could receive a 25% reimbursement for TIF-eligible expenses, an electricity tax rebate of 25% and an electricity tax freeze for a 20-year term, according to the agreement under discussion.

The agreement will detail the scope and nature of the proposed development incentives, lay out how a “qualifying development” is defined, and establish development performance standards for future uses, including data centers.

The proposed M-1 zoning designation would allow for several permitted “future uses” and “would require no additional zoning relief” if Plote wants to use it for a data center, electrical substation, accessory use facility or high-voltage transmission line at a height of 300 feet. Data centers are allowed in M-1 districts.

“There are no current development plans for either the western or eastern properties, and Plote is not under contract to sell any portions of the properties at this time,” Weiss said.

Another provision calls for the village to extend water and sewer lines to the eastern part of the land within 18 months of annexation, a point that has become a contentious issue, he said. According to Interim Village Manager Franco Bottalico, that is considered a development incentive.

The 2026 annexation agreement was created when Plote was in discussions with a data center developer, and the extension of infrastructure, estimated to cost East Dundee between $6 million and $8 million, would’ve been reimbursed right away, Pearson said.

Since Plote isn’t currently proceeding with the data center project, the village doesn’t want to bear the infrastructure cost without being reimbursement, Pearson said at the meeting.

“This was something that was negotiated before me,” he said. “This (agreement) was (negotiated) when there were talks with the data center. … Right now, it’s the biggest holdup on the board. We don’t want to pay for something if we can’t recoup the costs.”

Data centers have become controversial since the village began negotiating the annexation agreement.

“Now, because of the public outcry, they are limited,” Pearson said. As a result, East Dundee may not have to offer as many incentives as originally proposed, he said.

That said, Pearson supports the idea of building one in East Dundee.

“Data centers, in my opinion, are the best thing to happen to towns,” he said. The developments “don’t use as much water as people say they use. They use a lot of electricity, but that’s where the village makes the money and on the property tax.”

Many Illinois cities and towns “are looking for ways to help fund infrastructure without having to raise taxes, so data centers are one of the best things to do that,” he said. “We are just trying to figure out ways to make the public happy. We’re still going to get the people who have negative thoughts. We have to do what’s best for the village.”

Trustee Scott Kunze said he would like to see “some sort of basic regulation on data centers that our residents can live with. Nothing outrageous, nothing that would limit you from putting one there.”

Ryan Trottier, vice president of land development for Plote, said at the meeting that the company has had a good relationship with the village and will continue to work with officials to hammer out an agreement.

Gloria Casas is a freelance reporter for The (Elgin) Courier-News.