Report: Financial incentives needed to get data centers in Illinois
Illinois should offer financial incentives to get companies to build big data centers here, says a report released Friday by the Illinois Chamber of Commerce Foundation.
Otherwise, it will continue to miss out as centers build in states that do -- including neighboring Iowa, where Apple is getting a $208 million break on local and state taxes for a $1.3 billion facility it is building.
ICC President Todd Maisch, speaking to business and civic leaders in Aurora, likened it to the value of railroad development in the 19th century or highways in the 20th century.
"This is that important. It is a growing market. Illinois is growing in this area, but we don't get nearly enough of what we should get based on our history and based on the economic potential of our state," he said.
The report, done by Mangum Economics, was released at news conferences at Support Techs LLC in downtown Aurora and in Chicago.
The report says Chicago is the third-largest data center market in the United States, but it is growing much more slowly than other major markets, at a rate of 7 percent from June 2017 to June 2018. During that time, the Atlanta market grew 12 percent, northern Virginia 16 percent, and Phoenix 26 percent.
Also, there are few data centers elsewhere in Illinois, the report said.
It notes construction underway of a data center in Hammond, Indiana, designed to serve the Chicago area, saying it could be a "harbinger" of more such centers that could be built on underused property in Hammond, East Chicago and Gary.
The report detailed impact from potential construction jobs and ancillary businesses, but acknowledged the centers themselves are not big employers.
Data centers store, process and distribute large amounts of data. Companies may set up and own their own data centers, such as Apple is doing, or lease data-storage capability from outside vendors.
Maisch said Illinois should benefit from having favorable prices, and a high-quality supply, of electricity, compared with other states.
But 30 other states offer incentives. They include exempting data centers from utility taxes, and from sales taxes on materials, particularly servers, which data centers replace every two to three years.
Republican State Rep. Keith Wheeler of Oswego, who represents part of Aurora, said he is going to broach the subject with other legislators when the Illinois House session begins next week.
Aurora could be "amazingly successful" in hosting data centers, Wheeler said, given its proximity to Chicago and Aurora's emphasis on becoming a digital Smart City. That includes the fiber-optic data-transmission network it has been installing for more than a decade, serving private and public customers.
Mayor Richard Irvin pointed out that Aurora doesn't charge a tax on cloud-based services, unlike Chicago. The Chicago Mercantile Exchange uses an Aurora data center.