Data Center Incentives Pass Illinois State Legislature

SPRINGFIELD, IL — The Illinois House and Senate have both approved a long-awaited bill that grants tax incentives to data center developers. Activists hope and expect that this legislation will put Illinois back in the data center development game, after falling behind neighboring states such as Iowa. If Governor J.B. Pritzker (D) signs the bill, the legislation will do the following:

  • Exempts state and all locally imposed sales taxes on the tangible personal property for qualifying data centers
  • Adds an additional income tax credit for the construction of new data centers in underserved areas of the state.
  • Requires data centers to use project labor agreements on the initial build of the data centers as a precondition of receiving the credit.
  • Requires any new and existing data center seeking a certificate of exemption must enter into an MOU detailing the agreement and would allow the state to claw back money if the data center doesn’t live up to the MOU.

Qualifying data centers are defined as new or existing data centers located in Illinois; which make capital investment of $250 Million USD by the data center operator and the tenants over a 60 month period beginning Jan. 1, 2020; result in the creation of at least 20 employees over a 60 month period (with compensation of those jobs at or greater than 120% of the median wage paid in the county of the data center); and is carbon neutral or attains several green building standards.

Tangible personal property includes several definitions but include items such as software, cooling systems, towers, battery systems, cabling, and also building materials in the build out.

“Members of the Illinois Data Center Coalition understood the role that incentives play in the site selection process and the importance of Illinois needing them to remain competitive with other markets.  Illinois already had the other key components that data centers require – strong fiber optic networks, top-performing electric reliability, and competitive electric rates with 100% renewable options. Adding sales tax exemptions is a game changer for the Chicago area and Illinois data center markets,” said Ed Sitar, Manager of Economic and Business Development for ComEd to CAPRE.

 

Ed Sitar moderated the panel “Legislative Efforts to Incentivize Traditional Data Center and Hyperscale Developers” at CAPRE’s Chicago Data Center Summit in March 2019

“The General Assembly has taken a giant step in aligning Illinois to 30 other states that offer incentives to attract data centers,” said Tyler Diers, legislative relations director for the Illinois Chamber of Commerce, in a press release. “When enacted, this proposal will offer our downstate communities a shot at the digital economy, while providing great paying, local IT and construction jobs. The Illinois Chamber applauds this bipartisan effort to strengthen our technology ecosystem.”