Proposal to create more data centers in Chicago gets committee approval

A proposed city ordinance to incentivize developers to set up data centers in Chicago passed through the city's Committee on Economic, Capital and Technology Development on Wednesday.

Sponsored by Ald. Gilbert Villegas (36th), the Chicago Data Residency Ordinance would give developers financial incentives to build data centers, including earned credits on potential future data center contracts. It's scheduled for a vote by the City Council on Sept. 18. If passed, the ordinance would take effect on January 1, 2025.

"At a time when the city needs to be the most creative with solutions to generate revenue, I am happy to see the data residency ordinance pass committee,” Villegas said. “This is a huge economic win for the city of Chicago and it's something that just makes sense.”

Using data centers within Chicago could generate millions in new revenue without increasing taxes on residents, while also creating jobs and economic development in underserved communities, according to Villegas.

"The city spends hundreds of millions of dollars in IT contracts that, in part, store its data in other cities and states, allowing them to benefit from Chicagoans' data and their tax dollars without giving anything back,” Villegas said in a statement. “This data residency ordinance is a tool the city can use to bring in new revenue, good jobs and economic development in communities that need it the most."

A single data center could generate as much as $13 million annually in property taxes, according to ordinance supporters. But many centers are located in Chicago’s suburbs such as Hoffman Estates, where construction has started at the former Sears headquarters to build a massive data center campus.

Advocates say that data centers would create short-term construction jobs and permanent positions, ranging from tech roles to security and maintenance positions. Data center jobs don't necessarily require a four-year degree and are more accessible to diverse job seekers.

Craig Huffman, CEO of Metro Edge Development Partners and supporter of the ordinance, said in a statement, “As the only Black developer of data centers in Illinois, I am dedicated to paving the way for others who look like me to enter this expanding market, and create new career opportunities and economic growth in underserved communities."

In 2022, Metro Edge announced plans for the company’s first data center in Illinois Medical District. The 191,000-square-foot facility will provide data storage for hospitals, healthcare providers, universities and corporations, according to the company’s website. A groundbreaking is scheduled for next year.