TECHNOLOGY COUNCIL
Newsletter
Tyler Diers

Director, Legislative Relations



630-400-3439
January 25, 2019

Good morning and happy Friday,

 

Later today, the Illinois Chamber Foundation will be releasing a study on the potential economic impact of a data center incentive here in Illinois.  Our report compares the disparity of data center capital investment growth and jobs created between Illinois and neighboring and competitive states and examines the state tax policies used to attract and grow the industry.

 

In an increasingly digitally-connected world, nearly every business operates a data center, either in-house or as a contracted service.  As the world's economy continues its reliance upon digital information, the need for facilities to store and transmit the ever-expanding universe of data will continue to grow.

 

While it is true that the Chicago area remains a desirable location for data center investment, it remains 40 percent smaller than the size of the Northern Virginia market.  And it is growing much more slowly than other major markets. According to CBRE, from June 2017 to June 2018, the Chicago data center market grew at a rate of 7 percent. At the same time, the Atlanta market grew 12 percent, the Northern Virginia market grew 16 percent, and the Phoenix market grew 26 percent.  No disrespect to those markets, but there is no reason they are outperforming us. 

 

Illinois showed significantly weaker growth in data center markets than any of the surrounding states that have data center incentives. The data center markets in the state of Illinois beyond the Chicago area have not been doing as well as the markets in surrounding states that have data center incentives.  In addition to providing capital improvements that add to Illinois' tax base, this capital investment also fuels an on-going demand for data center construction which often uses union labor. This has particular relevance for Illinois, where employment growth in the state's construction sector has lagged behind the national norm in recent years.


Today, 30 states (from Washington to Florida, New York to Arizona) have incentives that are specifically targeted at attracting data centers as part of expanded economic development efforts. However, 24 of these states have enacted legislation since 2012 in an effort to capture a greater percentage of the growth. Illinois is surrounded by states that offer data center incentives. 


If a large data center were to be located in Illinois like the one that Apple is building in Waukee, Iowa, the potential total economic impact on the Illinois' statewide economy would be approximately 3,360 jobs, $203.9 million in labor income, and $521.7 million in economic output. That much economic activity would generate approximately $66.7 million in tax revenue, of which $20.2 million would be state and local tax revenue.

 

As the Illinois Chamber turns 100 this year and as Illinois enters its next centennial it is important that our state's economic development tool box is one that reflect the new digital economy.  We at the Illinois Chamber feel that our report lays out valuable information that policymakers can use to help boost our demand for data centers and therefore strengthen our stature as a digital powerhouse.   

 

I invite you to read and share the report and corresponding appendix.  And as always, if you have any questions I'm at your service. 



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