News & Insights

Illinois Governor Set to Approve Data Center Incentives Bill

Tax Development Jun 07, 2019

Illinois Governor Set to Approve Data Center Incentives BillGovernor Pritzker is set to sign a data center incentives bill into law to enable the state to better compete for data center projects. The Illinois Legislature approved SB 1591 and sent the bill to Governor Pritzker for his expected signature. The legislation provides incentives for data centers investing and creating jobs within the state of Illinois. 

To qualify, a data center must:

  • Invest $250 million within five years (tenant investment included)
  • Create at least 20 new full-time equivalent jobs within five years (tenant jobs included) at a wage that is greater or equal to 120% of the median wage paid in the county in which the data center locates
  • Require contractors and subcontractors to comply with requirements of Section 30-22 of the Illinois Procurement Code
  • Must be carbon neutral or attain green building standards such as Energy Star or LEED

The benefits of the program include:

  • State and local sales tax exemption on tangible personal property
  • Employment tax credit equal to 20% of the wages paid to construction contractor employees if the data center is an eligible underserved area. The credit can be carried forward for five years. An eligible area is defined as:
    • An area with a poverty rate of at least 20%
    • 75% or more of the children in the area participate in the federal free lunch program
    • 20% or more of the households in the area receive Supplemental Nutrition Assistance Program (SNAP) assistance
    • Has an average unemployment rate that is more than 120% of the national unemployment rate average for a period of two consecutive calendar years preceding the date of the application

Companies will be required to enter into a Memorandum of Understanding (MOU) detailing milestones and timelines that will be required to maintain the incentive. The MOU will include clawback language should the company not achieve the agreed-upon milestones.  

This legislation sends a message that Illinois is ready to compete for data centers. Illinois will join other states such as Arizona, Florida, Georgia, Ohio, Texas, and Virginia in offering data center sales tax exemptions to entice data center investment.

TECHNICAL INFORMATION CONTACTS:

Allea Newbold
Principal 
Ryan
813.228.7100
allea.newbold@ryan.com

Matt Lowell
Director
Ryan
321.251.2924
matt.lowell@ryan.com

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