(TNS) — Five years ago, Indiana enacted a law providing tax incentives for data centers, paving the way for the Digital Crossroads Data Center to be built on the site of the former State Line Power Plant in Hammond.
Since then, tech giants including Amazon, Google, Microsoft and Meta have committed more than $15 billion to building data centers in the state. Massive new data centers are springing up in LaPorte and nearby New Carlisle to meet the demands of artificial intelligence and the growing need for data for streaming, medical records, banking and the countless other functions of an increasingly digital society.
“The situation is incredibly good,” said Tom Dakich, an attorney and developer who spearheaded lobbying efforts for the data-center bill. “Indiana has become a national leader in data-center development.”
The Indiana Data Center Tax Incentive, introduced by State Rep. Ed Soliday (R-Valparaiso), State Rep. Carolyn Jackson (D-Hammond) and State Rep. Earl Harris (D-East Chicago), has made Indiana one of the most competitive states in the nation for data center development. The incentive provides an exemption from energy and equipment taxes for up to 50 years for new data centers built in Indiana, the longest exemption of any state at the time of passage.
Servers, routers, wiring, software and other equipment are exempt from business personal property tax and state sales tax. Electricity purchases are also exempt from state sales tax.
The goal is to provide financial incentives for big tech companies to build data centers in Indiana, where data center owners are estimated to save between $1.75 million and $10.5 million in taxes each.
“Now it’s time for Indiana to take the next step and use these data center assets for more research and education purposes and make them part of a larger effort,” Dakich said.
Dakich has converted a former coal-fired power plant on the Hammond-Chicago border along Lake Michigan into a data center that is expected to cost $200 million and grow to 1 million square feet, and plans to begin construction on a second phase once it is filled with large institutional clients.
“What we’re doing with these big projects is making Indiana better,” Dakich said. “We never thought it would get this big. People appreciate that law. It created tax incentives that allowed Indiana to compete with the rest of the union.”
Microsoft plans to invest $1 billion in a 245,000-square-foot data center in LaPorte’s Radius Industrial Park, marking the largest economic development project in the city’s history. Amazon Web Services will soon begin construction on an $11 billion data center that will employ 1,000 people in New Carlisle, just east of the LaPorte County line that borders St. Joseph County.
Google plans to build a $2 billion data center in Fort Wayne in northeastern Indiana that will employ 200 people, while Facebook parent Meta is planning an $800 million data center in Jeffersonville, across the Ohio River from Louisville in southern Indiana, that will employ 100 people.
“The biggest companies in tech are here,” Dakich said. “Everyone is taking notice. We’re really proud of this bill. We never imagined we’d have $11 billion in projects. These are big projects. They’re bigger than we ever imagined. This means hundreds of millions of dollars in new tax revenue, new jobs and economic growth.”
Developers have abandoned plans to build a $1 billion data center at Chesterton’s Brasserie Golf Course after facing public opposition, and local economic development officials say they’re being approached about more data center projects in Northwest Indiana. Merrillville is forming a Citizen Data Center Advisory Committee to prepare.
AI is driving much of the demand for new data centers: According to a Goldman Sachs study, AI is predicted to increase data center electricity demand by 160%. Data centers are expected to account for 8% of U.S. electricity use by the end of the decade, up from 3% in 2022.
“Data is becoming more and more everywhere,” he said. “AI is driving a lot of the demand.”
It also means jobs for organized labor, Dakich said.
“When we first built the data center in Hammond, we spent $800,000 a week on labor and design. As it gets bigger, it’s only going to get stronger,” he said. “It’s only going to get bigger.”
©2024 The Times (Munster, Ind.). Distributed by Tribune Content Agency, LLC.
