Chicago Data Center Tax Incentives Approved For QTS

The Chicago City Council approved a plan in September that would allow Quality Technology Services to receive more than $11 million in Chicago data center tax incentives for converting the former Sun Times printing plant into a large scale facility.

To encourage development in the city, Chicago’s Committee on Economic, Capital and Technology Development have recommended a deal in which QTS would receive a break on property taxes for the Chicago data center. The plan would reduce the assessed value of the property over the next 12 years, saving the company $11.4 million over that time period. The data center tax incentive deal will now go before the full council for approval.

Tax Incentives Vital for Construction
QTS paid $18 million earlier this year to acquire the former Sun Times plant and the 30 acres that surround the building. The company plans to spend an additional $500 million over the next 10 years to turn the space into a 400,000 square foot data center, half of which would be used for housing servers and computers to provide services for companies around the country. The first phase of the data center would cost $140 million and be completed in 2017, but QTS will only be able to afford converting the plant into a data center if the tax breaks are approved.

“For major banks, major Internet companies to trust us to house their servers and all of their data, you have to provide significant infrastructure, capacity, availability, redundancy and reliability. There’s a lot of technical aspects that go into putting this building together,” said QTS chief investment officer Jeff Berson. “We looked at multiple cities and multiple areas within Chicago. We love the location. But to get the returns that we’re targeting [for] our business and our investors, the tax break was a critical aspect of being able to put the additional cost into that retrofit. Without it, we’d have a lot of other options that would be less costly.”

QTS CEO Chad Williams describes the Sun Times building as a resource that is becoming increasingly scarce in the city, as many other Chicago data centers are at full capacity. The property has land to accommodate expansion if necessary and is close to high-speed fiber lines and power substations, making it an ideal location for a data center.