Deals and Data Centers: Striking a good deal in the 'Silicon Prairie'

SOUTH BEND, Ind. -- For several years, large corporations have green-lit hyperscale data center developments across Michiana.

From AWS in New Carlisle to Microsoft in La Porte and Granger, the projects are coming in fast.

But with data centers, come questions about resources, infrastructure and sustainability.

So how do communities negotiate a good deal with these large tech companies?

ABC57's Dante Stanton sat down with officials in Michigan City to better understand the art of the deal.

Michigan City is a community undergoing rapid growth thanks to the completion of the double-track rail project through the South Shore Line.

The centerpiece of their growth is "Project Maize," an $832 million data center built by Google.

In the case of Michigan City, Google representatives simply asked, "What would help you make a deal happen?"

Economic Development Director, Clarence Hulse, says the project offers short and long-term impacts.

In the short-term, Google announced a $400,000 gift to the city Tuesday, set to fund the Fedder's Alley All-Inclusive Playground and Fitness Park. Hulse also tells me Google is invested in supporting local school systems, and the city receives a direct payment from the development.

Michigan City Mayor, Angie Nelson Deuitch, says "Project Maize" is replacing a long-abandoned property which has been generating around $20,000 in tax revenue since the former owners left 15 years ago. She expects 'Project Maize' to generate $1-2 million for the city each year once complete.

The land where the development is happening was deemed a Brownfield site because of leftover contaminants; Google is covering the cost to clean up those contaminants as a part of the deal.

Nelson says funding will go toward supporting local parks, keeping the city's tax base lower and supporting public safety.

Hulse broke down the timeline of the deal and how it got made. Each proposal starts with him, then heads to city staff to deal with zoning, water, and sewer. The proposal then goes to the mayor before heading to attorneys for a final review.

ABC57 also sat down with Liz Schwab, Google's Global Infrastructure and Energy Data Center Development Manager, to learn what Google looks for in a community before reaching out.

"At the end of the day, you need a supportive locality, you need a good site, you need energy, you need workforce and you need fiber. If all of those things are true, you've got a chance at a good project." said Schwab.

Hyperscale developers are also looking for incentives; specifically, tax abatements.

Hulse tells me Michigan City was able to negotiate a win-win for the community; 40 years for personal property, with a 50 percent tax abatement on real estate property. This allows Google to get its incentive; the city gets 30-40 new tech jobs and proof of concept that it's a community that can support large-scale industry.

Other areas in Michiana aren't as supportive of the idea of data centers.

In Marshall County, commissioners placed a permanent ban on data center developments, citing concerns from residents in New Carlisle.

Third District Commissioner, Jesse Bohannon, says there's too many unknowns with data centers, and he hopes developers don't even attempt to approach the county about a project.

"When you're a small county like ours it's too big of a risk to bring in something as speculative as this. And the bottom line is the taxpayers don't want it; the voters don't want it and so it's our job to represent them." said Bohannon.

Still, commissioners have the ability to change their minds about the permanent ban. Bohannon says he wouldn't be opposed to doing so, but only if the public becomes more accepting of data centers, and developers are able to demonstrate a better track record in other areas.

Google's environmental report addresses a number of power and energy concerns regarding data centers.