Land Use and Zoning Implications of Data Centers in Illinois: A Legal Perspective
As the demand for digital services continues to surge, data centers have become essential infrastructure, powering everything from cloud computing to data storage and artificial intelligence. In Illinois, where tech innovation is booming, data centers are a crucial component of the state's economy. However, the development of data centers also raises a series of land use and zoning challenges that need to be carefully navigated. This article explores the legal implications of data centers in Illinois, focusing on zoning, land use policies, and the regulatory landscape.
What Are Data Centers and Why Are They Important?
A data center is a facility used to house computer systems and related components, such as telecommunications and storage systems. These centers are integral to storing and processing the vast amounts of data generated daily by businesses, governments, and individuals. Given the exponential growth of data usage, particularly with the rise of artificial intelligence, and cloud computing, data centers are becoming indispensable. One of the key challenges in siting data centers is ensuring that they meet local environmental and infrastructure standards. Data centers require vast amounts of electricity to run servers and cooling systems, and they often must be located near power sources or substations. This can make it difficult to site them in areas where electricity infrastructure is not already in place.
Local Economic Development Incentives
Data centers have become highly sought-after investments for local municipalities in Illinois due to their economic benefits. Data centers bring jobs, infrastructure investment, and tax revenue, often making them a key component of local economic development strategies.
Many local governments in Illinois have recognized the potential benefits of data centers and offer incentives to attract these projects. This may include property tax abatements, sales tax exemptions, or infrastructure grants. The Illinois Department of Commerce and Economic Opportunity (DCEO) has also been active in promoting the state as a prime location for data centers, citing Illinois’ central location, access to fiber networks, and proximity to renewable energy sources.
Zoning and Land Use Issues for Data Centers in Illinois
The development of data centers in Illinois raises significant land use and zoning issues. In general, local governments in Illinois have the authority to regulate the use of land within their jurisdictions through zoning ordinances. Data centers are typically considered industrial or commercial uses due to their nature as large-scale facilities that require substantial infrastructure, including high-voltage electricity, access to fiber-optic networks, and large amounts of land
Zoning Classifications and Permitting Requirements
In Illinois, data centers often face zoning hurdles depending on their location. Many localities have outdated zoning laws that were not designed to accommodate modern technological infrastructure like data centers. In some areas, data centers may not fit neatly into existing zoning categories, and developers may need to seek variances, special use permits, or rezonings to move forward with a project.
In industrial or commercial zones, data centers are generally permitted by right, though even in these areas, additional regulatory approvals may be required. Local municipalities may impose restrictions related to noise, air quality, stormwater runoff, and building height. In some cases, Illinois municipalities have passed specific ordinances to regulate or restrict the growth of data centers, particularly in regions where there is concern about overdevelopment or environmental impact.
Data centers located in residential or mixed-use districts will likely require a special use permit. The granting of a special use permit typically requires a public hearing, where neighbors, local businesses, and other stakeholders can voice their opinions on the development. Local governments may consider factors like the size and scale of the proposed facility, traffic impacts, environmental concerns, and the compatibility of the data center with surrounding land uses.
Recent Developments in Data Center Expansion
The Chicago area is experiencing a significant surge in data center development, with no signs of slowing down. Industry experts anticipate that Chicago and its suburbs will continue to be a major hub for data centers, with 30 projects planned over the next five years. This growth is driven by the increasing demand for data storage and processing capabilities, particularly with the rise of artificial intelligence and cloud computing. However, there are concerns about the strain on the region's power infrastructure. To accommodate this expansion, utility infrastructure will need to grow, especially as companies look to the suburbs for suitable land. The rapid development of data centers also raises questions about environmental impact and sustainability, prompting discussions on how to balance technological advancement with responsible resource management.
Data Center Expansion and Energy Challenges
The data center industry is experiencing a notable shift towards larger sites in emerging and tertiary markets, driven by challenges in securing land and power in established regions. This trend has led to a significant increase in the average size of acquired sites. As of October 2024, the average parcel procured spans 224 acres, marking a 144% increase since 2022. Additionally, average U.S. data center land prices for parcels 50 acres or larger have risen by 23%, from $4.39 per square foot in 2023 to $5.40 per square foot in 2024.
Despite this expansion into new regions, densely populated established markets continue to command premium prices due to advantages like dense fiber networks, low latency, robust infrastructure, and government incentives. Urban data centers' proximity to end-users makes them ideal for applications requiring reduced latency, such as autonomous vehicles, IoT, content delivery, financial trading, gaming, and healthcare. However, the scarcity of suitable options in primary markets and the upward pressure on land values are prompting developers to consider more rural areas, where land is less scarce and less expensive.
Conclusion
In Illinois, where tech is booming, the legal and regulatory framework for data centers will continue to evolve, creating both challenges and opportunities for stakeholders involved in this vital sector. Developers must be prepared to navigate a complex web of zoning laws, environmental regulations, and local opposition. At the same time, municipalities must balance the desire for economic development with the need to preserve quality of life and ensure that data centers are compatible with the surrounding community.
Shapiro & Associates is a real estate and commercial litigation law firm representing real estate developers, small businesses, individuals and local governmental entities throughout Illinois and the Chicago area in practice areas of land use, litigation, and local government law. For questions, please feel free to contact us at info@shapiroassociateslaw.com.
