SOUTH BEND, Ind.--(BUSINESS WIRE)--St. Joseph County in northern Indiana is primed to become a high-tech hub, thanks to a change in state law that allows for personal property tax exemptions on data center equipment.
“This is a huge step forward because it removes a significant obstacle for data centers interested in locating here,” said Pat McMahon, executive director of Project Future, St. Joseph County’s economic development agency. “We have substantial centers already in operation, and we think this law will significantly increase the activity and size of national data centers in our area.”
The new legislation goes into effect July 1.
New law + Metronet + competitive local costs = multimillion dollar savings
McMahon said Indiana as a whole has been at a competitive disadvantage compared to states like Illinois and Wisconsin that have had a property exemption for sophisticated, enterprise-class IT equipment.
“But now, the playing field isn’t just level, it’s tilted in our direction,” he said.
That’s because the area possesses a dramatic competitive IT advantage: the St. Joe Valley Metronet, a state-of-the-art dark fiber infrastructure offering connectivity to one of the largest concentrations of long-haul national telecommunications carriers.
“Add that to our competitive utility and property costs, and this legislation makes us extremely attractive to companies interested in establishing data centers in the Midwest,” he stated.
McMahon said the new property tax exemption for data center equipment will mean savings of millions of dollars for firms that locate in St. Joseph County.
He cited a study done last year by a Chicago site selection consultant on a $24 million, 70,000 square-foot facility in South Bend that would have housed $25 million in computer hardware. It also would have employed more than 25 people in high-income jobs.
The company considering the project would have paid $8 million less in operating costs over a decade compared to a competing site in Illinois. But when the $11 million in Indiana state personal property taxes on computer equipment were added in, McMahon said South Bend quickly fell out of contention.
Now, personal property taxes on enterprise-class IT equipment no longer will be an issue.
Larry Hinman, a principal with Chicago-based EYP Critical Facilities Services, concurred with McMahon and said the state IT equipment property tax issue had been a deal-stopper for bringing data centers to the South Bend region.
“Companies looked at that and went elsewhere,” he said. “Now, if that’s truly going away, I’m delighted. That should really help out in a big, big way.”
Benefits for Metronet subscribers
Kevin Smith, founder and owner of Global Access Point, a South Bend telecommunications company, said he believes the new law will benefit both Metronet users and those who wish to provide services to them.
“The new fiber connectivity between Chicago, South Bend and Indianapolis, along with new fiber planned along the Indiana Toll Road, and the removal of this tax barrier means that those wishing to build data centers to supply major markets like Chicago and New York can now build them in Indiana,” said Smith, whose company has transformed South Bend’s historic Union Station into a state-of-the-art locale for off-site data centers, data transport, and disaster recovery operations.
Moreover, he said the availability of data centers will attract other industries, including shipping and other brick and mortar businesses offering new sales opportunities along with the potential to develop new partnerships. It will also create many new long-term high tech jobs for St. Joseph County, he predicted.
Growing South Bend’s high-tech industries
McMahon said South Bend and St. Joseph County have been working hard in recent years to incorporate a larger number of technology based companies into their economies.
“We’ve been very active in growing businesses that have major communication components in their business plan as a result of the Metronet,” McMahon explained.
Now, he said, the county’s ability to attract capital-intensive data centers or other high-tech projects has been greatly enhanced by the Legislature’s action.
“We can’t be more pleased,” he concluded.
State Sen. Ed Charbonneau, (R-Valparaiso), author of the property tax bill – SEA 448 – said he believes the new law will be a game-changer for the state.
“This has the potential to totally alter our economic development landscape,” Charbonneau explained. ”Indiana has generally fared pretty well on the checklist for high-tech firms until they got to how we tax their sophisticated computer equipment. Time and time again, we lost out to states with exemptions.”
Sen. John Broden, (D-South Bend), a co-sponsor of Charbonneau’s bill, said he, too, expects St. Joseph County to gain from the new law.
“This could be the spark that encourages high-tech companies to locate here instead of neighboring states,” he said. “With Metronet’s high speed and unlimited bandwidth, as well as our many other advantages, we’re in an ideal position to take advantage of this. It should be a real boon to our economy.”
About Project Future: Project Future is a non-profit economic development organization founded in 1982 by leaders from the business, government, labor and education sectors of St. Joseph County, Indiana. While working to enhance the economic environment of South Bend, Mishawaka and St. Joseph County, Project Future acts as a catalyst between the community and prospective businesses.