Collaborative research by the Illinois Answers Project and the Chicago Tribune highlighted significant property tax breaks received by over a dozen data centers around O’Hare International Airport, amounting to millions of dollars this year. While local leaders promote the benefits of this growing industry, suburban homeowners feel the burden as these centers shift taxes onto them. In suburbs like Northlake, homeowners could save over $2,000 annually, nearly a 30% reduction, if data centers weren’t given valuation cuts and incentives, as shown by the analysis.
Cook County officials awarded multimillion-dollar breaks to at least 18 data centers, reaching valuations below initial purchase prices. Of these, 11 had tax incentives earlier approved that significantly lowered their tax obligations for years ahead, even before recent board reductions.
Twelve centers benefit from a separate state tax break saving owners millions on sales and use taxes. Together, assessment reductions and incentives knocked almost $2 billion off the taxable property value across suburbs like Elk Grove Village, Northlake, and Franklin Park, translating to $100 million saved on taxes that could have lessened neighboring property owners’ bills and funded local infrastructure.
These facilities form a minimal fraction of over 100 operating data centers across Cook County, with additional ones under construction. Local hearings often decide reductions that few taxpayers attend, while agencies unfamiliar to many individuals make these crucial decisions.
Controversies arise in assessing data center values for tax purposes, leading to significant financial differences. While developers insist on the necessity of tax breaks for operational profitability, opponents state that prime real estate location should be incentive enough.
Despite tax breaks, data centers contribute substantially to property taxes, according to Brad Tietz from the Data Center Coalition. This year, the 18 centers paid nearly $71 million in taxes. In Northlake, three centers represented 28% of the city’s tax base last year.
Analysis included data centers in Elk Grove Village, Franklin Park, Des Plaines, and Mount Prospect, indicating Illinois is slipping in national rankings for attracting data center developers due to less favorable tax conditions.
Kasia Tarczynska from Good Jobs First argues that corporations have enough funds for building centers and paying taxes, with local taxing bodies like schools needing funds for basic services. Reduction in assessment means higher taxes for others.
Outgoing Cook County Assessor Fritz Kaegi opposed many valuation reductions, believing commercial properties have historically been undervalued. He focuses efforts on data centers, criticizing tax appeal attorneys for low estimates in appeals.
Kaegi’s office fought against Microsoft’s Azure data center’s appeal, which presented an appraisal of $250 million. The office argued for nearly $900 million valuation, based on past investment and upgrades, illustrating different approaches to tax assessments.
Approaches included valuing centers not just by square foot but by kilowatt capacity, adjusting property values to reflect their power generation capabilities. Microsoft’s appraiser undervalued major building systems essential for continuous center operation, contested by Lehman, Kaegi’s director of valuations research.
In another case, Elk Grove’s center appealed a $100 million valuation granted by Kaegi, claiming a worth of about $21 million due to exclusion of critical systems as personal property.
Legal battles in data center appraisals rooted in new industry involvement often hinge on untested arguments regarding property fixture permanence, facing challenges addressing high stakes economic implications.
With noise around appealing valuations, overall implications from high volumes of appeals push assessor and review boards to consider larger economic impacts on local tax environments.
Public criticism grows against incentive-driven placements, seen in larger strategic approaches. Some leaders reconsider universal tax incentives as avenues to preserve fiscal spaces while aggressively developing industrially viable centers.
Cook County’s property tax reform report suggests transforming incentive programs to zone-specific rewards, adjusting its dynamic approach amidst evolving community and economic landscapes.
Governor JB Pritzker’s executive order paused state data center tax credit applications, sparking debate on industry growth measures. Some advocate pausing construction to develop regulatory frameworks and ensure public fiscal benefits.
Despite changes, developments proceed, with Elk Grove continually innovating buildings toward center construction, demonstrating firm dedication to maintaining locality competitiveness against industry pressures.
Demonstrators in Springfield in 2026 advocated for construction standards regulation during legislative sessions, keeping public focus on balancing local corporate rights against community growth policies.