Data center opposition

Most of the 250 people who turned out at a public meeting Jan. 5 in Lincoln to hear a Florida-based company’s plans to build a $5 billion data center in rural Logan County clapped, chanted, stood and yelled in opposition.

“Who asked for this future for Logan County?” Mount Pulaski resident Sebastian Scassiferro said in front of the Logan County Board’s Zoning and Economic Development Committee.

He and others at the almost three-hour meeting raised concerns about the disruption to rural life – particularly in and near Latham – as well as the risk of regional electricity rate hikes, power disruptions, potential sound and light pollution and elimination of prime farm ground associated with the proposed $5 billion project.

They questioned whether those uncertainties would be worth the proposed 200 permanent, full-time jobs with an average annual salary of more than $100,000 and a potential tidal wave of new property tax revenue.

Scassiferro said he doubts that a proposed Hut 8 Corp. data center – one to three one-story structures covering more than 1 million square feet about two miles west of Latham – would lead to a new family restaurant or auto repair shop opening in the area.

“I see farm land turning into asphalt, and I don’t like it,” Scassiferro said.

 But Gregory Irwin, Hut 8’s senior vice president of energy origination and portfolio management, said the publicly traded company will work to minimize any disruptions and wants to partner with community leaders to bring jobs and other economic benefits to Logan County.

Peter Goehausen, Hut 8’s director of energy origination, said the additional property tax revenue generated by the data center would “exceed $50 million per year.” One document from the company put the estimate as high as $65 million per year.

For perspective, total property tax collections from all property owners in Logan County amount to $55 million, according to Logan County Treasurer Penny Thomas. And the fair market value of all property in the county totals between $7 billion and $8 billion, according to Logan County Supervisor of Assessments Jennifer Bryant.

Irwin said company officials would be committed to Hut 8 being a good neighbor in Logan County, and the company wants community.

“We’re in the top of the first inning,” Irwin said, using a baseball analogy to say many details of the plan still need to be worked out. However, key votes could come soon.

Irwin said Hut 8 would like to see Logan County officials vote in February on either rezoning the proposed site’s 200 acres from agricultural to industrial or issuing a conditional-use permit under current zoning to allow the project to proceed.

But Logan County Zoning Officer Allan Green told Illinois Times after the meeting that the soonest county officials could make a decision would be March because of legal notification requirements.

The County Board also needs to decide whether it wants to change the county’s zoning law to allow for conditional permitted use in an agricultural zone, he said.

Green said Hut 8 officials agreed Dec. 29 to temporarily withdraw the company’s rezoning request for the project so county officials and the public could have more time to hear and debate the details.

Rachel Smith, who lives just outside Latham, said she is worried that the Hut 8 project could disrupt life in the tranquil area 35 miles northeast of Springfield and 18 miles southeast of Lincoln. She said she appreciated the delay by Logan County officials. “I’m glad to see it looks like there will be a little more transparency … on how this will affect people long-term,” Smith said.

Construction plans

Hut 8, which develops large-scale data centers that support artificial intelligence, internet cloud storage and other high-powered computing platforms, provided more details at the Jan. 5 meeting than were available when Illinois Times first published news of the company’s plan Dec. 23.

Information that company officials provided to Logan County and the public so far makes it appear that its proposed-500 megawatt data center would be similar in size and scope to a data center proposed by a different company for Talkington Township in Sangamon County.

Dallas-based CyrusOne has told Sangamon County officials that the privately held company wants to build a 636-megawatt data center complex covering 1.4 million square feet on 230 acres on farm ground in an unincorporated part of the county about 14 miles southwest of Springfield.

Electrical demand for the two data centers would be similar, as would the amount of farm ground to be purchased if the companies receive zoning approval from county boards in Logan and Sangamon counties, respectively.

But CyrusOne has said it would spend about $500 million to construct the Sangamon County data center, while Hut 8 says in documents submitted to Logan County and in public presentations that its data center would cost $4 billion to $5 billion to establish.

That would make the project the largest construction project in Logan County history, according to county officials. Precisely why Hut 8 is listing the cost of its project as 10 times more expensive than the Sangamon County project is unclear.

Hut 8 has told Logan County officials that construction of the data center wouldn’t start until late 2027 and would last 18 months. The land used would amount to about 0.05% of the county’s total 454,694 acres of farm ground.

More jobs and property taxes

Sangamon County Supervisor of Assessments Byron Deaner has estimated that the CyrusOne data center – once the six 232,000-square-foot buildings on its proposed campus are complete – would generate an average of about $5 million a year in additional property taxes. CyrusOne says 100 permanent full-time jobs would be created.

Hut 8 said its data center would create 200 permanent full-time jobs, and its property tax revenue estimate is about 10 times more than what CyrusOne says its data center would generate in new property taxes for Sangamon County taxing bodies such as the North Mac School District.

CyrusOne officials, whose project has received substantial support from organized labor in Sangamon County, wouldn’t comment on the difference in property tax estimates.

The soonest that Sangamon County officials could vote on CyrusOne’s request for a conditional-use permit in an agricultural zone would be in February and March, Sangamon County spokesperson Jeff Wilhite said.

 Hut 8 officials stood by the company’s estimates.

“I totally appreciate that the numbers are staggering,” Irwin said.

Bryant, the Logan County supervisor of assessments, said she plans to begin research soon to verify whether the Hut 8 estimates are valid.

Goehausen, of Hut 8, said the property tax estimate is part of an economic impact study commissioned by Hut 8 and conducted by David Loomis, professor emeritus of economics at Illinois State University, and the rest of Loomis’ team at Normal-based Strategic Economic Research LLC.

Irwin said Hut 8’s estimated construction cost for the Logan County project is “within the stated range” of the industry standard for data centers and on par with the local benefit associated with another Hut 8 large-scale data center being built in Louisiana.

Irwin said he doesn’t know why Hut 8’s numbers for its project differ so much from those connected with the CyrusOne project.

Hut 8’s property tax estimate, if accurate, would be a huge boon for the Mount Pulaski school district. Compared with other taxing bodies, school districts typically receive a majority of all property tax revenue.

The land in Hut 8’s request to rezone agricultural land for industrial use is in the Mount Pulaski district’s territory, and the district’s current property tax collections total between $9 million and $10 million per year.

When asked to comment on the potential of a tripling in property tax revenues for the district – which covers parts of Logan, Menard, Sangamon, DeWitt and Macon counties – Mount Pulaski Superintendent Jason Spang said he doesn’t know how to determine the accuracy of Hut 8’s estimate.

Spang, whose district serves 540 students – 40% of them from low-income families – said he wants to learn more about the possibility of more funding for the district.

“We could do a lot of things with it,” he said.

Infrastructure issues

Speculation on social media has included suggestions that the project would threaten underground water supplies and lead to birth defects, Green, the Logan County zoning officer, said.

But unlike some data centers around the country, which use large amounts of water to cool computer servers, Hut 8 would use a “closed-loop” system in which water that it would truck to the site would be recirculated and recycled, according to Green.

The company would have to drill a water well or supply its own water for workers’ everyday needs at the site, and Hut 8 would have to install a septic system for sewage, because municipal water and sewer pipes aren’t available for the site, he said.

Goehausen said the data center would use about as much water as an average office building and less than a car wash.

Some County Board members and area residents have raised questions about whether Ameren residential rates might rise because of additional demand for electricity on the power grid created by the Hut 8 site, which is near an Ameren substation. Five hundred megawatts is enough to power 300,000 or more homes.

The regional electrical grid operator serving central Illinois, which is known as Midcontinent Independent System Operator and is based near Indianapolis, has certified that there’s enough capacity on the grid to supply CyrusOne’s proposed site in Sangamon County without risking blackouts or brownouts in the region.

Irwin said Hut 8 hasn’t yet sought MISO approval yet but has received informal indications from Ameren that there would be adequate power available on the grid for the data center and that MISO would approve the company’s request.

Hut 8 officials said evidence suggests that large data centers “can actually help stabilize or reduce rates for residential customers” because of the electrical infrastructure upgrades that data centers agree to pay for in infrastructure improvements.

But those estimates don’t deal with the increased demand on the MISO power grid overall throughout parts of the Midwest and South.

A recently released study on power capacity demands in Ameren’s territory are expected to begin in 2031 and increase through 2035, primarily because of the increase and expansion of data centers. The study was conducted by the Illinois Power Agency, Illinois Environmental Protection Agency and Illinois Commerce Commission.

Capitol Fax publisher Rich Miller wrote on Jan. 5 that the “gigantic increases” forecast by the study “were not foreseen when the state designed its landmark clean energy law in 2021 requiring net-zero carbon energy by 2045.”
           

Residents raise concerns

Several speakers at the Jan. 5 meeting said they are leery about trusting Hut 8 and perpetuating the use of artificial intelligence.

Kevin Kirk said he moved to a rural area two miles from the proposed Hut 8 site “to get away from all the craziness. … I’m not OK with this at all. … This will destroy all of that peace.”

Melissa Cox of Lincoln said she worries the data center will lead to brownouts or blackouts, though Irwin said such concerns would be unwarranted if MISO signs off on the additional power to be used.

Irwin, the Hut 8 senior vice president, said the site wouldn’t generate hazardous waste, and the hum of computer servers wouldn’t be louder than a whisper to the closest homes a half-mile away. He said outdoor lights at the site would point down and not into the sky, and 25 to 50 acres of site land would be used for buffering.

Kelly Cubberly said, “This data center is nothing more than a tech billionaire investment. … It comes with a lot of risk for us.”