Yorkville City Council approves plan for 228-acre data center campus

Yorkville City Council has unanimously approved a development of 228 acres of Bristol Township, in unincorporated Kendall County, into a data center campus with nine two story-buildings by Texas-based developer CyrusOne.

The agreements for the development were approved at the council’s July 9 meeting.

The campus is to be located at the northeast corner of Eldamain Road and Faxon Road, in land currently owned by Chicago-based Green Door Capital since 2023. In addition to the nine buildings, the campus will contain six on-site stormwater basins and an electrical substation.

Yorkville City Administrator Bart Olson told the council, once each individual building is completed, they are estimated to generate a million dollars annually in utility taxes for the city, with a total $9 million once all nine buildings are completed.

The construction is currently planned to be developed in phases over a 10- to 20-year period, with the first data center planned to go live in 2026. This means the utility taxes received by Yorkville will arrive incrementally depending on the current phase of construction completion.

Data centers generate such high utility tax revenues because the extremely high energy usage necessary to operate their networked computers, storage systems and computing infrastructure. The campus will also generate property tax revenue for the surrounding area.

Olson told the Council, the first million dollars generated from a data center building’s utility taxes will be rebated back to CyrusOne at 50%. The next eight million dollars will be rebated back to CyrusOne at 60%.

“We felt that was a reasonable thing to do because data centers are currently the darling of economic development,” Olson told the council. “We are uniquely situated to reap some of that economic development benefits over the next couple of years on property that CyrusOne proposed, plus some of the properties that Green Door is proposing to be annexing (next). Building infrastructure, especially $10 million at a time, is not easy for any entity. It usually requires some sort of city upfront cost.”

Yorkville will reimburse CyrusOne for the water and sewer infrastructure via tax revenue over time. Both CyrusOne and the City will split the costs of moving power poles for road works.

In order to develop the property, CyrusOne will front the more than $10 million in costs to extend water and sewer utilities to the property with the city of Yorkville responsible for construction and rebating CyrusOne for the costs over time.

Yorkville will assign recapture fees to owners of properties surrounding the data center campus for how much water and sewer they would use. Property owners will have to approach the city to negotiate a way to recapture payments in the future or to pay.

The city will only rebate CyrusOne the remaining portion of CyrusOne’s total investment after the recapture fees from the owners of the surrounding properties.

The full package of agreements covers easement acquisition cost reimbursements, design engineering cost reimbursements for the upcoming water main loop project and sanitary sewer project, and a utility infrastructure agreement containing the recapture agreements.

According to the agreement, CyrusOne is also paying for road improvements. Yorkville will reimburse CyrusOne for the water and sewer infrastructure via tax revenue over time. Both CyrusOne and the City will split the costs of moving power poles for road works.

Construction is currently slated to begin later this year or early 2025.

The Planning and Zoning Commission also unanimously approved the Planned Unit Development (PUD) and Preliminary PUD Plan for the data center campus. A data center and an electrical substation are permitted under the property’s M-2 General Manufacturing District zoning.

An amendment was passed for the city and CyrusOne to split 50/50 the unknown costs of utility construction and acquisitions. It was previously agreed that a landscaping design along the campus perimeter would be added to help blend the boxy-industrial campus into the agricultural scenery background.

Data centers the new economic development

The explosion in the development of data center campuses across northern Illinois has divided public opinion as the benefits of large generated tax revenues are contrasted with construction dramatically altering the beauty of the rural landscape people call home.

Unincorporated areas being pressured to annex into a city’s limits so the city can increase their tax revenues have served as a flashpoint from towns including Elk Grove Village and Itasca. Housing units have frequently been demolished to provide the large acreage necessary for the data centers. Rural towns tend to plan building development on agricultural properties.

According to Data Center Dynamics, two more large data centers are being planned by development partners and Yorkville after annexing more of unincorporated Bristol Township.

1. Immediately south of the CyrusOne’s current data center proposal, on the other side of Flaxon Road, Green Door Capital and Kelaka LLC are seeking to annex and rezone approximately 148 acres of unincorporated farmland for the purpose of constructing and operating a future industrial/data center land use.

2. North of CyrusOne’s current data center proposal, Green Door Capital is also filing to annex and rezone approximately 138 acres of unincorporated farmland (in partnership with the Hagemann Family Trust) for the purpose of constructing and operating a future industrial/data center land use.

These developments are in addition to Microsoft recently acquiring 500 acres in nearby Plano for a massive campus.

In March 2016, CyrusOne acquired a data center in Aurora for $130 million. In 2018, CyrusOne sued the city of Aurora for allowing a competitor, Scientel Solutions, to build a telecommunications tower that CyrusOne argued would interfere with their own planned 350-foot mega-tower.

CyrusOne is owned by funds managed by Kohlberg Kravis Roberts and Global Infrastructure Partners.

A 2023 report by the Private Equity Stakeholder Project accused Kohlberg Kravis Roberts’ liquefied natural gas plants of increasing toxic pollutant exposure in so-called “fence-line communities,” made-up of economically disadvantaged households with a predominantly Black and Latino population.

The report reads, “Environmental protection agencies have already cited two of the projects for violations. Nevertheless, Kohlberg Kravis Roberts companies expanded the projects over vocal opposition from local communities.”