Indianapolis economic development officials are recommending a tax incentive package worth up to $56 million in tax breaks for a developer planning a data center in Martindale Brightwood, saying the build would not be possible without the savings.
In addition, any potential tenants of the data center campus could save a whopping $339 million under the agreement.
The incentives offered to Metrobloks, a Los Angeles data center developer, are the first data center tax breaks made public since heated debates over the facilities entered Indianapolis city limits last year. If approved by the Metropolitan Development Commission, these tax breaks could serve as a roadmap to how much tax relief data center companies can pocket in Indianapolis.
In the package set to be introduced July 15, the city is recommending granting Metrobloks two tax abatements, a tax incentive tool when a local government reduces tax payments on an area to decrease the amount of money landowners pay on a redeveloped property.
In a public staff report released July 10, the city’s Department of Metropolitan Development said the project at 2505 N. Sherman Drive “would not be economically feasible without the tax abatement incentive.”
If the package is approved, Metrobloks would save:
That’s in addition to $339 million in tax savings from which a potential tenant could benefit. No tenants have been named publicly but city staff estimate in the agreement that tenants could bring up to $7.2 billion in economic investment.
In an attempt to assuage residents’ concerns about the center, Metrobloks’ attorney suggested in a February hearing that Metrobloks would not lease space to “big tech” or artificial intelligence companies.
“We’ve heard a lot in the news about whether it’s going to be AI or big tech coming in. I want to just emphasize this is a small business, and it hopefully would be releasing out these spaces to tenants, anything from a hospital to a bank to a school,” attorney Tyler Ochs said February 12.
Metrobloks requested the abatement to offset the high costs of investment needed for the development and to phase in increased tax payments, according to city public documents not signed by a specific individual.
Data center developers see Indiana as a welcoming place to build technology campuses given generous state and municipal tax incentives, available cheap land and steady fiber connection to transmit information.
Yet, the Martindale Brightwood agreement could face opposition from city residents, who have launched a monthslong, energetic campaign to stop the data center from entering the historically Black neighborhood. A group of residents sued in May to stop the data center.
The company plans to spend about $250 million to build the campus and $406 million on the equipment inside.
City staff estimates the project will increase the site’s tax base by $1.4 billion, with $82.9 million stemming from the actual investment in the property. Metrobloks will pay about $9 million in new real property taxes over the first 10 years under the agreement, then about $2.2 million a year when the agreement expires.
Currently, the vacant lot, a former drive-in theater, generates $4,600 in property tax a year.
The Indianapolis Economic Development Inc., the nonprofit agency created by Mayor Joe Hogsett’s administration, reviewed the company’s investment and graded the project on how much the development would benefit the site and the city’s tax base, among other things.
The IEDI is working on a report card to grade data centers specifically, but that process has not been finalized.
“During our incentives review process after a project has submitted their information, we conduct detailed due diligence of the company and score the project based on a variety of criteria such as capital investment, workforce plan, tax impact, development location, target industry, etc,” IEDI CEO Andrea Richter-Garry said in a statement.
Metrobloks plans to hire 35 workers at an hourly rate of $46, documents show, meaning the company will save roughly $1.6 million in taxes for each new job created.
The state has not entered into any incentives deals with Metrobloks, according to an Indiana Economic Development Corporation online transparency portal.
Alysa Guffey writes business and development stories for IndyStar. Contact her at alysa.guffey@indystar.com.
This article originally appeared on Indianapolis Star: City weighs $56M in tax breaks for Martindale Brightwood data center
Reporting by Alysa Guffey, Indianapolis Star / Indianapolis Star
USA TODAY Network via Reuters Connect
By Alysa Guffey, Indianapolis Star | USA TODAY Network
