Logan County data center plans delayed

A public outcry and inaccurate information on social media about a proposed data center in rural Logan County have prompted officials to delay votes on zoning necessary for the project until at least February.

In the meantime, representatives of Miami-based Hut 8 Corp. plan to make a presentation and answer questions about the company’s proposal to build a 500-megawatt data center on 200 acres of farm ground near Latham at 7 p.m. Jan. 5 in front of the Logan County Board’s Zoning and Economic Development Committee.

The publicly traded company, which develops large-scale data centers that support artificial intelligence, Bitcoin mining and other high-powered computing platforms, has provided limited information on the Logan County proposal since Illinois Times first published details on Dec. 23.

Information that company officials provided to Logan County appears similar to plans that a different company, Dallas-based CyrusOne, has presented to Sangamon County officials as part of CyrusOne’s request for zoning approval to build a 636-megawatt data center complex on 230 acres in unincorporated Talkington Township. The site is 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, a privately held company, has said it would spend about $500 million to construct the Sangamon County data center, while Hut 8 says in a document submitted to Logan County that its data center would cost $5 billion or more 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.

CyrusOne officials have estimated that the Sangamon County data center – once the six 250,000-square-foot buildings on its proposed campus are complete – would create 100 permanent full-time jobs and generate an average of about $5 million a year in additional property taxes.

Hut 8, on the other hand, said in its document that its data center would create 200 permanent full-time jobs and generate an average of $65 million in new property tax revenue each year for local taxing bodies.

That amount of revenue is at least 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 wouldn’t comment on the difference in property tax estimates.

A Hut 8 official stood by the company’s estimates in a text-message exchange with Illinois Times on Dec. 31.

Peter Goehausen, Hut 8’s director of energy origination, 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.

Goehausen said he will present the rest of the findings at the Jan. 5 meeting.

He said Hut 8’s estimated construction cost for the Logan County project is “within the stated range” of the industry standard for data centers.

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

Logan County Zoning Officer Allan Green told Illinois Times that 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.

“I kind of talked them into it,” Green said, adding that rumors and false statements about the project have circulated on social media in recent days.

“It’s gotten totally out of control,” he said.

Green said he and other county officials haven’t yet had the opportunity to analyze any information and financial estimates from Hut 8 yet.

“Until they put it on paper in a formal contract or presentation … I’m taking it with a grain of salt,” he said.

The zoning committee, which will meet in the Logan County Courthouse in Lincoln, makes nonbinding recommendations to the full County Board and doesn’t plan to take any votes on Jan. 5, Green said.

The public will have a limited amount of time to ask questions about the proposal but doesn’t need to register to speak before the meeting, which he said is expected to last an hour or more.

The Logan County Regional Planning Commission had been scheduled to consider Hut 8’s zoning request for an advisory recommendation to the County Board at the commission’s Jan. 7 meeting, but that discussion has been postponed, Green said.

Also canceled are a Jan. 8 advisory vote on Hut 8’s plans by the Logan County Zoning Board of Appeals and a potential final vote Jan. 15 by the Logan County Board, Green said.

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.

It’s unclear what the next steps in Hut 8’s quest for a zoning change to allow for the project will be, Green said.

He said Logan County State’s Attorney Bradley Hauge is looking into whether county officials could authorize the Hut 8 project with a “conditional use permit” rather than rezoning agricultural land to industrial.

A conditional use permit would give county officials more say over Hut 8’s local operations, Green said.

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

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.

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.

Officials from MISO and Ameren wouldn’t say whether Hut 8 has sought or received MISO approval for the power load that would be required for its proposed site in Logan County.

The Hut 8 document says 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.

“The revenue they contribute often exceeds the cost of serving them, which can help spread the utility’s fixed costs over a larger base,” according to the document.

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.