Economic Improvement Districts and the Data Center

Economic Improvement Districts (“EIDs”) are public-private partnerships in which local property and business owners elect to make a collective contribution to the maintenance, development, and promotion of their property. EIDs avoid some debt caps which might otherwise limit bonding or borrowing.

The EID is primarily a financing structure that provides benefits to the lender, municipality, data center operator and the local community – a true win, win, win, win.

For the lender, they are able to provide a low-risk, secured investment with a superior interest in the property. The municipality collects a fee for facilitating the financial transaction between the lender and the data center operator, adding to the municipality’s coffers. The data center operator gains access to a low-interest source of capital to invest in needed infrastructure and facility expansion. And the local community ultimately benefits from increased infrastructure investment (ex. electrical grid, telecommunications, building rehabilitation) without tax incentives that could diminish municipal services.

On February 8, 2021 the Hammond Indiana City Council passed an ordinance establishing an EID in Hammond- home of the Digital Crossroad data center. This EID highlights the city’s commitment to the continued betterment of the local Hammond community.

Digital Crossroad will be using the new EID financing to invest in the expansion of building 1 of the Hammond data center campus and the commencement of the building 2 design. The continued investment in this data center campus will bring new national and international enterprise and hyperscale clients to Indiana, create Indiana-based jobs in the electrical, mechanical and civil trades and showcase Indiana’s viability as a competitive data center market.

In summary, the EID is a strong demonstration of the multi-constituent value that can be derived from a public-private partnership. The EID structure can serve as a model for other municipalities looking to attract 21st century technology firms to their states, improve their tax base, and add jobs.

To learn more, contact Digital Crossroad today.

Leave a comment

Your email address will not be published. Required fields are marked *