Despite months of community opposition, developers of a proposed southside data center were approved for $240 million in tax abatements.
Seattle-based Sabey Data Centers agreed to spend a minimum $29.8 million to improve the Decatur Township community.
In March, the city agreed to rezone 130 acres of land at 6400 Kentucky Avenue to allow for a two-building data center campus.
Around 100 labor union members attended the Sept. 16 zoning meeting in favor of the development, which is expected to bring hundreds of construction jobs. But many southsiders have opposed the project due to concerns related to health, property values and environmental damage.
Pat Andrews, a southsider opposed to the data center, is one of about a dozen residents who protested against the project. As the land use chair for the township civic council, she has spoken on behalf of residents during data center meetings.
“The taxpayers are going to be on the hook for extra fire equipment, extra fire training, not these guys,” Andrews said. “The school isn’t getting extra gravy, the fire department and other services from the township, they aren’t getting any gravy.”
To address those concerns, Mindy Westrick Brown, a lawyer with Faegre Drinker Biddle & Reath who represents Sabey Data Centers, said the company has put the fire department in touch with other communities with a Sabey data center to better understand those needs.
Sabey plans massive building investment
The commission approved the proposed tax break 6-1 for real estate taxes and 5-2 for equipment taxes.
As the city’s first hyperscale data center facility, Sabey and its tenant are projected to make a combined $4.3 billion investment in property and equipment purchases. Typically, hyperscale data centers are large and research shows they may cause environmental and health impacts such as respiratory issues and cardiovascular disease.
Sabey’s Indy location would be more than 1 million square feet and could use up to 250 megawatts.
Clete Casper, director of real estate for Sabey, said he’s excited to partner with the city.
“We have years of experience of being good neighbors, good corporate citizens and a good local government partner,” Casper said. “In our experience, it is not unique for Sabey to be among the largest taxpayers in the city. And we’re not surprised to see that, during the abatement, we will be the ninth largest taxpayer in the city of Indianapolis, and post abatement, the second largest taxpayer.”
The economic incentive package was outlined by Indy Economic Development, a city nonprofit that works to boost the city’s business infrastructure. Mayor Joe Hogsett’s office helped launch the nonprofit and previously indicated support of the tax abatements.
Sabey is expected to save $47 million in real estate property taxes over 10 years and $36 million for equipment taxes over 15 years. The company’s tenant, a group that will lease the data center facility, will save around $157 million, according to city documents. Sabey, the developer, has yet to announce the name of the tenant.
How much will Sabey still pay?
Sabey is estimated to pay around $31.5 million for real estate property taxes over 10 years and $21.5 million for property taxes on the equipment over 15 years.
In exchange for the tax breaks, the company will invest an additional $29.8 million into the southwest community.
That includes $5 million for road improvements beyond the data center and $24.5 million for a new aquatic center in Decatur Township at a location that has yet to be determined. Sabey may pay an additional $10 million after the first 10 years to account for increases in equipment value. This is in addition to around $50,000 for public art, workforce development programs and other neighborhood incentives.
A portion of the city’s tax revenue generated from the development is expected to go directly into the Decatur Township community, which includes $31.6 million to Decatur’s public schools and $3.1 million to the Indianapolis library system.
But not everyone is convinced.
In an emailed statement to Mirror Indy, Decatur Township schools Superintendent Scott Collins said he has tried to remain neutral and declined to write a letter of support for the data center.
“I have not received communication from the city of Indianapolis or Sabey officials regarding any allocated funds that would directly support Decatur Township schools from the construction of a data center,” Collins wrote.
He said much the same earlier this summer. Collins spoke to residents about school funding during the township’s Aug. 31 civic council meeting. At the time, he said he wasn’t convinced the money would really be spent in Decatur Township due to the city’s tax distribution structure.
Notice issue?
Decatur Township Trustee Jason Holliday stood with Andrews as she asked zoning officials to delay the vote. Andrews, the township land-use chair, thinks the city was breaking state law by continuing to hold the meeting even though the trustee and the Decatur Township schools superintendent didn’t receive direct notice of the meeting ahead of the decision.
The commission voted 5-2 against postponing the vote on Sabey’s tax abatements since public notice was given online and through IndyStar.
What’s next?
In April, seven residents filed a judicial review against Sabey to stop the construction of the data center. That case is being reviewed by a judge.
If Sabey is allowed to proceed, the company would not begin major construction of its warehouse until after March 1, 2027, according to court documents.
Sabey is also eligible for a sales tax exemption through the state, but the company hasn’t filed for that savings, according to Indy Economic Development staff. If approved, about 1% of the amount saved would return to the local community.
Metrobloks postponed
Tax abatements for another data center proposal are also in discussion. Metrobloks, a project proposed in the Martindale Brightwood neighborhood on the east side, is projected to save around $56 million. The Metropolitan Development Commission is expected to vote on Metrobloks’ abatement proposal Oct. 21.
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Mirror Indy reporter Elizabeth Gabriel covers the south side of Marion County. Contact her at elizabeth.gabriel@mirrorindy.org. Follow her on X at @_elizabethgabs.
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