Assessing Data Centers: New White Paper Provides Illinois Framework

Data centers have become a flashpoint in debates over energy, infrastructure, and economic development in Illinois and nationwide. Yet one of their most far-reaching effects may ultimately be felt on local property tax rolls. Beneath the controversies making headlines lies another consequential issue: their potential to significantly reshape the property tax base supporting Illinois schools and other local taxing bodies.

With billions of dollars invested in this highly specialized real estate, accurately assessing data centers for property taxation purposes is essential. An assessment that is too high or too low can affect not only the facility’s owner but also taxing districts and every other property taxpayer sharing the local tax burden. As data centers become an increasingly important part of Illinois’ digital economy, determining their value accurately, fairly, and uniformly under Illinois law will be critical.

Against this rapidly changing backdrop, David M. Chudzik, Ph.D., MAI, CRE, has released a new, independent white paper examining how data centers should be assessed for property tax purposes. Mr. Chudzik is a Senior Vice President in Kidder Mathews’ Valuation Advisory Services practice who has valued and advised on a broad range of commercial properties, with particular experience involving complex and specialized assets such as data centers. Arriving at a critical moment for Illinois, his white paper presents assessing officials, school districts, local governments, taxpayers, and data center owners with a timely and practical framework for considering accurate, uniform, and defensible assessments under Illinois law.

In the white paper, Mr. Chudzik describes the components of a data center, discusses common valuation pitfalls, and explains how the different appraisal valuation approaches may each inform value depending on the available data and facility type. It also highlights practical valuation challenges, including limited market data, varying lease structures, separation of personal property from the real estate asset and the implications of differences between various types of data center facilities. For assessing officials and stakeholders navigating the assessment of this asset class, the white paper may be a practical resource for considering the valuation issues presented by these properties.

Illinois assessing officials, school districts, and taxing bodies face a critical window as data center assessments and appeals move forward—decisions made now will determine whether billions in cumulative tax revenue is accurately allocated over the coming decades. Mr. Chudzik’s white paper provides the defensible, legally grounded framework assessors need to address these facilities with confidence and consistency. Robbins Schwartz is actively presenting this framework at assessor conferences, Board of Review meetings, and PTAB proceedings. The decisions made over the next 12–24 months on data center assessment will reverberate for decades—ensuring they are grounded in law, fact, and principle is essential to the integrity of Illinois’ property tax system and the fiscal sustainability of host communities.

Please contact Scott Ginsburg or Brittany Flaherty Theis with any questions about David Chudzik’s white paper or to discuss pending issues or upcoming seminars regarding the assessment of data centers in Illinois. Additionally, please click here to read the white paper.