LAPORTE — Microsoft Corp. plans to build two data centers within 30 miles to the west and east of South Bend.
A deal struck Monday night calls for Microsoft to invest $1 billion to build a data center in LaPorte in what Mayor Tom Dermody described as the largest economic development project in the city’s history and one that will have a noticeably lasting impact on the community of about 23,000 citizens.
“Wow," he said. "Changing our future direction. This is amazing.”
This comes after Microsoft purchased more than 900 acres of farmland from the historic St. Joe Farm in Granger on May 23 to position itself for the planned construction of a data center.
Microsoft will invest $1 billion into what will be a 245,000-square-foot facility on Boyd Boulevard just east of U.S 35 on the far south side of LaPorte.
Mike Stockwell, Land Development and Permit Program Manager for Microsoft, said adding data centers is in response to growing demand for online services ranging from virtual classrooms to opening apps on phones and “playing a game online with your friends.”
Stockwell said data centers provide the infrastructure that makes the use of such technology possible.
“As customer demand grows for cloud services, Microsoft is expanding our data center footprint, driving the need for new data centers like we’ll build in LaPorte,” he said.
The data center will be constructed on about 500 acres of farmland Microsoft purchased in two separate transactions in 2023 and early this year after the property was annexed into the city at the request of the now-former property owners, who expressed a desire for the land to be redeveloped, LaPorte Economic Advancement Partnership Executive Director Bert Cook said.
Up to 200 people will be employed there by the end of 2032 in what were described as high-wage, high-tech positions.
The deal was struck when the LaPorte City Council unanimously approved a 40-year data center tax exemption strictly on the high-tech equipment to be contained inside the facility.
In exchange, Microsoft will refund as much as $2.5 million or 30% of its tax savings a year under the lifetime of the agreement.
The money will be split by the city’s Redevelopment Commission and the LaPorte Community School Corporation.
“It’s massive for the city of LaPorte," LaPorte City Councilman Tim Franke said. "The jobs are all going to be quality, high-paying jobs, which is something we can’t have enough of.”
He also said what the redevelopment commission and school corporation can do with the revenue is also a “game-changer for us.”
Unlike tax abatements, which forgive a percentage of property taxes over, typically, a 10-year period, there will be no property taxes assessed on the equipment at any time under the exemption, Cook said.
The exemption was made possible under a law designed to attract data centers and other high-tech companies to the state.
State Rep. Jim Pressel of Rolling Prairie said he helped draft the tax exemption legislation signed by the governor about three years ago.
“Since we passed that, Indiana is becoming the data hub of the country," he said. "It’s working out very well.”
Cook said property taxes will be assessed in full, though, on the value of the building and property.
Gov. Eric Holcomb said the LaPorte data center will accelerate cloud computing infrastructure to support growth in technology and artificial intelligence worldwide.
“As a state, we’ve built a pro-growth business climate and implemented a future-focused framework to attract major investments in high-tech, high-growth sectors," he said in a press release Tuesday morning in which he announced the LaPorte development. "We’re excited to welcome Microsoft’s new data center to Indiana and look forward to the incredible value add impact this will have on our statewide data driven ecosystem, new career opportunities, specifically the greater northwest Indiana community.”
Cook said landing Microsoft definitely furthers the steps into a more modern era the city has been aggressively striving for since Dermody became mayor in 2020.
He believes other companies and residents will be attracted to LaPorte just from having a world-renowned company like Microsoft in the community.
“It really signals that LaPorte is a community that’s growing and it is a place where people want to be," Cook said. "For any of those other businesses or residents who are looking for a community to locate in, they should be looking in LaPorte and we’re excited about that.”
Holcomb said the timetable for construction of the data center hinges on how fast it takes to go through the building design, planning and permitting process that will begin with the city later this year.
“We’ll see construction in the very near term," Cook said. "It’s not something that’s 10 years out.”
Microsoft in St. Joseph County
According to the St. Joseph County Assessor’s Office, Microsoft paid $77.5 million for farm land east of Capital Avenue and Cleveland Road.
On May 14, the St. Joseph County Council voted 6 to 3 to rezone the property for industrial use over the objections of neighbors concerned about damage to their rural lifestyle and potential impact on Juday Creek, which is a cold-water trout stream.
Since 1867, St. Joe Farm had been used by Holy Cross brothers to feed staff and students at the University of Notre Dame, which sold it in 2008.
The most recent owner, Paul Blum, told the St. Joseph County Plan Commission in April that he and his wife struggled with mud and silt issues in the soil that caused a 40-percent loss of their income.
Blum also reported spending millions of dollars on irrigation and other improvements at St. Joe Farm, which includes a portion of Juday Creek running through it.
Tribune staff writer Ed Semmler contributed to this report.
This article originally appeared on South Bend Tribune: Microsoft to invest $1 billion in LaPorte data center
