More than a dozen AI data centers near O’Hare International Airport in suburban Chicago are receiving at least $100 million in local property tax breaks this year, pushing more of the tax burden onto Cook County homeowners.
The Chicago Tribune reports that an analysis by the Illinois Answers Project and the Tribune found that at least 18 northwest suburban data centers won multimillion-dollar reductions in their taxable value from Cook County officials this year, in one case landing on a valuation lower than what the business paid to buy the site. Of those 18, 11 already had special local tax incentives that reduced their tax burdens over a dozen years, and 12 hold separate state tax breaks that save owners money on sales and use taxes.
Combined, the assessment reductions and incentives cut nearly $2 billion off the taxable property value of data centers across the suburbs of Elk Grove Village, Northlake and Franklin Park, translating to almost $100 million in tax savings that would otherwise have lowered bills for neighboring property owners or funded local infrastructure. In Northlake, the average homeowner would save more than $2,000 annually, about 30 percent of their bill, if local data centers did not receive the reductions and incentives. The 18 facilities paid nearly $71 million in property taxes for the 2025 tax year, and the three Northlake data centers alone made up about 28 percent of that city’s tax base last year.
Cook County Assessor Fritz Kaegi has fought many of the valuation cuts, arguing commercial properties, including data centers, have been undervalued. His office’s director of valuations research, David Lehman, has personally drafted and defended appraisals, an unusual step in a process where evidence from property owners has often gone unchallenged. In the case of Microsoft’s Azure data center in Northlake, Microsoft’s appraisal valued the property near $250 million, while Lehman’s assessment reached nearly $900 million, based partly on the site’s 2009 sale price of $182 million plus at least $650 million in later upgrades. The Board of Review ultimately set the value at about $364 million.
Lehman argues attorneys and appraisers often undervalue land and exclude costly systems like backup generators and chillers by classifying them as personal property rather than real estate. He contends data centers should be valued by kilowatt capacity rather than square footage. Geoffrey Propheter, a University of Colorado Denver professor who studies property tax policy, said such systems should generally count as real property because removing them would change the building’s function, comparing them to HVAC systems in a house.
In a separate Elk Grove Village case, an owner argued its facility was worth about $21 million, less than it paid for the property in 2016. Lehman countered that it was worth $100 million more. The Board of Review sided with Kaegi’s office, one of only four such wins out of 13 data center appeals Lehman personally contested that cycle.
Eleven of the 18 data centers operate under Cook County’s industrial tax incentive program, which cuts a property’s taxable value by 60 percent for 10 years before phasing back to baseline over two more years, and can be renewed indefinitely. In Elk Grove Village, now home to 20 data centers with five more under construction, active incentives on five complexes erased more than $280 million in taxable value last year, producing about $14.5 million in tax savings. Without them, the average homeowner’s bill would have been roughly $33 lower.
Kasia Tarczynska of Good Jobs First, which opposes corporate subsidies, said the region’s fiber lines, power access and proximity to O’Hare already make it attractive without added incentives. She cited a 2018 study finding that incentives made a decisive difference in profitability for only about a quarter of facilities studied.
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Read more at the Chicago Tribune here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.
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