Jeff Rea-President and CEO of The South Bend Regional Chamber

 Today we're diving into a topic that's generating a lot of conversation across the country and right here in St. Joseph County: data centers.

As artificial intelligence, cloud computing, and digital infrastructure continue to expand, communities everywhere are evaluating what these large-scale developments mean for economic growth, energy demand, workforce opportunities, and long-term competitiveness. St. Joseph County is no exception.

To help us understand the opportunities and considerations surrounding data center development in our region, we're joined by Jeff Rea, President and CEO of the South Bend Regional Chamber. Jeff has been at the forefront of conversations about economic development, site selection, infrastructure investment, and the future growth of our community.

We'll discuss why data centers are attracting attention, what makes St. Joseph County a potential destination for these projects, how local leaders are approaching the conversation, and what residents and businesses should know about the potential impact on the region.

Transcript

SPEAKER_00 0:01

Welcome to Inside the Region, the podcast that explores the forces shaping our local economy. Being brought to you by Old National Bank for relationships and results matter. Discover what Old National Bank can do for you at OldNational.com. In each episode, we dive into the conversations driving business growth, investment, and innovation across the region. From major development projects and capital investments to workforce strategies, market trends, and data insights, we unpack what matters most to business and community leaders. Now here's your host, Director of Economic Development at the South Bend Regional Chamber, Alison Hersey.

SPEAKER_01 0:37

Welcome to Inside the Region, where we explore the issue shaping our economy and communities. Today we're joined by my boss, Jeff Ray, CEO and president of the South Bend Regional Chamber. And uh Jeff, thank you for being here today.

SPEAKER_02 0:50

Boy, it's an honor to be on with you. Thank you for asking me.

SPEAKER_01 0:53

Oh my gosh, did you hear that? Wow. It buckle up people.

SPEAKER_02 0:56

Hey, I'm a big fan. I listened to this. You actually have had some great guests. I love kind of the insight into what's happening in the economic development space. It's the thing that we get asked about probably most when we go different places. So to be able to dive deeper into the podcast is great. So I think you're helping educate a lot of people about uh key economic development things in the community. So thank you for doing that.

SPEAKER_01 1:15

Yeah. So I gave them notes on how to lead off and start. So appreciate that. Um today, though, we are going to talk really kind of um about data centers. It's it's everywhere. You can't get away from it. You wrote uh, you know, an article about it. We a couple. A couple. You know, our website has a lot of information about it. Um, we're often asked to participate in conversations related to it. And so I thought it would be really good if you know the two of us kind of sat down and talked a little bit more about you know data centers in general and and what's going on in our community.

SPEAKER_02 1:49

Yeah, I I love the idea. You you know, in particular when we think about the explosion of this around the country because of what's happening in the AI space, some 5,000 of these being built around the country right now, another 2,000 planned in the years ahead. Um so it's it's definitely something every community, not every community, but a lot of communities across um the country are dealing with right now. We've sort of seen it play out um in a lot of different places. We've obviously seen it here with two uh really significant projects. So I appreciate the chance to sit and talk a little bit um in deeper detail about it today.

SPEAKER_01 2:20

Aaron Powell And I think most people at this point understand what a data center is. Um but it at a high level, just you know, what why are they so important?

SPEAKER_02 2:29

Aaron Powell You know, it's interesting. Not as you know it's really become critical infrastructure. Not a single transaction happens with a business that doesn't affect isn't touched by a data center sometimes. So I think that um businesses in particular see how important um this is as technology takes you know an even greater role in all business transactions. I I think that the that businesses say, gosh, we really need these because speed is key. We need the processing, we need AI. Um AI is making our lives easier, that kind of stuff. And so um that that's kind of leading to this explosion um right now, and and I think the the major growth. You know, when you think about it, that there's not another business industry that's growing like this right now, and which is partly why it's catching so much attention because it's it's on the headlines everywhere.

SPEAKER_01 3:17

Yeah, and you know, as you kind of look overall, like manufacturing used to be one of our you know big headliners, and then you know, we've moved over to really more to be a service industry in the nation, and now all of a sudden tech is really just everywhere. You can't go anywhere without it. You drive on, you know, the highway or and the toll road, and all of a sudden you have the easy pass and just the everyday things, you know, your banking and you cannot get away from technology anymore. And I think, you know, it's often kind of missed as people are looking and uh at data centers and trying to calculate, you know, are they gonna be here for a long time or is this just a fad that's going away? What do you what are your thoughts on that?

SPEAKER_02 4:00

You know, it's interesting because uh, you know, when you asked the question, I certainly I pop back in time a little bit and think almost 25 years ago, we were at the forefront of this discussion. We've had data centers for 25 years plus in our community. This isn't a brand new fad. Um and I think 25 years ago, we thought we could be on the front edge of this. We worked really close at the time with the state of Indiana on um legislation that would be favorable, you know, toward data center development. We thought uh um our old manufacturing base, the power uh infrastructure that was built to support that base, um, the fiber technology that ran you know through our area, the our climate here, all made us really prime for this. And so we saw we saw them first uh you know in places like Onalytics and and over at the old Studebaker complex, so on a much smaller scale, if you will. But as the as the AI explosion has happened and and then as there's greater need, um, you know, we certainly see more need for this. Um and I think that's only gonna continue to grow our businesses. And it like you said, every transaction is here. I I can't stream a movie, I can't do a uh do any banking, I can't do really uh um watch NFL football, all those, you know, I can't shop online, any of those without you know kind of touching um this. And so um I think it's in you know it's here to stay. I think sometimes there's this, you know, this bubble's gonna burst in the next couple years and it's gonna go away. And um and what are we gonna do with all these buildings? I'm sort of not in that camp when I see the amount of massive investment that the major tech companies are making right now. They're not making that kind of investment to walk away from it in a couple years. Certainly things will change over time as technology evolves, but uh uh but this is here to stay, is gonna be a part of our community for some time and has really significant impacts on our community as a whole. All that I think um are are some benefits, they're gonna be real pluses.

SPEAKER_01 5:53

Yeah, and you know, you've talked about we have two large um projects going on in our community. We have an AWS and Microsoft, but I think really before we get too far into that, I want to talk about responsible um development and and what that means with data centers. Can you give a little insight to that?

SPEAKER_02 6:11

Yeah, I think so. You know, you know, it's interesting. I think uh uh with with any industry, especially some new that are coming at this scale, we want to really understand um what they look like, what they sound like, what they smell like, what they use, all those kind of things. So we certainly spend a significant amount of time studying um other communities and how um these developments have impacted um other communities and what safeguards they've put in place and all those kind of things. You know, and and I would use water as a as a good example here. Um when these first were announced here, the great concern about the aquifer and what happens with the aquifer and and can we protect it because it's one of our most important resources. So we very carefully assessed the aquifer, understood it's safe yield each day, put some caps in place to protect it so we can we never even come close. So we have a 44 million gallon cap per day. That's how much the water the aquifer recharges every day. We we a cap is in place that we would never use more than 24. And I think it's important to understand for folks that we're not anywhere near 24 right now, and we're not even anywhere near 24 after these data centers are built as well. We built some capacity in there for future growth and stuff. So uh so I think the protection is good. We'd only ever use about 55% of what the daily capacity is in an effort, and that's uh that's leaders in our area recognizing that we need to uh make sure that we protect um that resource. And then I would say and and other things, like we thought yeah, like everybody wonders about power and what you know, what do we do with with power? Are my rates gonna go up? And you know, and we've studied other communities, we've kind of felt like no, no, actually it's been the opposite is you know, we have an aging infrastructure, whether we have data centers or not, um, we have to make investment in infrastructure. And normally that expense would be on you and me uh to have to pay for that in terms of upgrading this infrastructure that needs to uh be improved. The the truth is data centers are kind of helping be that uh um that payment source, if you will. The investment that they're making there will actually uh lead to a rate decrease in Sancho County next year with a rate case filed that we expect to be filed in June on rates and stuff. So you know, so part of this is just studying all those kind of things, putting protections in place, um making sure those companies understood what we wanted and one what we needed, um, understanding kind of the impacts of them long term when we think about, you know, kind of what's the tax impact, job impact, you know, the impact of those new wages there. This this is something that has been studied. I think the perception sometimes from the public is we've not thought through all of those things as a community. I think that we're probably farther ahead than most in thinking uh through those kind of um protections or what the answers to those those kind of things are. Um certainly I think it's right for people to be asking questions, but but the these are the same questions that we and others have been asking for a long time and that we have a lot of good answers for.

SPEAKER_01 8:58

And and let's talk about AWS because um they're much further along than the Microsoft project. And when AWS came and they were working on their development agreement, they made some um real efforts to try to listen to what the community's concerns were and to set aside um some funding for some of those to make sure, and not even funding, but to incorporate that into their plan. You know, lighting is one thing that they have really across most um development at this time has lighting um facing down to be respectful and you know, of nighttime lighting issues. And then there's some stuff about um, you know, being aware of uh the the um native pollinators. And I mean, they really kind of went out and listened to what people's concerns were and and took the time to say, you're right, we're gonna make sure that we put um safeguards in place, or um, you know, in some instances, put environments in place that will promote some of these things that are very important to your community. Um, and and that's one of the great things about what we do. We get to have kind of a front row seat to those types of conversations, but we often, when you know when you have a big company behind, you know, you can look at other projects they've done in other communities and see um the impact they've had there and then be able to, you know, pick those things and talk about them for your own community. I know um there's been some stuff with uh AWS making investments in schools out there. Do you, you know, do you have um any insight on some of that?

SPEAKER_02 10:33

Yeah, I you know, I I think perception big companies don't care about local. They're gonna come in, they're gonna suck the money out of this, you know, community, take advantage of it. Certainly not been the case here where AWS has been a phenomenal partner from day one. Said we have these important corporate priorities, um, and we'd like to incorporate those into what we do here. So some so some of that investing in the K through 12 space made a major investment with New Prairie Schools on a new learning center there that's one of their only ones, I think, in the world uh right now. Um, volunteering in the community has um sustainability goals and and making donations to that. And and it's I think it's not just sprinkling money. The the AWS AWS team is actually really rolling up their sleeves and making things these things go and volunteering in the new learning center at New Prairie or volunteering at different places. Um, they're in it for the long haul. They they know they're big and it can be a little bit um um of a pain right now while that while they're building, and they want to sort of show um kind of their overall commitment community. I love that. I you know and I would say that may be different than what we've seen with some other large companies, and it's probably become the new gold standard, if you will. We want everybody to sort of live by this this same idea and embrace and be part of our community. Not only are they going to be a big taxpayer, uh, but they're a big civic benefactor. And if you and you think back hunt back hundreds of years in our communities, Uniroil and and um Studio Baker and those, that's that's what big companies did. They led and they made investments in major things in the community. They want to be part of their community, they want this community to be good for their employees as well, too. So we love the investments that they're making. We would anticipate um Microsoft following suit on some of that kind of stuff. They're much earlier in their process um right now, but uh but all indications to us so far are are they too will be embracing the community like AWS and and will become an important um partner from day one.

SPEAKER_01 12:26

Yeah, and they have in other communities that they're in, which so it really kind of shows that what we can anticipate within our own community. Uh AWS is over in New Prairie, as you mentioned, and Microsoft is in the Penn Harris School District. And so really across the whole county, then we're going to see some impacts from these larger projects on our students, helping them kind of make those decisions on what comes next, career choices, giving them awareness. Um, you know, the big thing I've noticed working with both of these organizations is the employees themselves are just they're thrilled with their jobs. They like what they do, they like sharing that knowledge with the younger generation. Um, you know, that makes me sound really old when I say that. But, you know, it it's interesting. And they live in our community now. And so they're very invested in working alongside other community members towards some of those goals that you had talked about.

SPEAKER_02 13:19

Uh, you know, it's interesting. I because I I I think we're lucky to have the two partners that we do. Um, these are two of the best places in the world to work. Uh, these are our people that are the most community-minded, they lead on environmental sustainability and so many other goals like that. So to have them here kind of setting the example uh for our community, but also for other employers in our community, I think is a real plus. And and uh like say all all has been good, you know, and it's amazing when you start thinking about like AWS, for example, largest investment in the world uh is right here. That's that's what they're making right here. They they have found this um community to be um supportive, they found some great uh a great plan um plan for some development and and they could have made this investment anywhere in the world and and we won. And it's interesting, we're not used to winning, you know, sometimes. And I think uh um we we should take great joy in in knowing that in a competitive process where they could have picked um many different communities, they picked our community. And I think long term we're gonna really benefit from this. And and and so you know, some of that is is on the tax side. This would even though there's some abatement and some people don't feel great about the abatement. This this is these are jobs and investment we wouldn't have had we not done an incentive, you know, for example. And so, you know, I think I tell some people sometimes that that 50% of something is better than 100% of nothing. And that's just kind of the simple math um there. And so we get great benefit of that. More importantly, though, I think this is a game changer for families in our community. When I think about especially the job side of this, and and so um, you know, right now, about um, well, first on the construction side, these have been amazing construction jobs, and we've had thousands of local people out on site working each and every day. And that's been a real boom for that. We have more people in the apprentice programs than ever uh before. Um, we've got uh, you know, people working on site, people have never thought of working on construction trades or out on site helping build um these plants, and I think that's great. But I think more importantly than, uh or important as important, I guess, not more importantly, but um long term, the jobs that are created on these sites are significant too. People, the critics say there aren't any jobs associated with it. We don't think that's the case. We have 900 people working out there today in full-time jobs at an average wage of $40 an hour. That's about $82,000 plus a year. That's a great wage for folks in our community. These are um are game changers for some families who have been working in in jobs that pay much less and uh and now have a chance to really benefit their family. Now can better afford housing, now can better afford childcare, now can afford better afford just to live in our communities. And I think that's uh that's a real plus uh for our communities and and uh and a real misnomer that I like to correct when I'm talking to people because this is a pretty significant uh job generator. When I think of our the people from our community, 60% of them don't um usually take any classes beyond high school. You can take a couple classes and go make significant money out on these sites and and and and I think more importantly, to be in with a good employer that has a great strong reputation, that has good benefits, some of those kind of things. So so that's a real plus, and I think as a community we should be excited about.

SPEAKER_01 16:18

And I'm gonna jump in on you though, because we often hear you had mentioned somebody, you know, comes in and and they're able to move up and take a job that has a substantial pay increase from jobs they you know previously had or a new opportunity for their family, but that might mean that they're leaving a job behind. We have heard some of this conversation. What's your you know, what's your take on that?

SPEAKER_02 16:39

You know, it it it is interesting. A few employ uh uh existing employers aren't very happy because wages are going up in the community. And it historically the rising tide has has raised all boats. I recognize that the challenges with that, but but we need an area um that's pros that's prosperous, right? And we need people to make more money and we need people to be affordable to afford housing and and be able to afford all the amenities that go with it. That's all signals the health of our community. So I I think that you know, for those other employers, I think this opened up a spot for somebody new, right? This is part of the the ladder, and and not everybody is ready for that AWS job, but somebody is ready to step in for uh those jobs that maybe somebody moved on to AWS, you know, for and so I'd like for existing employers to bear with us. I'd like them to be cheerleaders uh, you know, for um kind of development, because we need this um activity and we need our economy to continue to grow. Um unemployment's really low, and when unemployment is really low, there's a lot of competition for folks and just and the wages uh go up. And and but uh overall wages going up is a good thing for our overall community.

SPEAKER_01 17:43

Some of the conversation is revolved around individuals, you know, our labor force participation rate is down. We have 5,000 individuals currently not working. Um, and people are like, well, how are you gonna get them back in the workforce? Maybe they don't want to work, maybe they've retired, you know, what's holding them back? And you know, our conversation around that has often been like wages are part of the conversation because a higher wage, like $82,000, is really transformational. And do you see that making an impact on some individuals that are not currently working in the workforce coming back in?

SPEAKER_02 18:17

I I do think so. I think especially the childcare piece where maybe um two parents have decided it's more economical for one to stay home rather than pay for the cost of childcare. So a higher wage sort of helps maybe put both back into the workforce. I I think a lot of um different reasons, but but I also think like like we've got to have like the the great mix of jobs here, the right job opportunities, the right skill set, the right environment. You know, we talked about like these um you know projects are generally you know kind of clean room kind of environment almost. You know, it there's not a bunch of heavy lifting and such. There are, you know, certainly some, but but I think the the right job, the right benefit plan, um, you know, kind of helps the whole family there. And and and our hope is that it does um cause some of those to come back to work. You know, when we look at the AWS jobs initially, 80 plus percent of them are from here. And we we would have anticipated a lot were from here. We're glad to see that when we laid out mapped out a plan. Um uh when I say we, when you when you helped us map out a plan, you know, important piece of that uh early on is where will these people come from? We had to make the case to AWS, so where we thought they'd come from. We thought a lot would come from here. And many of those have been underemployed, many of those have been out of the workforce, some of those are commuting and have a job now that's closer. Um there's no one um solution on the workforce side. And so um we're we're we're thinking that that's exactly what they're seeing. 20% came from outside the area. That's exactly what we hope will that some people will come here and move here for the job opportunity. We gotta grow population. Our population had been pretty stagnant for um six plus decades. It's finally grown a little bit in the last decade, but but but it'll only grow, I think, if we have those job opportunities and then the right quality life amenities for people to be here to enjoy.

SPEAKER_01 19:55

Yeah, and we know some individuals um who have moved back to the region um to take a job at um AWS's facility. And so, you know, they saw this as a great opportunity for their family to move from Chicago and um Indy to come back to be closer to home, be closer to family, and and set roots back down. And so we love seeing that boomerang effect with uh you know jobs, um, especially at $82,000. Um, I want to just kind of pivot a little bit and and talk about like the economic impact of some of these jobs, because it's real money that we're talking about. We um for most projects, our organization goes ahead and does economic impact modeling and we use um implant modeling software. And so part of that is you know, just trying to understand the impact of the ripple effect of those jobs, the payroll out into our community. So it's you know, you you talk about the uh 900 individuals that are employed right now and up to 1200. But the the reality is when those individuals are out spending their money, it is gonna impact our community over $400 million a year. I mean, that's like real money.

SPEAKER_02 21:08

It it absolutely is. And and it, you know, not insignificant. You know, it's funny it's funny. I think you know, our elected officials carefully weigh things like this as they're making decisions on this. You know, you know, we the the long-term economic impact every year. We get, you know, you give up a little bit on the front end on some taxes as you're uh uh phasing some taxes in, but you get the long-term benefit of that new spending in the area. As I mentioned, this is game changing for families, but game changing for the community for us to be able to add a new user with a 400 plus million dollar economic impact just from the wages. We also think they might buy one or two things, you know, from here. They'll pay a lot of taxes here, they'll have a lot of people come in and out, they'll use our airport, stay in our hotels, do a lot of things. It really impacts us up and down the line in so many different ways. And we've sort of seen that initially just on the construction side. But as all of these start to come online, we'll feel it. Um, in particular on the tax piece, for example, or as property taxes. I I think long term, when we look at what happened in Loudoun County, Virginia, property taxes went down. We all want property taxes to go down. I'm not guaranteeing that they're gonna go down here, but more people paying into the pie means all of our pieces of the pie could get a little bit smaller here. And and if it if things follow suit here like they did in other communities, I think we'll really benefit from that. But but but the the best thing is that people are already benefiting from the construction workers here that are are doing work and then will benefit from these new full-time jobs and the wages they're paying and the cars that they buy and the groceries that they buy and the new houses that they buy, um, will all be things that really benefit our community in a positive way.

SPEAKER_01 22:38

Well, and we could probably talk for another hour about all of this, but we're running out of time. So I want to thank you for coming in. Appreciate your insight on a lot of uh you know the nuances that you really don't hear being broken down um in the community. And so thank you again for your time today.

SPEAKER_02 22:52

Yeah, thank you. I I do hope just one last word of advice for folks. I said there is a lot of information. Some of it's right, some of it's not. I just uh I want I want folks to continue to ask the questions. Reach out to us, ask us the questions. We're happy to help share our knowledge or insight. Um, there's a lot of uh rumors and different stories out there. I just encourage people to be open-minded. Be uh don't be afraid to ask us questions, but also um seek out the answers because there's a lot of great answers to it. Um not all of what we've seen right now has been um exactly what you're seeing on site.

SPEAKER_00 23:21

To learn more about the South Bend Regional Chamber and explore our interactive data dashboard where local economic and labor market data comes alive, visit sbrchamber.com. A special thank you to our sponsor, Old National Bank, where relationships and results matter. Discover what Old National Bank can do for you at OldNational.com.