In one Chicago suburb, a shot at the American Dream looks something like this: Balloons, fanfare and an NFL Draft-style raffle, with the 20 chosen ones given five minutes to pick a house priced at roughly $500,000 each.
It’s the brainchild of Craig Johnson, mayor of Illinois’ Elk Grove Village. If approved by the town’s board in June, it would be the first new residential subdivision there in more than 20 years.
Lately, the town has been known more for houses demolished in favor of artificial intelligence infrastructure. Stream Data Centers bought — and then promptly tore down — an entire 55-home subdivision about two years ago to build a trio of data centers. Just this week, a borrower known as Elk Grove Village Property LLC is marketing $900 million of junk bonds to build a facility tied to CoreWeave Inc.
It’s a clash of two of the most dominant trends in real estate: the need for more housing in the face of a supply shortage that’s left many Americans unable to afford homes, and the competing demand for land to build data centers.
Smaller towns outside of big cities have emerged as a hot spot for this battle. Outraged community residents are fighting back against data center construction, with some successfully forcing companies to scrap their plans.
Illinois currently offers tax incentives for qualifying data centers. Plus, some data centers in Elk Grove Village can apply for Cook County’s Class 6B property tax classification, which reduces the property assessment rate down to 10% from the standard 25% for a decade.
However, Illinois Governor JB Pritzker proposed a two-year moratorium on new state-issued tax credits for data centers during his February budget address, though lawmakers didn’t approve the measure as part of the budget passed this week.
Housing Hunger Games
For Johnson, who has likened the excitement around raffling off homes to the NFL Draft, the initiative boils down to one thing: keeping people in Elk Grove.
“The American Dream is to have a home and the place to be is Elk Grove Village, that’s why residents will have their first chance at this,” Johnson said. “It’s a unique way to get the housing shortage addressed.”
The Chicago suburb is partnering with Tonne Grove LLC to redevelop a former church site into 20 single-family homes ranging from 1,300 square feet to more than 2,000 square feet. Existing residents of the village can enter a lottery until July 15 for the chance to purchase one of the planned homes, priced from about $466,000 to $508,000, and must agree to live there for at least five years.
The day of the drawing is July 18, and eligible entries will be placed in a ticket drawing system. When an applicant’s name is selected, they will have only five minutes to select a lot.
Already, the buyer inquiry website for the project has seen more than 107 inquiries since it launched May 27, according to developer Nick Papanicholas. He expects about 400 more by the time the raffle takes place July 18.
“The demand has been outrageously huge,” Papanicholas said, noting that each home is $75,000 to $100,000 less than market price. “That’s $2 million left on the table by us, the at-risk developer. But we believe in the initiative and what the mayor’s trying to do here.”
As for the data centers nearby, Johnson said they are “the perfect neighbor” who contribute to permitting and tax funding and help in building rehabilitation. The site bought by Stream Data Centers was in “a dumpy area” in the heart of the industrial park, and many residents had already moved away.
And in just the last year, the 20 data centers in the village generated $26 million in tax revenue, he said.
Katgara writes for Bloomberg.
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