A St. Louis-based data center developer wants to transform the shuttered Alton Steel mill into a 200-megawatt data center, just nine months after the factory's sudden shutdown left 253 workers without jobs. TerraWatt has proposed redeveloping the 381-acre property at 5 Cut Street into what it's calling the Riverbend Technology Center, pending city rezoning approval and a buyout agreement with Alton Steel Inc.
According to St. Louis Public Radio, TerraWatt has reached a contingent agreement to purchase the Alton Steel property and plans to close on the deal in 2027 if the city approves rezoning and other required conditions are met. The project also hinges on a study from Ameren Illinois and TerraWatt's own due diligence, the outlet reports. If it moves forward, the first phase would involve demolishing roughly 1.26 million square feet of existing mill buildings before new construction begins.
The Alton mill's closure in January left a gaping hole in the Metro East economy. Alton Steel abruptly halted operations at its 750,000-ton-per-year steel mill after a primary supplier seized raw materials that had been held as collateral, according to Argus Media. The shutdown ended steelmaking at the site. Laclede Steel Company entered bankruptcy in 2001 and was purchased by local investors in 2003 to preserve industrial jobs, per the U.S. Environmental Protection Agency.
No Tax Breaks Requested, Developer Says
TerraWatt co-founder and CEO David Daneshforooz told the station the proposal would return the mill site to productive economic use. The company says it will pay its own project costs without seeking local tax incentives and will not request or use funds from Alton's Riverfront Tax Incremental Financing District, even though the site sits within that TIF zone, the station's report notes.
Daneshforooz said TerraWatt expects the project to generate millions of dollars a year in new tax revenue for Alton and its schools. He also said the data center would be the quietest neighbor the site has had in a hundred years, and that the company believes in responsible development and intends to be a good neighbor, per the same account.
A Separate, Larger Project Faces Legal Fights in Midtown St. Louis
TerraWatt is simultaneously pursuing a separate 120-megawatt data center in Midtown St. Louis's technology district, colloquially known as the Armory Data Center, with construction expected to begin in August 2027 and wrap by late 2029. Construction there is estimated to cost roughly $1 billion, with another $2 billion in equipment costs, per the station's reporting.
That Midtown project calls for $1.05 billion in building construction, $40 million to renovate the historic Armory into office space, and roughly $2 billion in server and technology equipment supplied by the eventual tenant, according to the St. Louis Business Journal. But the Midtown proposal has run into legal turbulence on two fronts. Opponents including local residents and environmental organizations filed a lawsuit in August seeking to overturn the municipal permit, citing concerns over noise pollution, energy consumption, and a lack of environmental impact studies, as reported by CBS News.
TerraWatt itself then sued the St. Louis Board of Adjustment in September, alleging that city-mandated renewable energy conditions and required aldermanic approval on a community benefits agreement exceeded legal authority and were impossible to satisfy on the site, the Business Journal reported.
Illinois Incentives and a Shifting Policy Landscape
Illinois law offers its own set of incentives for data center projects, though TerraWatt has said it won't seek them for Alton. Under the Illinois Data Center Investment Program, operators must make a minimum capital investment of $250 million over 60 months and create at least 20 full-time jobs paying 120% or more of the county average wage to qualify for state sales tax exemptions, according to the Illinois Department of Commerce and Economic Opportunity. The state also provides a 20% income tax credit on construction worker wages for qualified projects in designated economically underserved areas.
That incentive landscape is shifting. Illinois Governor J.B. Pritzker announced a pause on state sales tax exemptions for data center equipment purchases in mid-2026 while advancing legislative efforts to require operators to fund electric grid expansion costs directly, per S&P Global Market Intelligence.
Public Open House Set for Next Tuesday
TerraWatt plans to hold a public open house on Tuesday from 6 to 7:30 p.m. at The Wedge, 620 E. Broadway in Alton, giving residents a chance to weigh in before any rezoning decision moves forward. The Riverbend Technology Center would proceed in several phases if approved, starting with the mill demolition.
For a community still absorbing the loss of 253 steel jobs, the proposal represents a bet that server racks can replace electric-arc-furnace steelmaking on the same patch of riverfront land that's hosted heavy industry for more than a hundred years.
