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A welcome sign for Michigan City is seen on U.S. 12.

Kale Wilk, The Times

MICHIGAN CITY — The city has taken the first step toward annexing 500 acres to develop new homes and warehouses.

The City Council has entered into an agreement with two of the six property owners to annex the land so water and sewer lines can be extended to the undeveloped site along U.S. 20 near Interstate 94.

Clarence Hulse, executive director of the Economic Development Corp. Michigan City, said the remaining landowners are on board and should officially be part of the agreement early next year.

About half the land is used for raising corn and soybeans; the rest is wooded with a creek running through it.

The site is on the south side of U.S. 20 beside the South Shore Freight Railroad tracks.

Hulse said talks already have been held with several developers interested in having product coming in and out of the site on a rail spur that would have to be added to the tracks.

"That’s key for any large industrial development," Hulse said.

Annexation could be finalized before the end of 2018.

Hulse said providing water and sewer service will substantially increase the land's value, but the owners have agreed to a three-year ceiling of $45,000 per acre to attract buyers so development occurs rapidly.

"We want to make sure it’s not going to be overpriced and nothing ever happens," Hulse said.

Councilman Tim Bietry said the site's proximity to rail and two major highways means the area has great potential.

"We’ve been talking about this for years. We were all really happy to see that first step taken," Bietry said.

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