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Massive lakefront data center to employ 100, take up as much as 1 million square feet

A developer wants to bring a data center to the lakefront site of the former State Line Generating Plant, which has since been razed, in Hammond.

HAMMOND — A proposed massive new data center on the Lake Michigan lakefront could be used by companies and institutions from across the country, providing opportunity and leaving space for future growth, city leaders say.

Carmel attorney Tom Dakich, a Northwest Indiana native and the brother of sportscaster and former Indiana University basketball star Dan Dakich, is looking to develop a wholesale data center at the former State Line Generating Plant, a coal-fired power plant on the Chicago border shuttered in 2012 because of heavy air pollution and multiple Clean Air Act violations. He's spearheaded a similar but smaller project in Indianapolis.

Hammond city officials said the data center would employ about 100 workers and result in $40 million to $200 million in investment. Chief of Staff Phil Taillon said it would initially be 400,000 square feet on 12 acres of the 77-acre site, but could be expanded to as many as 1 million square feet if there's strong demand. That would potentially make it nearly as large as Digital Realty Trust's Lakeside Technology Center in Chicago, a 1.1 million-square-foot multitenant data hub billed as "the world's largest data center."

"If it's successful in the first 36 months, it could really blow up," Taillon said.

The project would include wind turbines and solar panels to generate part of the power needed for the energy-intensive center, a greenhouse for Purdue University Northwest and 200 feet of greenspace for the Marquette Greenway trail connecting Chicago to Northwest Indiana.

New York City-based DataGryd Data Centers LLC, which also operates a major data center in Manhattan, would operate the data center. The center would house computers that would store data for off-site companies.

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Site offers plenty of pluses

"They could lease space to a bunch of different companies such as AT&T or Verizon," Hammond Mayor Thomas McDermott Jr. said. "It's a perfect location. A national fiber line, one of the main lines, runs right down the train tracks. They have access to the Midwest power grid. They're just south of Lake Michigan so they have cooling water to cool down their operations, like we did in the Navy. They're pulling in water and all they're discharging back into the lake is warmer water, so it's a clean use."

Hammond is lining up a $9.1 million state tax credit from the Indiana Economic Development Corp. for a program that's aimed at redeveloping old industrial sites.

McDermott said the facility would be highly automated so it would require relatively few employees, at least compared to other industrial behemoths lining the South Shore lakefront. But the data center would require high-tech maintenance workers to ensure everything continues working around the clock, Taillon said.

The city had been in talks about the project with the developer, its backers in New York and Texas, and Sam Townline Development Inc., a side venture by the owners of Beemsterboer Slag Corp. in Hammond that owns the 77-acre lakefront property but is interested in selling. The Beemsterboer family initially had pitched a lakefront neighborhood with a marina and greenspace, but such a project would be extremely difficult to pull off, McDermott said.

"This location is tough," McDermott said. "If we had our druthers, it would be great if you could put a skyscraper with condos there. But there's so much heavy infrastructure. There's 10 rail lines, high tension wires with 365,000 volts that carry energy from state to state and are a core of our national energy system, and huge substations."

Everything uses data

McDermott said the site was far better suited to a data center that could be built around the existing electrical substations. Since the project would only take up "a fraction of the site," other companies could build data centers, or Hammond still potentially could use part of the property for a water plant that would sell cheaper tap water to the South Side of Chicago and the south suburbs, he said.

An analyst estimated the project could generate as much as $48 million in property tax revenue for a tax-increment financing district that could help fund further development at the site.

"Psychologically, this means so much to the city of Hammond," McDermott said. "This shows we can bring in similar types of tech companies. This is something that could be used by Oracle, AT&T or Apple."

The data center could help diversify the entire Northwest Indiana economy because it could be cited as critical infrastructure in pitches to tech companies, Taillon said.

"When you go to talk to tech companies, you can say we've got this data center to support what you guys are doing," he said. "Everybody's using data now. Everything's using data. Autonomous cars will be connected to some sort of data system. Any company going forward will need data of some kind, and not just data companies. It would appeal to small businesses to large corporations that employ 10,000 people. It's an opportunity for anyone and everyone."

The city hopes to finalize a deal with the developer and tech company in the next few weeks, Taillon said. Construction should start in the summer and take about 12 months.

"They describe it as an off-ramp to the information superhighway," Taillon said. "Chicago has a very large data center at 350 E. Cermak that's been very successful. We can market this to companies all around the country who might find it a lot cheaper in Indiana. We're going to be able to offer a cheaper product."

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.