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Hammond lands tax credit for $40 million data center that would be the largest in Indiana

A developer wants to build a data center on part of the State Line Generating Plant in Hammond.

Hammond lined up a state tax credit of more than $9 million for a developer to build part of a data center on the former State Line Generating Plant site on Lake Michigan.

Hammond Mayor Thomas McDermott Jr. said it would be the largest data center in the state of Indiana during a Facebook Live broadcast Wednesday night at Freddy's Steakhouse. Developers plan to invest at least $40 million in the project, and the investment potentially could climb to hundreds of millions of dollars.

"This would be the largest data center in the state of Indiana," McDermott said. "We'd be in competition with the big boys in Chicago."

Hammond's unsuccessful bid for the Amazon headquarters, first reported by The Times of Northwest Indiana, piqued a developer's interest because it involved a prime lakefront spot on Lake Michigan, on the border of Chicago.

"A lot of people were laughing when Gary put in their bid, when Hammond put in their bid and when Indianapolis put in their bid," McDermott said. "But we weren't laughing. We were serious. We looked at the State Line Generating property as one of the most marketable properties in the Midwest. And as a result of that we ran into a great partner who has this great idea and backers in New York and Texas."

Dominion Resources shut down the coal-burning energy plant, long owned by Commonwealth Edison, in 2012 because of its failure to comply with the Clean Air Act. It had been the largest property taxpayer in the city of Hammond, contributing more than $1 million a year to city coffers.

But redeveloping the former power plant has proven to be a challenge, despite its prime lakefront location, because of its condition, Hammond Chief of Staff Phil Taillon said.

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"It's been a problem because it's been one of our more challenging pieces of property," he said. "There are three different substations on the property. There are power lines. So we went to the IEDC and said, 'Look, we need your help, we need a tax credit to recruit or attract investors to that site.'"

Hammond was approved for the full amount.

"We were approved for every penny they asked for," McDermott said. "It's not a done deal. There's still some negotiation between Hammond and these developers. ... It would be twice as valuable as the State Line Generating Plant while sitting on a fraction of the property."

Developers were interested because of access to cold water from Lake Michigan, a reliable local energy grid so they would never lose power and "the information superhighway going under the train tracks there," McDermott said.

"This is the perfect location for them, and it's a great use," McDermott said. "Obviously it's going to be very visible, so we're going to make sure the architecture is nice."

The project could serve as a building block to help modernize and diversify the Region's economy, Taillon said.

"You often hear because we're an old manufacturing area that we need to do more to try to get more tech companies to come to Hammond and Northwest Indiana. This infrastructure is going to help us attract some of those companies that right now might bypass us. This is going to be exciting for Northwest Indiana."

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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.