A $7 billion data center planned for Hammond would fund the city's College Bound Scholarship program for 20 years.
The scholarship program pays college tuition for high school graduates in Hammond, which city officials credit with stabilizing the housing market at a time when many other cities in the Calumet Region and across the Rust Belt have struggled. Hammond Mayor Thomas McDermott Jr. said the data center developer would pay $80 million, which would ensure the long-term stability of the program that has sent thousands of Hammond youths to college.
McDermott said the potential windfall could not have come at a better time, as the casino revenue that has long bankrolled the program has been diminishing in recent years.
Chicago-based Decennial Group filed plans with the Indiana Utility Regulatory Commission to invest $2 billion to build new buildings at the former State Line Generating Plant on the Lake Michigan shoreline in Hammond, right on the border with Chicago. The developer plans to invest $5 billion in computer servers that would be used to support online activities, including social media use, GPS navigation and the increased use of artificial intelligence.
The project was held up while NIPSCO pursued regulatory approval to create a GenCo subsidiary to negotiate rates directly with developers while supplying electricity to future data centers. But the two sides have made progress during negotiations following the state approval, McDermott said.
"If the deal goes through, the data center group working with NIPSCO will provide Hammond with $80 million for the next 20 years. The $4 million a year would be enough to be a permanent source of funding for College Bound," he said. "It's something the council needs to weigh, but it's what I would like to see the money used for."
Such direct payments to cities are becoming increasingly common in Indiana when data centers come to town. Phoenix Investors pledged to pay $26.1 million to Michigan City so it could build an $832 million data center at the former Anco factory.
The payments in lieu of taxes are the result of an incentive Indiana passed to lure data centers to the state, McDermott said. Indiana offers tax breaks of up to 50 years on sales and use tax on equipment and energy for investments of more than $750 million.
The new data center would still pay property taxes on the buildings it constructs to fund local municipal services, McDermott said. But most of the value is in the computer servers.
"It's a payment in lieu of taxes. Most of the worth is the computers, which aren't taxed. The data center will still require services from the fire department, the police department and the city," he said. "It's like an impact fee. It's a hotel for computers. But the computers are tax-exempt, so we negotiate a payment so it benefits the city."
McDermott said he negotiated a large enough payment to cover College Bound for the next two decades. The program has historically been funded by casino and water utility revenues, but the city's casino tax income has shrunk by $15 million a year after the Hard Rock Casino was built on the Borman Expressway and eclipsed the popularity of the Horseshoe Casino, which had been the busiest in the state with a lakefront location right on the Chicago border.
College Bound Coordinator Sharon Daniels said the program has sent 9,282 high school graduates to college thus far. A total of 465 students are now enrolled in the program.
The majority of College Bound scholarship participants end up going to Purdue University Northwest, Daniels said. Many also go to Indiana University Northwest, Calumet College of St. Joseph and Indiana University Bloomington, followed by Purdue University, Indiana State University and Ball State University.
The scholarship amount was originally tied to the tuition at Indiana University and can be applied to any college in the state. Some even use the funds to cover part of their tuition at private schools like Butler University and the University of Notre Dame, McDermott said.
The program has been successful and attracting residents to and retaining residents in Hammond, he said.
"Hammond's housing market speaks to its success," McDermott said. "We're committed to it in every possible way. Look at the housing markets in other urban cities in the Midwest since I've been mayor."
Zillow estimates the average home value is $173,361, up 0.5% as compared to last year. That compares to $131,147 in neighboring East Chicago and $83,352 in neighboring Gary – two fellow industrialized North Lake County cities that have experienced similar trajectories.
The program has also given Hammond and Northwest Indiana a more educated workforce, since many of the scholarship recipients attend college close to home.
"A lot of the kids want to stay close to their parents and love the Region," McDermott said. "I think it's good for people to experience the world and see the world before coming back to the Region. But Hammond's a smarter city now because of College Bound. It also requires 40 hours of community service, so it's great to see them doing internships out in the community."
McDermott said a data center would have other benefits, such as potentially attracting more technology companies to the area or by hiring workers who could go on to start tech firms locally. But the biggest impact would likely be the long-term support of College Bound, he said.
"I think College Bound is the most important program the city has even had, certainly in my 20 years as mayor," McDermott said. "This will need the city council's support, but it would ensure we don't have any questions years from now about where we're going to get the funding."
© Copyright 2025, nwitimes.com, Munster, IN