A proposed data center would bring Michigan City a $26.1 million windfall, in addition to hundreds of thousands of dollars in additional property tax revenue a year.
Milwaukee-based Phoenix Investors is looking to redevelop the former Federal Mogul windshield wiper factory in Michigan City into a data center. The state approved incentives for the $832 million data center, but Michigan City Mayor Angie Nelson Deuitch expressed some concerns, including low job creation and a lack of contributions to the community.
After talks with the city, Phoenix Investors came back with a revised proposal, hoping to resolve the issues city officials and residents brought up. Company officials made their case for redeveloping a long-vacant site at a Michigan City Common Council workshop Thursday.
The developer proposed paying $26.1 million to the city, including $100,000 for sanitary improvements and $1 million to the Economic Development Corp. of Michigan City to support economic development. It would also pay $5.5 million and $500,000 for the next 39 years to the city.
Economic Development Corp. of Michigan City Executive Director Clarence Hulse said it was a great project for the community that would reuse a brownfield site and put it back on the tax rolls.
“The Federal Mogul site is an industrially zoned, brownfield site that has been empty and dilapidated for the past 20 years, paying $22,000 in taxes,” Hulse said. “This project cleans up the site, will pay approximately $1 million annually for the next 40 years to the city with an additional taxpayer agreement for $25 million — a check sent directly to the city.”
The commercial real estate firm has developed 83 million square feet of space in 27 states since 1994. Its core business is acquiring and redeveloping former single-occupant factories that have since closed, largely in the Midwest, said Patrick Dedering, senior vice president of acquisitions and leasing.
"This strategy has led to a number of case studies of positively transforming the communities that we touch," Dedering said. "In Normal, Illinois, we acquired a building that was 60% finished and was tied up in the courts. It sat vacant for close to a decade. We acquired it successfully in 2021. Without a tenant or occupant, we immediately put the capital into it to put it back into a tenant-able condition. We immediately began the renovation to get it ready for occupancy. We were approached by Rivian, the electric vehicle company, and were able to add another 500,000 square feet on the site. Rivian maintains occupancy, and it's a core part of their manufacturing in that region."
In 2022, Phoenix Investors acquired the 400,000-square-foot Federal Mogul building that was constructed in 1960 by Anco, the windshield wiper manufacturer whose former Valparaiso plant was recently renovated into Journeyman Distillery's The American Factory campus.
It would use the existing building at 402 Royal Road, which NIPSCO recently extended a substation feed to.
The data center would generate noise from cooling equipment, electrical switching and emergency generators, but they would be within the 60 to 65 decibels that the city caps it at. It would test its emergency generators for up to an hour once a month. It would only otherwise use the generators during power outages, disasters or maintenance projects that require idling.
The developer will put in up to 175 trees, 160 shrubs and berms to shield neighbors from any light.
It will get power from NIPSCO and water and stormwater services from Michigan City. It will have 24.7 on-site security and a fire suppression system.
The project is expected to create up to 800 construction jobs and 30 permanent jobs.
Residents who spoke at Thursday's council workshop expressed some concerns, including that it could drive up electric rates and impact the environment. They had questions such as whether the Federal Mogul site was the best location, how many diesel generators would be on site and what would be done to capture carbon emissions.
Phoenix Investors estimates the property will go from generating $22,000 a year in property taxes to $926,000 a year for the first decade and then $1.5 million a year after that. The city would collect about 48% of the property taxes, which would ultimately grow by 68 times.
Hulse said he believed there was "good, healthy momentum" in talks trying to address the concerns of residents and city officials.
"We're excited for Michigan City to be considered for a project of this magnitude," he said. "This would be a win for the city and a win for the residents. This shows the area is doing well and would help attract future companies to the city."
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