Michigan City officials had been eagerly eyeing the redevelopment of the 165-year-old Indiana State Prison that's long been considered a drag on property values and developments on the west side of town.
The city brought on consultants, started holding public hearings and took suggestions from the public on how to redevelop the site of the historic prison that has been home to many infamous inmates like the bank robbers John Dillinger, Harry "Pete" Pierpont and Homer Van Meter.
However, those plans are now on hold after the state of Indiana reversed course and rescinded its letter of intent to transfer the prison to the city when a new $1.2 billion prison in Westville is built. The city has been informed that the current Westville prison will still close, but the Indiana State Prison will no longer be consolidated in the new facility and will instead stay open for years to come.
“The state of Indiana has informed our administration that the December 2024 letter of intent to transfer the Indiana State Prison property to the City of Michigan City has been rescinded due to changing circumstances at the state level. While this is not the direction we had been anticipating, our team is working to process and pivot based on this latest development," Michigan City Mayor Angie Nelson Deuitch said. "We are continuing conversations with the state today and tomorrow as the future of this property reaches a crossroads. No final path has been determined, and our city remains committed to advocating for outcomes that benefit our residents."
Indiana Department of Correction officials did not return messages Monday.
Michigan City still plans to work toward its long-term goal of redeveloping the Indiana State Prison, which was supposed to be vacated by 2026 and turned over to the city by 2029.
“For generations, the Indiana State Prison has been a barrier to investment and growth on our Westside. While the state’s rescission of the transfer agreement is not the outcome we were expecting, our mission to reimagine this site for future development has not changed," Nelson Deuitch said. "We see this as a bump in the road, not an obstruction.”
The city has been eying a mixed-use redevelopment project that could include a lot of housing and some historical preservation. It's been looking at the property as a blank slate.
Michigan City will still work on the reimagination study it launched early this year, with a public hearing in which more than 125 residents suggested ideas. It's funded in part by a READI 2.0 grant from the state.
Nelson Deuitch said it was important to have a thoughtful, research-based strategy ready before making decisions about the future of the property.
“We respectfully urge the state to keep Michigan City’s voice at the table. Taxpayer dollars should not be spent to repurpose this facility for uses that would burden our community, such as an immigration detention center. Instead, they should be invested in strategies that create jobs, strengthen neighborhoods, and foster long-term economic vitality," she said.
The Michigan City Common Council will vote on a resolution urging the state to honor the 2024 agreement and work with the city to transfer the property. There's a lot of public support for the site's redevelopment, Nelson Deuitch said.
“Our business leaders, legislators, and community partners are united," Nelson Deuitch said. "Together, we will continue advocating for a future that turns a longstanding barrier into a regional opportunity.”
The delay is a setback to the redevelopment plans, Economic Development Corp. Michigan City Executive Director Clarence L. Hulse said.
“The state’s rescinding of the letter of intent is a disappointing detour in the trajectory of the Indiana State Prison’s direction toward redevelopment and revitalization. While the certainty of the prison’s purpose and pathway is uncertain at this time, our city and community leaders remain steadfast to staying on track with where we want the west side of Michigan City to soar," he said. "The reimagination of the prison is vital to the synergy and energy of development that we envision for our community members within the prison’s shadow and beyond. Our mission to bolster the neighborhoods on the West, East and Midtown areas of our city persists even in the veil of vagueness that now surrounds the prison’s future. The community deserves and demands it."
Residents have pitched ideas like housing, mixed-use development, green space and a museum. They've suggested preserving the chapel, the administration building or some other structure to preserve the history of the partly maximum security prison that has hosted infamous inmates like Ku Klux Klan leader D.C. Stephenson and the serial killers William Clyde Gibson and Howard Allen and been featured in documentaries like “Life on Death Row,” “Midwest Breakout” and "Inside Death Row with Trevor McDonald.”
"Our team has seen a strong sense of community spirit and unification since we launched the reimagination study, and we will not stymie this passion and sentiment with a pessimistic perspective on the prospects of the prison’s future status," Hulse said. "Today, the reimagination study has a place of even stronger importance to our vision of the city’s future. The change in course has solidified our stance on exploring what the site can be: a place for prosperity with community offerings and development, a spot for small business growth and most importantly, a beacon for promise, optimism and aspirations.”
© Copyright 2025, nwitimes.com, Munster, IN