Chicago Data Center Proposal Dispute for Major Contractor

Back in 2012, McCormick Place officials put out the call to find a developer interested in establishing a new Chicago data center in an underutilized space in the building. Little did they know that the search would evolve into a fight between Chicago city officials and one developer vying to build an Illinois data center near the South Loop section of the city.

Recently, however, the construction company has sought out city officials to reach an agreement that would allow for the construction of a new Chicago data center near Lake Michigan.

Looking to Develop Exhibit Space
This story all starts two years ago, when decision-makers at McCormick Place made the announcement that they wanted to find investors to create a data center in an often empty exhibit area in the complex. According to Crain’s, the investment sought would total more than $300 million to convert the space into a usable Chicago data center. City officials hoped the addition of a computing facility would raise revenue levels for the convention center.

McCormick Place administrators stated they were looking for developers interested in establishing a 280,000 square foot facility that could provide 20 to 24 megawatts of critical power load. This would make the proposed lakeside Chicago data center one of the biggest in the city.

At the time, James McHugh Construction Company had three other projects being developed near the proposed McCormick data center, including on just to the west of the convention center. Although they did not express an interest in the internal space, the organization would fight for the land parcel next door.

McHugh Sues the City of Chicago
While the construction business made plans for its Chicago data center, Mayor Rahm Emanuel and his administration had other ideas for the site. Crain’s reported in September last year that city officials had their sights set on the land for the construction of a 1,200 room hotel.

Before the city expressed interest, the construction company established plans for a 314,000 square foot Illinois data center that would include six floors of computing and office space. However, these plans were stalled when Chicago officials announced they wanted to acquire the parcel for the hotel build.

In response to this, McHugh filed a complaint with the Cook County Circuit Court, bringing the fight for land into the legal realm. The complaint is urging the city to issue the required permits to enable the construction company to begin their Chicago data center project.

Although the city tried to reach an agreement with the Metropolitan Pier and Exposition Authority, the group overseeing McCormick Place operations, officials could not concede to mutually beneficial terms.

Seeking an Agreement: Build Both?
In late May 2014, Crain’s reported that the James McHugh Construction Company was proposing an agreement that would give both parties the solution they were looking for: build both the Chicago data center and the hotel.

Although the city was able to build a hotel a block away from the sought-after site, officials now want to construct a smaller, “boutique-style” accommodation, which the construction company believes could be built in addition to its planned computing facility.

Currently, McHugh is seeking approval for a 359,000 square foot, 142 foot tall data center near Indiana Avenue. This would also allow for the construction of a 320 foot tall hotel at the north side of the land parcel.

A spokesperson for the construction business said the city “tentatively agreed to support” the proposal, although the plan “still has a long way to go.” However, an official from the Department of Housing and Economic Development stated that Chicago decision-makers had “not agreed to anything at this point.”

Currently, the future of McHugh’s proposed Chicago data center hangs in the balance as negotiations between the city and the company continue.

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