Equinix Data Center In Chicago Scuttled After Political Interference, Lawsuit Alleges
A planned Equinix data center in Chicago was scuttled after interference from politicians and a rival developer who wanted to build on the property themselves, a lawsuit alleges.
The owners of a vacant property in the Near South Side section of Chicago are suing city officials and longtime local developer Scott Goodman, who they allege conspired to block a planned Equinix data center on the site in an attempt to incorporate the land into Goodman’s city-backed Bronzeville Lakefront development next door.
The suit alleges that city officials also encouraged Equinix to build a data center on Goodman’s adjacent property instead.
“The City and Goodman would like to own [the] plaintiff’s property—eventually. But they do not want to buy it yet, and they do not want to pay fair market value for it. Instead, they would like to make Plaintiff’s property unmarketable until they are ready to buy it, and then to buy it at a discount,” the filing claims. “The City and Goodman have conspired to scare off potential buyers of the Plaintiff’s property—including one that even signed a purchase contract.”
The complaint, first reported by Crain’s, was filed March 15 by the owners of a now-vacant site that once housed an outpatient health facility known as the Sykes Center. After purchasing the property in 2007, the owners demolished the building and in 2021 agreed to sell the property to data center REIT Equinix for $30M.
The former Sykes Center property is directly adjacent to the 50-acre Bronzeville Lakefront project, a massive, $3.8B multi-use lakefront redevelopment that is expected to generate $97M for the city from the sale of the property.
According to their complaint, the owners allege that they were forced to terminate their agreement with Equinix following interference from 4th Ward Alderwoman Sophia King, who they say wanted to artificially suppress the value of the property and force its sale to developer Scott Goodman, part of the group behind Bronzeville Lakefront.
The suit alleges that King explicitly told Equinix she would block any potential data center project on the Sykes Center because the city wanted to purchase the land at a lower price than what Equinix had agreed to pay. King also steered Equinix toward developing a data center on the Bronzeville Lakefront property instead, the suit alleges.
As a result of the city’s interference, property owners allege that they ended the agreement with Equinix and began negotiating with Goodman, at which point city officials told them they needed to halve their asking price to gain approval. The lawsuit asks for $15M in damages to account for the difference between the eventual sale value of the property and their previous agreement with Equinix.
"Of course, no potential purchaser would want to buy the [Sykes] Site when — just like with Equinix — the city was not going to approve any use for the Site," the complaint states.
