Insurance and Economic Development

WFYI Teleplex to make $20 million move: Federal tax credit will help pay for purchase of former Indiana Energy building, renovations, equipment

February 19, 2007

Metropolitan Indianapolis Public Broadcasting Inc. will invest $20.1 million to move its WFYI Teleplex up the street into the former Indiana Energy headquarters, a shift that will give the notfor-profit room to grow and breathe new life into an enormous building that's been nearly vacant since 2000.

The broadcaster will pay $8.5 million for the four-story, 94,000-square-foot building at 1630 N. Meridian St., and spend $11.6 million on renovations and equipment.

Funding will come from a hodgepodge of sources, including proceeds from a capital campaign, the sale of the existing facility, small loans and money from an investor that will get tax credits in return.

WFYI's radio and television stations have been operating out of studios at 1401 N. Meridian since 1956, and the staff expanded into offices at 1433 N. Meridian in 1982. Officials have been looking at how to get more space for the last decade.

They launched a capital campaign in 2004, aiming to raise $15.3 million to expand and equip its existing facility and shore up its endowment. But adding on to 1401 N. Meridian would have eaten up already-scarce public parking, making it difficult to follow through on plans for the public broadcaster to host more community forums.

Fund-raising efforts lagged in 2006, as station officials put the expansion plans on the back burner and started looking at the possibility of buying 1630 N. Meridian instead. The capital campaign, which has been extended through the end of this year, has raised $11 million so far.

CEO Lloyd Wright said the old Indiana Energy building is ideal, offering 34,000 square feet more than the addition would have, and 430 parking spaces in a surface lot and a garage. Plus, WFYI can rent out the third and fourth floors, generating income while renovating the first two floors to add studios.

But the financing didn't fall into place until WFYI lined up some federal tax credits to put the project over the top.

The new markets tax credit program allows for an income tax break on development projects in areas with high poverty rates. Funders get a credit equal to 39 percent of the project cost to encourage their investment.

"[The credits] don't make a deal, but they can make a shaky deal much better," said Christie Gillespie, executive director of the Indiana Association for Community Economic Development. The IACED partnered with Indianapolis-based House Investments to oversee $26 million in taxcredit-backed redevelopment projects in Indiana through 2005.

Working together as the Indiana Redevelopment Corp., the groups helped line up financing for local projects including construction of the 21st Century Charter School at Fall Creek Parkway, redevelopment of 1402 N. Capitol Ave. into offices for insurance firm Gregory & Appel, and the expansion of the John H. Boner Community Center on East Tenth Street.

Ohio-based Stonehenge Community Development is overseeing the WFYI project. The not-for-profit's tax credits will be reallocated to Fifth Third Bank, which in turn will invest $2.2 million in cash and provide low-cost loans to help finance the project.

MIPB is also hoping to sell its existing buildings for $2.2 million, and Vectren Corp. is contributing an undisclosed amount in order to cancel its lease for 1630 N. Meridian, which was set to run through mid-2008. Only a handful of Vectren employees have worked in the building since about 2000.

With the financing drawn up, WFYI will start adding the two-story studio spaces in the 1630 building this spring and plans to move all 90 employees there by the end of the year.

Wright said a "compelling factor" in choosing 1630 N. Meridian was the hope that a more aggressive facilities plan also will help kick-start the capital campaign. Originally scheduled to wrap up at the end of 2006, the campaign is still $4.2 million shy of its goal and has been extended.

"This is a grander vision," Wright said. "It makes for a stronger case for support."

MIPB board member James Carr agreed, and said the financing would have been much more difficult without the tax credits.

"It's a real shot in the arm because [1630] is a really exciting facility," Carr said.
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