A legal fight is brewing over a 2.3-acre parking lot sandwiched between the RCA Dome and Lucas Oil Stadium.
The state is seeking to acquire the property through eminent domain and is fighting an appraisal that puts its value at $7 million. The owners, meanwhile, contend the land is worth about twice as much.
The owner--a trust started by late local businessmen Anthony Maio and Ronald Palamara--isn't fighting condemnation of the property. The problem is price, said Paul G. Roland, an attorney for the trust, which is now controlled by local developer Michael Maio.
The land arguably is one of the best sites for private development in the city, but government officials covet it for other reasons. It would be a natural location for a future convention center expansion. A connector between the stadium and a $275 million expansion of the Indiana Convention Center is slated for the property.
The state also needs to fulfill an obligation to the Indianapolis Colts to provide 3,000 parking spaces near Lucas Oil Stadium and now is about 1,000 spaces short. The land has been studied for a possible parking garage. Another concern is that high-rise construction on the land could block views from Lucas Oil Stadium.
Still, there are questions. Among them: How would the state develop the land? What is it worth? And should the owners receive compensation that accounts for the presence of Lucas Oil Stadium?
The property, which is bordered by Senate and Capitol avenues, has been profitable for years. The owner has leased the space over the last 30 years to the U.S. Post Office, Express Parking and the city's Capital Improvement Board, which owns the rest of the block. CIB also once had an option on the Maio property but did not exercise it.
The latest tenant, the Indiana Stadium and Convention Building Authority, is paying $500,000 a year, Roland said.
Local government officials have been trying to take the property for years, as documents obtained by IBJ show. In 2004, CIB began eminent domain proceedings with an offer of $1.9 million. The rationale: The land was needed for a multimodal transportation facility.
When the state took over the stadium project about a year later, the Indiana Stadium and Convention Building Authority began its push to acquire the land. In a July 2005 resolution, the authority said it needed the land "for the construction of a multi-use venue and improvements related thereto."
The authority made a $3 million offer for the land on Sept. 2, 2005, saying it was needed for "the development and construction of improvements related to a new multi-purpose venue and convention center expansion project."
In December 2005, the authority filed a lawsuit against the landowners, seeking to condemn the property because the land was "considered useful in connection with capital improvements for the development of the so-called 'Indiana Stadium.'"
For now, the land will be used as surface parking and construction of the convention center and stadium connector, said John P. Klipsch, the stadium authority's executive director.
The portion of the connector that will travel under South Street is being constructed, but the design is being finalized for the portion that goes through the Maio property. The authority is working with CSX to find out whether the tunnel can go under the railroad tracks or needs to follow the sidewalk, as called for in the original plan.
The land's eventual use is a "question for the future," Klipsch said.
"It would depend on what happens in the next expansion of the convention center or what happens with the final solution for Colts parking," Klipsch said. "Until a solution is determined, it could be surface parking."
Klipsch said the authority plans to leave the property's valuation up to the legal system. He said the acquisition of roughly 36 acres for the stadium itself cost about $30 million, which would put a potential $7 million price tag for the 2.3 acres at the high end.
The state doesn't want a jury to consider Lucas Oil Stadium in its valuation since eminent domain proceedings began before the stadium plans were official.
A local real estate broker who keeps track of downtown transactions said the land is worth at least $100 per square foot based on recent property deals. That would put the price above $10 million. The broker, who asked for anonymity fearing a backlash from government officials, said the land would be a bargain at the appraised price of $7 million.
Roland believes the land is worth $15 million, and he intends to prove it.
The stadium is the biggest wild card in the case, said property appraiser John C. Snell.
"A huge question is whether Lucas Oil Stadium should be factored in," said Snell, who owns Fishers-based Snell Real Estate Evaluation Co. "If the taking is for the stadium, they can't use the stadium itself as a rationale for value. On the other hand, if the stadium is there and this property is not part of that deal, that could change things."