Vote on North of South project's bond financing delayed

January 21, 2011
North of South

A City-County Council committee’s vote on whether to allow the city to issue $98 million in bonds to finance a portion of the $155 million hotel-retail-residential North of South project downtown has been delayed until Feb. 2.

The Economic Development Committee made a few changes to the financing proposal on Tuesday and chose to wait until its next meeting to vote on the proposal.

City-County Councilor Mike McQuillen, a Republican committee member, said he expects the measure to pass next month and advance to the full Council for its consideration.

At Tuesday’s meeting, committee members approved capping the interest rate on the bonds at 6.5 percent. The original rate was set at 8.5 percent.

“They never would have gone to that [high of a] rate,” McQuillen said, “but it made people more comfortable to cap it.”

Committee members also agreed to give the Council authority to review the city’s involvement in the project, once it gets started, if there are substantial changes in financing, he said.  

Locally based Buckingham Cos. is leading the development, set to be built on 14 acres of land owned by Eli Lilly and Co.—now home to a parking lot north of South Street between Delaware Street and Virginia Avenue.

The city is offering to provide an $86 million loan and build $9 million in infrastructure to get the project off the ground. Plans call for a boutique hotel, retail space, a YMCA and 320 upscale apartments.

The price tag includes a $7 million contribution from Buckingham, a $6 million grant from the Indiana Economic Development Corp., the $29 million in land Lilly is providing, and $18 million for the YMCA branch.

Instead of $86 million, however, the city actually will borrow $98 million to pay for administrative costs related to the bond sale and for interest payments while the project is under construction.

City officials say the additional $12 million adds flexibility to the bond issue because it’s often impossible to know how the bond markets will perform between the time of filing and issuing of debt.

The project’s site plans also still need to be approved by the city’s Regional Center Hearing Examiner. Because the site is within the Regional Center overlay district, its design needs to comply with Regional Center Urban Design guidelines.

A regional center meeting to consider the site plans is scheduled for Feb. 10.


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