The lead developer on a long-delayed proposal to redevelop the former Bank One Operations Center has landed a powerhouse partner: apartment developer Gene B. Glick Co.
Milhaus Development and Glick hope to break ground late this year on the $30 million first phase of The Residences at 451 E. Market St., which would recast the rundown and vacant downtown office building into 258 high-end apartments and first-floor retail space.
City officials are eager to close on the project soon, both to add new residential units to downtown and to clean up the blighted building between Washington, East, Market and New Jersey streets, said Deputy Mayor Michael Huber.
"The more companies that we have investing in real estate downtown—especially companies with Glick's history and credibility—the better it looks for downtown," he said.
The project—which the city approved in late 2009 as part of an unusual public-private partnership—ran into delays as Indianapolis-based Milhaus worked to secure financing so the city could close on a deal to privatize publicly held parking assets, including thousands of metered spaces.
The plan for the former Ops Center calls for Milhaus to acquire the building, surface parking lots and an adjacent parking garage from a private owner for $18.5 million. Then Milhaus will sell the 1,680-space garage to the city for the same price.
City officials have argued the deal will provide a boost to a blighted area and give it control of enough parking to support the future redevelopment of the former Market Square Arena site—all without any upfront cash, no issuance of bonds, and an automatic tenant for the garage. The developer would take out a loan to buy the property, and the city would make the payments over 20 years using revenue from the garage.
The deal calls for Milhaus to buy back 600 spaces in the garage over 20 years by repaying $6.6 million in tax abatements and pitching in additional payments to the city totaling $2 million.
Milhaus Principal Tadd Miller said the project will begin six to nine months after the city closes on the parking garage. He said Glick will use its decades of experience in apartment development and management, while Milhaus' contributions include its creativity in designing a public-private partnership to pull the deal together.
"I wish we could get rolling on it tomorrow," he said. "We're ready to go."
The deal is only the latest partnership for Glick and Milhaus, which first teamed up to acquire downtown's The Maxwell apartments out of foreclosure in late 2010. The project is almost 100-percent leased, and several more potential renters have joined a waiting list, Miller said.
The two companies also are collaborating on the Penn Circle development at 126th Street and Old Meridian in Carmel, and are working on two others outside Indiana. He said Glick has been on board as a partner in the Ops Center redevelopment since Day 1.
Some critics of the project have questioned whether the city is taking on too much risk and overpaying. Sales disclosures show the properties most recently sold in July 2004 for a total of $13.5 million—$3 million for the former operations center and $10.5 million for the parking garage.
The agreement allows the city to take control of the entire property if the deal doesn't materialize within 18 months of closing.
Milhaus was founded in 2009 and is operated by four principals: Miller, Andrew Lahr, Gregory Martin and David Leazenby. Miller, Lahr and Martin are former employees of Kosene & Kosene, which developed the $24 million Maxwell project.
Indianapolis-based Glick, founded in 1947, manages more than 18,500 apartment units in 10 states and recently has stepped up its acquisition and development efforts. The Maxwell was Glick's first foray into the downtown market.