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City backs string of high-profile real estate projects

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The administration of Mayor Greg Ballard found its stride in the final year of its first four-year term, at least when it comes to major publicly supported real estate projects.

The largest by far was CityWay, a $156 million mixed-use development now under construction at Delaware and South streets.

The complex, to be built primarily on Eli Lilly and Co.-owned parking lots, calls for a boutique 157-room Dolce hotel, a YMCA branch, 320 apartments and 40,000 square feet of retail and office space, all developed by locally based Buckingham Cos.

Taxpayers are acting as the project’s bank, putting up nearly every dollar used to build it, chiefly by loaning $86 million raised from the sale of municipal bonds.

As IBJ reported in April, taxpayers are shouldering most of the risk in the no-bid deal, while the potential for a tangible profit rests squarely in private hands.

Buckingham stands to cash in every step of the way, earning fees for all three of its divisions—development, construction and property management. And Lilly gains a new amenity for its corporate campus while cashing out of a 20-year-old arrangement with the city that required the company to make periodic payments on infrastructure bonds.

Elsewhere in Indianapolis, the city agreed to kick in $6.3 million toward a new parking garage in Broad Ripple that also will feature first-level retail. The project would replace a long-vacant service station and help alleviate a parking crunch in the area.

But critics of the $15 million project, including members of the Broad Ripple Village Association, question the new retail space and the rationale behind such a rich city subsidy.

City officials refused to share financial projections for the construction and operation of the 350-space parking garage, describing the documents—which developer Keystone Construction filed as part of its bid—as a “trade secret” exempt from public disclosure.

In a 2007 study, Walker Parking had reported the selected site would be inappropriate for a parking garage and that such a structure should cost about $15,000 per space. The $6.35 million subsidy for Keystone works out to more than $18,000 per space.

Construction has begun on a project to convert the former Bush Stadium into 268 apartment units, whose rents will range from $480 to $1,400 per month. The stadium’s façade will be preserved.

The $23 million project, led by developer John Watson, is set to get a $5 million infusion from the city.

Finally, the city sought bids for the redevelopment of a 1.45-acre property at Massachusetts Avenue and New Jersey Street occupied by the Indianapolis Fire Department. The city had not yet picked from among five bidders. The project is expected to cost $30 million to $50 million.•

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  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

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  5. It is sad to see these races not have a full attendance. The Indy Car races are so much more exciting than Nascar. It seems to me the commenters here are still a little upset with Tony George from a move he made 20 years ago. It was his decision to make, not yours. He lost his position over it. But I believe the problem in all pro sports is the escalating price of admission. In todays economy, people have to pay much more for food and gas. The average fan cannot attend many events anymore. It's gotten priced out of most peoples budgets.

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