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City committee again delays vote on MSA tower’s financing

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A City-County Council committee again delayed voting on whether the city should provide a developer up to $23 million to help finance a massive mixed-use project to be built on part of the former Market Square Arena site.

On Monday evening, members of the Metropolitan and Economic Development Committee continued the vote until their next meeting March 3.

This is the second time the committee has delayed action on the development’s financing after failing to receive information it requested from developer Flaherty & Collins Properties.

The committee is seeking to build an $81 million, 28-story tower that would include 300 luxury apartments renting for $1,300 to $2,400 per month. About 500 parking spaces and 43,000 square feet of ground-floor retail space would be included. Flaherty & Collins said it prefers that a specialty grocer occupy the space and is pursuing Whole Foods as a tenant.

The development would be backed by a combination of public and private funds, with the city agreeing to contribute at least $17.8 million from a bond sale and land for the project appraised at $5.6 million.

But before the city commits, members of the Metropolitan and Economic Development Committee are asking that Flaherty & Collins provide it information on the project’s financing structure, plans to hire local contractors and parking specifics.

Flaherty & Collins so far has not supplied the information, causing the committee to once again continue the vote, to the frustration of the body’s eight members.

“I feel against the wall, having made the request [to Flaherty & Collins] and not having anything in front of us,” said Vop Osili, who represents the district in which the project would be built.

Why Flaherty & Collins has yet to abide by the request is unclear. Representatives of the company did not speak at the meeting and abruptly left before the committee voted on the continuance.

Reached by IBJ, Flaherty & Collins CEO David Flaherty referred comment on the situation to the city.

Deron Kintner, the city’s deputy mayor for economic development, was at the meeting and prepared to give a presentation along with Flaherty & Collins’ executives.

“We were surprised and as caught off-guard [by the continuation] as everyone,” he said. “It sounds like they were hoping for [the information] ahead of time.”

Kintner has said he believes real estate taxes on the $81 million project, estimated at $1.3 million per year, will be adequate to cover payments on the 25-year bond.

“I’m supportive of this project, but if you’re looking at the maximum to be bonded ... it’s fair for the city to be asking tough questions,” said John Barth, a committee member and City-County Council vice president.   

The deal is essentially tax-increment financing, but Kintner said it hasn’t yet been decided whether to expand the downtown TIF district to encompass the site. By law, tax revenue can be captured outside a TIF district, as long as it benefits the district, he said.

The project and bond financing will need to be approved by both the Metropolitan Development Commission and City-County Council.  

The remainder would be financed by Flaherty & Collins, which requested the second-lowest amount of public incentives of five development teams vying to develop the nearly 2-acre property. The city chose Flaherty's proposal in July.
 

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  • I wish
    I wish the Indianapolis media would dig deeper into this story. Why is Flaherty & Collins not providing any details? Something really fishy is going on.
  • Political Pork...
    I wholeheartedly agree that downtown needs this kind of development...with that said, I don't understand why it is taking so long to provide the requested information. It's as if there is no real plan-- like it's a political "gift" or something. For goodness sake, they left the meeting before the vote was made for a continuance and the deputy mayor seemed confused like "oh, the committee expected the information BEFORE they make a multi-million dollar decision...How strange?"
  • Criminal Justice Center
    Seems like to parts of government aren't running into each other in the halls enough. How about consolidating the MSA site and surrounding abandoned property / building(s) and building the new Criminal Justice Complex that the county wants / needs there, conveniently located with the City County Building.
  • More parking
    I think this property has served the city well as an affordable parking lot since the demolition of MSA. I appreciate its proximity to the CCB when I go monthly for my urine tests for probation. Please, Mayor Ballard, do NOT develop this land so my kids,too, will have a great place to park for court for years to come.
  • More Tax Giveaways to the Mayor's Contributions
    This is some of the most highly valued real estate in the city. Giving the property away and then heavily subsidizing the project is outrageous. This though is all about the Mayor putting taxpayer money into the pockets of his contributors and the lawyers that represent them. This city has other needs. We shouldn't be subsidizing private development, especially when that private development is luxury apartments.
  • Bad Move ?
    Doing something just to do it without good reason and solid financials/environmentals is a bad idea anytime. Sounds like this one won't even pay for it's self...just like Pacers!
  • Developer/Taxpayer Shakedown
    Doesn't appear the hold up is the deals structure or taxpayer contribution, or high cost. Appears the hold up is a Project Labor Agreement (PLA) agreement that bars non-union labor and added local hiring quotas on top of "minority" hiring quotas that have no basis on merit or low cost for taxpayers. They appear to be fighting over which of their politically connected subcontractors will get developer/taxpayer dollars. Shameful.
  • Let's get going
    I'm not one for reckless government spending (nothing infuriates me more than seeing constant expansions of I-465). But there are legitimate uses of the government fisc, and this is one. The city, and indeed the metropolitan area, will benefit from a strong downtown core that is flush with businesses and residents. We are turning the corner, but because of how ridiculously inexpensive we have made it to live outside city limits, we have to help development along. Development breeds development. Shiny, gleaming towers will remind people that downtown is revitalizing, and residents will create demand for more services, which will in turn bring more residents. Hopefully in 10-15 years, downtown will be strong enough to be developed on its own without any government intervention. Unfortunately, we are paying for the poor decisions of the past sixty years. I agree F&C needs to cooperate with the process, but let's get this show on the road.
  • Just give FC the land and call it a day
    Indy doesn't garner, demand, or need $1,200-2,400/month rents. The City should not be subsidizing the highest rents in the market. Just give them the land.
  • Not any cost
    I have driven around BigJoe. I understand that a subsidy can be appropriate in some cases, but the return on the public's investment needs to justify it. I think the public footing 25% of the cost of the project and forgoing any property taxes for the next 25 years (if the completed property value turns out as projected) is just too high a cost. We can't assume that all or even most of the residents would live outside Marion County (and thus not pay income taxes here) if this building weren't built. The administration needs to drive a harder bargain on these projects to get a better return, or less of a negative return you might say, for the rest of Marion County's taxpayers who will continue to subsidize this ever growing list of subsidized downtown projects. It's often said that subsidizing these projects will stimulate the private market to create unsubsidized projects, but all we get are more subsidized downtown projects. When will be able to stop subsidizing new projects and expect the private market to take over?
  • brook
    Like many of you, I agree that it is time for something to move forward on this site. I also think mixed-use residential has the most potential. Incomes bring income tax. If you have been reading about key City and Downtown priorities, key priorities are to increase the number of residents in order to increase the amount of income tax collected. The City and those it represents are being asked to offer sizeable subsidy in order to make this project work for the developer. The developer does need to do its best to make sure the project works for the City and those it represents. F&C need to quickly provide the information and make the commitments to employ central Indiana residents to design and build this project. As the Councillor states, if you are looking for the maximum to be bonded it is fair for the City to ask tough questions. It is also MORE THAN FAIR that we ask that Indianapolis citizens be employed in the construction of this project.
  • RE; Maria
    Maria, for once I actually agree with you. I fully support the project, but something is beginning to smell a little fishy. Two times now that F&C has failed to provide necessary information to the committee. Lets just hope they don't balk again in March...
  • Income Taxes
    Have you driven around Paul? We're pretty desperate. The site's sat empty for a decade. Few other places we can sink in $20ish million and get this level of revenue return. Even Carmel and Fishers are kicking in public subsidy for development now. But more to the point, the property taxes generated are meant to cover the bonds. The development is designed to attract high-income earners. Their income taxes pay for the rest of the things you mentioned that they and everyone else use. In the world of property tax caps, chasing income taxes is the new game for a municipality to stay afloat.
  • Bravo!
    Bravo to the City County Council for standing up to Mayor Ballard and his cronies. I support development of the MSA site, but not at all costs! Why are developers so afraid of providing specifics????
  • What really is the value oftheland
    If they move the Orange Jumpsuits and the Orange Jumpsuits Fans that traverse the City County Building, that land is worth more than $ 5. Who wants to live next door to criminals? This developer isn't putting $hit up. At this point the taxpayers might as well do the development. This is criminal what these Ballard Goons are doing with taxpayer assets. They give everything away to grafters - parking meter revenue, land, taxpayer guarantees, taxpayer money. Now that Burt S has passed lets revoke Unigov. It doesn't work as it places too much power in the hands of the Mayor. The Suburbs get NO SERVICES, NO STREET REPAIRS, NO SIDEWALK REPAIRS, HIGHER WATER AND SEWER RATES AND CERTAINLY NO STREETS PLOWED OR SALTED, because all the TAX REVENUE HAS BEEN HIJACKED INTO THE TIFS AND OUT OF THE GENERAL FUND.
  • How desperate are we?
    Giving away land valued at more than $5 million plus nearly $18 million just to get a project built that might pay enough in property taxes to pay off the holders of the public bonds? Are we really that desperate to get something built on a prime piece of downtown real estate? What if the appraised value of the completed project comes in low and the property taxes don't cover the bond payments? What about all the public services (police, libraries, public schools, IndyGo, etc) that the residents of the development will use without any new property tax revenue generated for the City's general fund for the next 25 years?

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    1. I took Bruce's comments to highlight a glaring issue when it comes to a state's image, and therefore its overall branding. An example is Michigan vs. Indiana. Michigan has done an excellent job of following through on its branding strategy around "Pure Michigan", even down to the detail of the rest stops. Since a state's branding is often targeted to visitors, it makes sense that rest stops, being that point of first impression, should be significant. It is clear that Indiana doesn't care as much about the impression it gives visitors even though our branding as the Crossroads of America does place importance on travel. Bruce's point is quite logical and accurate.

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