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Developer secures financing for $9M Irvington project

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Developers are one step closer to building a $9 million apartment project to replace a blighted former hotel in Irvington.

A group led by the Irvington Development Organization has closed on its sale of state-issued housing tax credits to raise $8.7 million to finance the 50-unit Irving Green development, set to be built on the site of the former Indy East Motel, a crime-plagued property the city shut down in 2009.

Great Lakes Capital Fund, a Michigan-based not-for-profit, provided a $400,000 predevelopment loan and sold the housing credits to a pool of investors, who will own more than 99 percent of the project at 5855 E. Washington St.

Irvington Development Organization, also a not-for-profit, will own less than 1 percent of the project's equity but will lead the development and management of the facility, said Kelly Bernero, a Great Lakes Capital spokeswoman.

A city board last year approved demolition of the hotel, with conditions that the developers secure financing and secure design approval from the Indianapolis Historic Preservation Commission. Another developer and a group of neighbors had argued the building should be preserved and reused.

Construction could begin as soon as this month.

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  • Tax Credits
    No, the way Section 42 Tax Credits work is that they are awarded to the developer, and then the developer sells those credits to make up the capital to build. So, whoever buys the credits is the "owner," and after 15 years, the IDO will be the sole owner. I may be a bit fuzzy on the details, it's been a few years, but that is the gist.
  • Huh?
    That doesn't make sense to me that the tax credit investors would own 99% of the project. Aren't the tax credits awarded to the developer, which in this case would be the IDO. The investors then get $9 million of reductions on their taxes owed in return for the $8.6 million they paid to IDO for the tax credits that were awarded to the project. Is this not correct?
  • Full Release
    INDIANAPOLIS, Ind. - Equity closed on Irving Green Apartments, a $9 million project serving Indianapolis' Eastside Neighborhood residents. The site, home of the former Indy East Motel-and a crime magnet in the neighborhood, has been undergoing massive revitalization efforts since late August. The new apartment complex will serve young professionals and working families, thanks to special financing the developers of the deals pursued through the non-profit, community development finance organization, Great Lakes Capital Fund (GLCF). "The unique partnership in the non-profit/for-profit development team is an exciting venture," said GLCF President and CEO, Mark McDaniel. "We are excited to be a part of the team and provide the financing the project needed to keep costs affordable for the future residents." Great Lakes Capital Fund provided the development team, comprised of Irvington Development Organization (IDO) and Irvington Partners, LLC, a $400,000 predevelopment loan; and utilized Housing Credits to provide $8,670,380 of equity, financing most of the more than $9 million total development cost. "The new apartments will be a great addition to the Irvington neighborhood and encourage future positive development in the area," said IDO Board President, Rosemary Spalding. "Without the resources and expertise of the development team, and across the board partnerships and collaboration that occurred, this project would not have happened." The project was made possible through a variety of partnerships including Indiana Housing and Community Development Authority (IHCDA), the City of Indianapolis, Marion County, Local Initiatives Support Corporation, One 10 Studio, Meyer Najem construction, First Financial Bank, and McKinley Development. The apartments will have many sustainable features and will be conveniently located in an up and coming urban commercial district in an historic neighborhood, and be resource for the community. The site is ranked as "Very Walkable" by Walkscore.com and is on one of the most active bus lines in Indianapolis, making it an ideal location for affordable housing. Great Lakes Capital Fund helps socially responsible corporations invest in affordable housing and community economic development activities. GLCF raises capital from corporations and financial institutions, and invests these resources into real estate development partnerships in Michigan, Minnesota, Illinois, Indiana, Wisconsin and upstate New York. The partnerships receive essential equity for their developments. The investors receive a competitive internal rate of return on their investment through tax benefits; and the community receives high quality, affordably-priced housing and/or commercial developments that generate social and economic benefits for area residents. For more information please visit http://capfund.net. Source: Great Lakes Capital Fund
  • Excellent
    Development like this on the east side is an excellent move by the city. The "Broken Glass" theory says crime moves away when buildings are maintained. Plus increasing development in and around the city is just plain good business for the entire area. I live in Greenwood but enjoy Mass Ave and surrounding areas for entertainment. This just broadens the potential as it adds to the momentum. Excellent.
  • $180,000.00 apartment unit
    50 apartment units for $9 million??? Wonder how much of that development cost are soft - bank, bond, attorneys, syndicators, consultants,etc...?? Hard to believe even half of that unit cost is bricks and mortar!!

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