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Developer F&C's 'bold statement' could finally solve MSA puzzle

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City incentives and a strong apartment market suggest Flaherty & Collins’ proposed $81 million, 28-story downtown apartment tower has a better chance of getting built than two previous attempts to redevelop the former site of Market Square Arena.

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

market square 15colConstruction on the 28-story tower is slated to begin next spring. (Flaherty & Collins Properties)

Deputy Mayor for Economic Development Deron Kintner 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.

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 two-acre property. (Click here for images and details of the other teams' proposals.)

Flaherty & Collins CEO David Flaherty said the company is ready to line up financing to cover its portion of the project's cost.

“At 28 stories and 300 units, we know there’s demand for that,” Flaherty said following a Tuesday morning press conference at which city officials announced Flaherty & Collins would redevelop the site. “If you get beyond those things, there’s a lot more risk involved.”

The incentive package of $23.4 million represents about 28 percent of the project's cost. That's just about what the city spent on incentives for the $100 million Conrad Indianapolis, which opened in 2006.

Kintner said he viewed the deal as revenue-neutral on property taxes and a “good business decision” because, according to a city estimate, it will generate $500,000 a year in new income-tax revenue.

“Our future as a city is going to depend on our ability to attract new residents,” Mayor Greg Ballard said at Tuesday's event.

Flaherty & Collins might use the city money on parking, but Kintner said how to allocate the money hasn’t been hammered out.

The plan calls for 300 luxury apartments, 500 parking spaces and 43,600 square feet of ground-floor retail space. It would feature a rooftop pool, a green sky window on the tower roof, and apartments with floor-to-ceiling windows and panoramic views of the city renting for between $1,300 and $2,400 per month.

With an average unit size of 900 square feet, apartments will rent for at least $1.44 per square foot, higher than the downtown average of $1.25, an all-time high for downtown, said Sherry Seiwert, president of Indianapolis Downtown Inc.

Demand for downtown living is still high, despite an abundance of apartment projects under construction or in the works. Flaherty & Collins also is building the 500-unit Axis at Block 400, adjacent to its Cosmopolitan on the Canal project.

Seiwert said downtown’s occupancy rate is 97 percent, with more than 60 percent of new downtown residents moving from either outside the state or county.

“For years we’ve had dollars leaving the county, and it’s high time we reversed that,” she said at the announcement.

Previous attempts to redevelop the property failed in 2004 and 2007, under former Mayor Bart Peterson.

The first attempt, which featured a proposal calling for condominiums instead of apartments, failed because the condo market wasn’t robust enough to support pre-sales. The second fell victim to a slumping economy.

City officials decided to offer only the northern half of the arena site this time around, in hopes a first phase would help drive demand for a second one.

The proposals were reviewed by an advisory committee made up of Kintner, Director of Metropolitan Development Adam Thies, Indianapolis Downtown Inc. President Seiwert, City-County Councilor Vop Osili, who is an architect and represents that portion of downtown, and Tom McGowan, president of Kite Realty Group.

The team of Kite and Buckingham Cos. was one of the initial six bidders but pulled out of the deal, Kintner said.

Besides Flaherty & Collins, teams submitting bids were: Keystone Group and Cleveland-based Forest City Enterprises Inc.; Browning Investments and The Whitsett Group; Milhaus Development and REI Real Estate Services LLC; and Barrett & Stokely Inc. and Ryan Companies US Inc.

The Keystone/Forest City proposal called for a tower up to 52-stories tall. A scaled-down, 35-story version of the tower would have cost $118 million to build and required a city subsidy of about $19 million.

Kintner said they asked Keystone to scale down from 52 to 35 stories.

“We felt, and the advisory committee confirmed, that was too tall for this area,” he said.

He also worried that having 450 apartments in one building would concentrate available property too much in one area, and that a project of that size might jeopardize plans to develop the remaining portion of the site.

Kintner said 250 to 300 apartments seemed most likely to be financed and absorbed the downtown market.

Flaherty & Collins’ architect is the Chicago office of Baltimore-based RTKL, which has designed other buildings for the company. David Flaherty described the design as a "bold statement about Indianapolis being a progressive, forward thinking city."

The developer is slated to break ground next spring with completion by late 2015.
 

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  • Things are always changing
    You're trying to assert causation where none exists. City Market and Union Station were struggling before Circle Centre Mall was built. And since the mall was built online retailing has skyrocketed; hence all bricks and mortar malls having to repurpose space. Look at the airport. The airline industry has merged and consolidated dramatically since the new terminal was built. Do you want to blame city subsidies for that as well?
  • hindsight
    There is a significant amount of vacant commercial space in downtown Indianapolis. The residential market is doing a bit better, but it's not as though there are hundreds of people longing to move downtown who can't find a decent place to stay. First the city subsidizes the renovation of City Market and Union Station. Next they build Circle Center Mall and act like they're surprised when City Market and Union Station turn into ghost towns. Circle Center is already leasing space to Brown Mackie College because they have more square footage than the market will bear. Despite that effort the mall has significant vacancies. This new development will not bring much new business downtown, it will just spread the existing tenants a bit thinner.
    • How many more financial defalcations of taxpayer assets?
      Seriously who wants to live adjacent to the Marion County Jail and the Courts in the CCB? Too many tattoo smoking undesirables and Orange jumpsuit fans. The courageous thing to do by Mayor Marine would be to redevelopment the site in conjunction with moving the Jail and courts out to the old airport site and build a high dirt Berm with landscaping around it. The city would not need to give the developer the land. This project is doomed from the start just like the last 2 times for the same reason. Hell they may as well put the building next door to a Nuclear Power Plant. If the project gets $$$ it will be because the taxpayers guarantee the debtor a portion thereof. This guy is such a Gomer.
    • Huh?
      “We felt, and the advisory committee confirmed, that was too tall for this area,” he (Kintner) said. He also worried that having 450 apartments in one building would concentrate available property too much in one area, and that a project of that size might jeopardize plans to develop the remaining portion of the site. Uh-huh. Meanwhile, Kintner/the City are subsidizing the 500-unit Axis at Block 400 project.
    • Really?
      "First impressions count and we need to advertise to the world that we are a place of significance, growth, and prosperity." Except that we are not!
    • Yes!
      Way to go. Make it taller! The hell with what these player haters say! Go bold or go home.
    • The cost of parking
      It would be great if Indianapolis had a better public transit system that would allow such large projects to provide less parking and need less subsidy from the city. It would be great if the project could have fit more residential use on the upper floors of the streetwall.
    • Response
      Whether you like it or not, skylines are the most common depiction used to represent a city, and for good reason. Type in a city's name by itself in Google Images, and 90% of the top results will be of that city's skyline. Wiki another city and the first image on the page will probably be of its skyline. Major league sports games, movies, television shows, and magazines also use skylines the same way. Look, everyone wants a good streetscape or urban environment, but that's just not enough. First impressions count and we need to advertise to the world that we are a place of significance, growth, and prosperity.
      • Taxpayer Subsidy
        Yet another huge taxpayer subsidy for a politically-connected developer. The Ballard Pay-to-Play machine is alive and well. If you're a developer, why would you build anything without a subsidy?
      • Yeah!
        They made the right choice for sure! 52 would have ruined and overwhelmed that side of downtown. The Streamlined E/W axis, and proportioned at 28 stories next to the 25 story CC Building will work very well! Views from the east 65-70 mix and the south I-70 run will be very interesting. Glad the City saved the south of Market 1/2 block for another development, that kept the contrived matching sides at bay. Good job to F&C!
      • Bigger
        I think this is a really good design, but the size is honestly kind of disappointing. I'm sure if theres as much demand as they say there is, they could add a few more floors. Unfortunately, this won't really add to our skyline. I thought this was an opportunity to really enhance it. We're a bigger city than any in Ohio and have the worst skyline. Maybe someday!
      • Build to Area
        I agree with Nick and Marshall, you need to look at the scale of the area and the overall development. The 52 story tower looked great but how would it really have fit into this area? I think it would have overwhelmed the residential neighborhoods and did little to address the surrouding business street scape. I have been to several larger cities where the skyline looks amazing from a distance but when you actually get to it at street level, it is just tall building after tall building with no real sense of place. I think the city choose the right building for the area it will be built in. Hopefully it will be very successful and a second phase will be built to the south that will add even more retail and residential.
      • What's the Point?
        What's the point of just slapping a 52 story building in there just to reshape the skyline. Sure, I'd love to have something super tall there, but if the market isn't there or if it will affect future development or is cost prohibitive. Why go that route just to please people who obviously have "size issues." Let's build a great, sold out mid rise, and if the market can bear it, then let's build something larger next door.
      • Disagree
        Sorry Maria, but I disagree with you on this. I think Kitner's concerns about concentrating too much residential in that one project and potential impact on developing the remainder of the site are VERY valid. I'm glad they stepped in with that requirement. Bigger isn't always better.
      • Ugh
        Maria, I agree. Here we had a real opportunity to breathe some life into our long pathetic cityscape, and they totally blow it (pun very much intended). Oh well, maybe our skyline can finally catch up to Fort Wayne and Toledo now.
      • UGH
        "Kintner said they asked Keystone to scale down from 52 to 35 stories." What a freaking joke. The Keystone proposal is beautiful and would have been a game changer for our skyline.

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      1. I am so impressed that the smoking ban FAILED in Kokomo! I might just move to your Awesome city!

      2. way to much breweries being built in indianapolis. its going to be saturated market, if not already. when is enough, enough??

      3. This house is a reminder of Hamilton County history. Its position near the interstate is significant to remember what Hamilton County was before the SUPERBROKERs, Navients, commercial parks, sprawling vinyl villages, and acres of concrete retail showed up. What's truly Wasteful is not reusing a structure that could still be useful. History isn't confined to parks and books.

      4. To compare Connor Prairie or the Zoo to a random old house is a big ridiculous. If it were any where near the level of significance there wouldn't be a major funding gap. Put a big billboard on I-69 funded by the tourism board for people to come visit this old house, and I doubt there would be any takers, since other than age there is no significance whatsoever. Clearly the tax payers of Fishers don't have a significant interest in this project, so PLEASE DON'T USE OUR VALUABLE MONEY. Government money is finite and needs to be utilized for the most efficient and productive purposes. This is far from that.

      5. I only tried it 2x and didn't think much of it both times. With the new apts plus a couple other of new developments on Guilford, I am surprised it didn't get more business. Plus you have a couple of subdivisions across the street from it. I hope Upland can keep it going. Good beer and food plus a neat environment and outdoor seating.

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