EDITORIAL: North of South project worth the risk

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IBJ Editorial

Barring further weather delays, the City-County Council should decide Feb. 7 if the massive North of South mixed-use project planned for 10 acres just north of the Eli Lilly and Co. corporate campus will proceed.

We understand the concern expressed by some on the council over the city’s role in financing the $155 million project, but there are compelling reasons to approve it.

Among them is Lilly’s involvement. North of South would be developed primarily on Lilly-owned surface parking lots at Delaware and South streets and is championed by a partnership of Indianapolis-based Lilly, the city, the YMCA and Buckingham Cos.—the local developer working with Lilly on the project.

The project would feature a boutique hotel, retail space, upscale apartments and a YMCA. Lilly sees it as a way to bridge the gap between its corporate campus and downtown proper with amenities that it says will facilitate recruiting and retaining employees.

The project also might be a draw for Rolls-Royce Corp., which is considering moving 2,500 employees to 465,000 square feet of space vacated by Lilly last year just blocks from the potential development.

North of South is to be financed with an $86 million city-backed loan, a $6 million grant from the Indiana Economic Development Corp., $29 million in land donated by Lilly, $18 million from the YMCA and $7 million from Buckingham.

In a perfect world, private projects wouldn’t require government involvement. Banks would lend generously at competitive rates. Building sites wouldn’t come with the challenges often associated with urban development.

But that isn’t the world we live in. Little of what we recognize today as downtown Indianapolis would exist without the city’s 40-year history of taking calculated risks to spur development. There would be no vibrant mix of retail, hospitality and sports offerings—just a blighted core that could conceivably drag down the economy of the entire region.

If you believe, as we do, that the public-private partnership model has been a success, there’s little to recommend abruptly abandoning it with North of South.

The impetus for the project is Lilly, which is arguably the city’s most important corporate citizen. It employs thousands here, it’s a linchpin in the region’s life sciences economic development strategy and its stock fuels the generous Lilly Endowment Inc. Add Rolls-Royce to the mix and you have two of the city’s largest corporate employers as advocates for the project.

Not to mention that their proximity to North of South gives it a built-in market, lessening the risk associated with guaranteeing the loan.

The council’s committee on economic development was to have considered the financial package at a special meeting Feb. 4 that was called after its Feb. 2 meeting was canceled because of the ice storm. Provided the committee approved the measure, the full council should act on that recommendation and grant final approval.•


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  1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

  2. $3B would hurt Lilly's bottom line if there were no insurance or Indemnity Agreement, but there is no way that large an award will be upheld on appeal. What's surprising is that the trial judge refused to reduce it. She must have thought there was evidence of a flagrant, unconscionable coverup and wanted to send a message.

  3. As a self-employed individual, I always saw outrageous price increases every year in a health insurance plan with preexisting condition costs -- something most employed groups never had to worry about. With spouse, I saw ALL Indiana "free market answer" plans' premiums raise 25%-45% each year.

  4. It's not who you chose to build it's how they build it. Architects and engineers decide how and what to use to build. builders just do the work. Architects & engineers still think the tarp over the escalators out at airport will hold for third time when it snows, ice storms.

  5. http://www.abcactionnews.com/news/duke-energy-customers-angry-about-money-for-nothing