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Former Thomson site may finally be ripe for redevelopment

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The vacant 49-acre Sherman Park business complex might finally be redeveloped now that the owner has exited bankruptcy and demolition has started on its main building.

Two groups led by Bloomington investor Peter Dvorak bought the former Thomson Consumer Electronics/RCA plant out of receivership in 2008, and had hoped to spend more than $20 million to renovate and lease the 13-building campus.

REW RCA campus 15colDemolition is beginning on the former Thomson Consumer Electronics/RCA plant, improving the chances the site could be redeveloped. (IBJ Photo)

But financing for the improvements fell through, and a lack of new tenants meant rent payments were not sufficient to cover debt service and property taxes.

“Our timing obviously was terrible,” Dvorak said. “We acquired it right at the beginning of the Great Recession, and we were not able to get the financing needed to make it work. That was kind of like the kiss of death.”

Dvorak’s group, listed in court filings as SP Investments H LLC and Midwest Commercial Investments X LLC, exited Chapter 11 bankruptcy reorganization in late June, clearing the way for potential development.

The ownership group filed bankruptcy in 2010 with the blessing of its largest lender, Fairport, N.Y.-based Pramco LLC, in part to try to keep some delinquent parcels out of a county tax sale.

The properties had secured debt of $5 million, including $3.5 million owed to Pramco, and another $2 million to $3 million in unsecured debt.

Dvorak’s attempt to keep the parcels out of a tax sale was unsuccessful, however. As part of the reorganization agreement, 12 parcels in which back taxes total $901,000 are listed in this year’s sale, which runs Thursday and Friday.

“We tried to deal with the gargantuan property taxes,” said Dvorak’s lawyer, KC Cohen. “Ultimately, it was so financially unfeasible that nothing could work.”

The biggest parcel of the complex northwest of Sherman Drive and East Michigan Street contains the 750,000-square-foot main building that should be completely demolished within the next 60 days, Dvorak said.

Demolishing the building is part of the reorganization plan, in which the contractor agreed to tear down the dilapidated structure at no charge if he could keep the scrap, Cohen said.

That parcel, in which Dvorak owed nearly $1.3 million in overdue taxes, was listed in last year’s county tax sale. No one bid on the property. In those instances the county, as the buyer, can expedite the usual 12-month timeframe an owner has to pay the taxes, which it chose to do in February.

In the meantime, Dvorak and the county agreed to delay the filing of the property deed to the county until demolition is complete, so the county will have a clean, shovel-ready site that it can use as a “carrot” for redevelopment, Dvorak said.

John Franklin Hay, executive director of Indy-east Asset Development, a community development corporation whose boundaries include the former RCA property, is hopeful someone will show interest in the site.

His group, along with a few others, such as Near Eastside Community Organization Inc., met in August to discuss potential re-uses and plans to convene again following the tax sale. A light industrial use might make the most sense, Hay said, particularly since there’s a rail line running through the middle of the complex.

“The fact that [the property] is right in the center of the near-east side, we’d really like to see a coordinated effort for its strategic development,” he said. “Historically, this was a site that generated income and economic vitality for a lot of east-side neighbors.”

The city, though, has yet to mount a full-scale effort to redevelopment the property.

“The thing’s been foundering in private hands for years,” said John Bartholomew, spokesman for the Department of Metropolitan Development. “We just need to let it play out and see what happens.”

One of the last tenants, the not-for-profit RecycleForce, left last September.
 
The property originally was developed in the 1920s as the headquarters for RCA, which was acquired by General Electric Co. in 1986. A year later, GE sold the former RCA to Thomson Consumer Electronics, now Thomson Multimedia.

At its peak in the 1950s, the plant employed 8,200 people, many of them producing TV components. But Thomson, which owns the RCA brand, sent those jobs to Mexico over the years. In 1994, the company moved its headquarters from the Indianapolis plant to Carmel.

The actual four-story headquarters building at the northeast corner of Michigan and LaSalle streets east of the main building being demolished likely will be saved, Dvorak said. Two other buildings near the headquarters are slated for demolition to make redevelopment of the headquarters more feasible, he said.

Under the reorganization plan, Dvorak’s creditors also are set to take ownership of some other parcels. The 49-acre complex contains 26 parcels.

Besides the Sherman Park parcels, this year’s tax sale includes about 3,000 Marion County properties in which back taxes are owed. Five other properties list debts exceeding $100,000. Among them is the home of Butler University’s Delta Gamma sorority chapter at 737 W. Hampton Drive.
 
 

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  • Financial Services Coordinator
    Response "Mrs. Karen Hodge, I apologize for not getting back with you. I did try calling you several times, but your phone was not set up to receive messages at that time. The Indiana Department of Environmental Management’s role is to mitigate environmental hazards and we have no control over abandoned buildings, trash and/or weeds on a property. It is the property owner’s responsibility to maintain their property according to City of Indianapolis/Marion County codes. If they do not, they are in violation of such codes, and citizen’s complaints related to them should be made to the Indianapolis Department of Code Enforcement: http://www.indy.gov/eGov/City/DCE/Pages/Weeds.aspx. I did send a complaint to them in August after I received your complaint. I did speak with Rodney Bertram today (9/30). He is in charge of demolition of the building. He states it should be another 60 days before the building is completely demolished. He did mention that they are dealing with an inordinate amount of battery theft and other theft on the property which makes it difficult to maintain the demolition schedule. I hope this information helps. Sincerely, Karla Frownfelter Complaint Coordinator Office of the Chief of Staff, Media and Communications Services Indiana Department of Environmental Management (317) 232-4464 kfrownfe@idem.in.gov"
  • Financial Services Cooridinator
    What I don't understand why the Department of Code Enforcement is not being held accountable for letting the property get out of hand since this is their responsibility. The Department of Code Enforcement is at the following, that's what I have learned from the Department of Environmental Management and who should be contacted about the weeds, grass and trash office located- 1200 Madison Ave., Ste. 100 Indianapolis, IN 46225 Fax: (317) 327-5174 Email: weedsquestions@indy.gov Automated High Weeds and Grass Help Line: (317) 327-5577
    • Ummmmm.....
      I might not agree with everything the others were saying, although they make great points..... but Tommy, you're incorrect, you should actually read the article. In the meantime, Dvorak and the county agreed to delay the filing of the property deed to the county until demolition is complete
    • Umm.. guys...
      Y'all did read the article right? Most of the property is now owned by the county.. The only areas being mowed and rehabbed are still owned by the developer..
    • Seriously.
      Yes, I do complain about weeds (is that what you call 4' tall trees growing out of the cement?) and broken glass, as I am one of the few people who still work in the area. Have you actually driven by to see the state of things? It is absolutely abysmal. I fell even worse for the people who live near here. I will "cut some slack" when I once again feel safe walking to and from my car, as I did before this property went into such a state of gross neglect. I am pleased that the Near Eastside Community Organization is involved with meetings regarding this, but they have little power to do anything regarding the current situation.
    • Yes,
      Sorry moochie, but those words match a thousand other investors who made it through the financial downturn successfully, and without creating an eyesore out of their investments. The investor knew the taxes prior to taking over, the units were leased at the time, prior to all tenants being shuffled out for future development, and now it sits in a nice grace period blessed by the city who can not / will not deal with the property. This grace period has been treated as an opportune time to perform a free demo job while waiting for a developer to come in and make a profitable offer. It is simple, take care of your investment like so many others during the downturn have, or let it go. I would prefer to see the property still occupied prior to the dismissal of the tenants than to have the "development" proceed in this half-hazard fashion. Slack is not something the owners have afforded themselves.
    • Seriously guys?
      Did either of you actually read the article? Gargantuan property taxes, bankruptcy, tax sale etc... The owner has done everything possible to keep this thing afloat and do right for the property, the city, and the neighborhood.. and you guys complain about weeds and broken glass? Where do you think the money will come from to clean the place up? The owner, like very nearly lost his shirt trying to rehab and reuse this incredibly important piece of property in the worst economic downturn since the Great Depression... cut him some slack?
      • Agreed
        I couldn't agree more. The area has become an eyesore and a danger to the community. This was seen when the guardhouse caught fire (arson) and fire trucks were unable to respond due to the barricades put in place by the investor. Though the building is currently being demolished, the grounds around the building are being shown no care at all. Not only are the weeds out of control and the parking and sidewalks being unmaintained, there is garbage and broken glass everywhere. The landscaping area on the corner of Sherman and Michigan is now full of overgrown trees that block the view of traffic trying to see around the corner. An area that was once safe and full of tenants is now, sadly, bringing down the entire neighborhood.
      • Mowing Crew Needed
        It is unfortunate that this group has chosen to allow the property to become such an eyesore throughout this process. Prior to their demolition project, while tenants were still there, the property was kept well enough mostly by staff members of the tenants. Now though, weeds are head high, grass is up to your waist, and every bit of the once maintained parking lot and sidewalk areas look more post apocalyptic than they do a property in transition. I would expect more of a plan from a seasoned investor like Dvorak. Hopefully that is on his list of issues to tackle in the near future.

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