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Pedcor angling for $16M subsidy for City Center expansion

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Pedcor Cos. is asking Carmel to help pay for a 600-space parking garage at its ambitious City Center development, laying the foundation for a $100 million expansion that could begin this year.

Preliminary plans call for starting work on the garage and as many as three mixed-use buildings this fall, with another half-dozen projects in the pipeline.

The parking and other infrastructure should cost about $16 million, Pedcor CEO Bruce Cordingley told IBJ.

Carmel has used revenue from its tax-increment financing districts to subsidize such expenses in the past. That also is the most likely source of funding this time around, though the City Council has kept a tight grip on the municipal checkbook since refinancing $185 million in redevelopment commission debt in 2012.

Bruce Cordingley Cordingley

The second phase of Carmel City Center construction will fill in vacant land between the Monon Greenway and Range Line Road, better connecting the existing commercial-and-residential hub with the Center for the Performing Arts campus.

But just as important, finishing the 88-acre development will add to the city’s tax base, helping the cash-strapped Carmel Redevelopment Commission meet its financial obligations.

“We need these projects to go forward so that we can elevate our TIF revenue and do what we need to do,” said CRC Executive Director Corrie Meyer, who was hired this year to oversee operations.

(In the video below, Pedcor provides a flyover of City Center with renderings of projects in the works.)



Carmel-based Pedcor has developed the bulk of the ambitious City Center project in partnership with the city and the CRC. Cordingley unveiled conceptual designs for the new buildings in December, and since then has been briefing council members on the plans.

Cordingley said interest from potential commercial tenants is strong enough to start the next wave of construction—and luxury apartments planned above the office and retail space should fill up fast—but not without the parking garage.

“Everything else is financeable,” he said.

So far, council members have responded favorably to his pitch, Cordingley said. A formal proposal is expected to be made public this summer.

It makes sense for the city to support projects like City Center that build density rather than encourage sprawl, Mayor Jim Brainard said. Extending city services to previously undeveloped areas is expensive, he said, and it takes longer to see a return on the investment.

citycenter-parkeast-g-web-15col.jpg Park East is projected to start this fall with a three- to four-story parking garage, to be surrounded next year by retail and office space. (Rendering courtesy of Pedcor Cos.)

“The basic infrastructure already is there,” Brainard said. “Now, let’s create some additional assessed value.”

City Council member Luci Snyder doesn’t disagree, but she’d like to see more specifics—and maybe even a signed lease—before committing to anything.

“Eventually, someone has got to build something that isn’t speculative,” said Snyder, a former commercial real estate broker and chairwoman of the council’s finance committee. “That’s what I want to see: Who are the users? What taxes are they going to pay? … We primed the pump enough with public money. Now I’d like to see some real tenants.”

Pedcor is in talks with four businesses interested in as much as 19,000 square feet of space in the new buildings, Cordingley said: two financial institutions, one service provider and a retailer. But given the two-year construction time line, few are prepared to sign on the dotted line now.

citycenter-site-map.gifHe pointed to the success of City Center’s first phase as evidence the concept works. Its 106 apartments are 95-percent leased, according to a CRC report to the council, and 79,500 square feet of retail/commercial space will be fully occupied by August.

Pedcor’s Nash Building is under construction and should come online this year; about half of its 10,000 square feet of commercial space is leased, Cordingley said. Work also is continuing on developer Anderson Birkla’s two-building The Mezz project nearby.

“With the time it takes to build these, we can’t wait for tenants,” Cordingley said. “Nobody signed up for phase one or the Indiana Design Center before we started, and those are doing quite well.”

Pedcor pays more than $1 million in property taxes on its commercial holdings in Carmel each year, he said.

The company owns most of City Center already, and Cordingley said it has “indicated willingness” to buy the former Shapiro’s Delicatessen building that has been vacant since last summer. The CRC owns the building at 918 S. Range Line Road and has it listed for sale with Colliers International’s local office.

While it’s too early to discuss possible uses for the 11,500-square-foot structure, Cordingley said, Pedcor may want to acquire additional land to expand the building.

Also on the drawing board: a four-star hotel near the tony Palladium concert hall. Pedcor is seeking an investment partner for that project, Cordingley said, and designers are looking for ways to speed up construction by building it in phases.

He suggested starting with a 30- to 35-room boutique hotel that could grow along with demand.

As Pedcor’s plans come into focus, the CRC is working to find a balance between the developer’s needs and the city’s priorities, Meyer said. And more parking is a key building block for any expansion of City Center.

“The parking on-site now will not support additional development,” she said. “We know getting the garage built is a critical element. Now we’re working on logistics—how to get it done.”

Snyder acknowledged parking has been a problem since City Center opened, but she nevertheless wants to know more before offering a publicly funded solution.

“If they have a marvelous tenant that needs extra parking, we’ll take a good strong look at it,” she said. “I like to keep my mind open and one hand on my purse.”

Last year, Snyder was part of a four-member council majority that voted not to support Pedcor’s application for a state tax credit that would help pay to redevelop Midtown—a blighted former industrial area between Carmel City Center and the Arts & Design District.

Although no city funding was requested at the time, she said then that the city simply could not afford to get involved with new projects.

 

snyder Snyder

A subsequent change in state law allowed Pedcor to pursue the industrial recovery tax credit without the city’s blessing. Cordingley is still waiting on a decision.

The company is working on plans for upscale offices and housing on 15 acres of land it owns west of the Monon. Carmel-based Old Town Development LLC has been acquiring property east of the Monon and could file a rezoning application this summer.

Cordingley said a revived Midtown could provide a much-needed link between City Center Drive and Main Street, complementing existing development and bolstering the city’s efforts to build a dense, walkable community.

“We hope to get something going there next year,” he said.•

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  • Read it again
    Big Jer, read my comment again. I never said there was a garage in Meridian Corridor. Again, if developers want to "if you build it, they will come" type of developments, they need to pay for their own parking facilities. Don't for a minute think this is public parking. The public part of it is very small. At the City Center, most of the parking is reserved for tenants, not the public. Providing parking for the tenants, is a hook to sign leases. Therefore, it should be paid for by the developer, as they are reaping the benefit.
  • Investment or boondogle?
    We paid $22.5 million for the a total of 184 parking spaces in City Center Garage or just north of $116,800 per parking space. The ratio of private to public spaces at City Center Parking Garage is 2 to 1. That means the actual cost of a Public Parking space at City Center was over $350,000. This proposed project would have a cost per Parking space of approximately $26,667/space However if the past ratio of Public to Private spaces is used there is a real cost per Public Parking Space of $85,000. Don't most Cities downtown garages charge to park in their facility? Why do we subsidize all of the private parking in addition to providing TIF for developers? Is parking not a feature the developer includes with the Lessor as terms of the transaction? This also fly's in the face of a letter the Mayor delivered to me that stated paying for parking garages should be paid for by the developer and he had learned from his mistake:Photo of letter available at http://carmelchatter.com/showthread.php?1767-Thanks-to-the-Mayor-for-his-efforts
  • QUESTION
    They don't have enough money to pay their bonds,refinancing bonds are guaranteed with a special tax, and the reflecting pond at the Veterans Memorial is crumbling. Despite all of this Mayor Brainard wants to give Pedcor $16M to pay for a parking garage. Does this make any sense?
  • Parking
    RKW - What parking garage is on the Meridian Corridor. Is there one at the Bridges? Your logic I would say is flawed here. There is no way a business can compete if it has to subsidise a free parking garage. Sorry your rent is twice as much as it would be down the street but we were looking for high density which meant a parking garage. I see nothing wrong with the city helping with TIF funding on a public parking garage.
    • Ghosts of Susbsidy Past
      Corrie Meyer makes an excellent point about the need to generate Tax base and TIF revenue. “We need these projects to go forward so that we can elevate our TIF revenue and do what we need to do,” said CRC Executive Director Corrie Meyer, who was hired this year to oversee operations. What a wasted opportunity to have invested $175 in the Performing Arts Center when, properly leveraged, it should have created $900+ million in taxable property value instead of producing ZERO property taxes as a City Financed and Owned asset. Now we are looking at starting over again on the same treadmill, didn't even have to change the carrot, trying to get in front of the present obligations while creating new ones for the future. This seems to be a potential doubling down on our past strategy. Let's hope this time we show up at the negotiating table and get as much as we give. We need to hurry and settle that last PAC lawsuit. We save so much money from losing these 'nuisance' lawsuits that the last one could be another large source of funding.
    • Yes with Lucy
      I don't normally agree with everything Lucy has to say, but she has this nailed. Its time for Pedcor, instead of boasting about their success, prove it, and risk THEIR capital, and build those garages. You can't have commercial and retail without parking. If Pedcor can't afford to build the parking, they can't afford to build the buildings. Argument over. Did the city need to pay for parking on Meridian corridor? Did they pay for parking at the ridiculous Bridges development? Did they pay for parking at the Meridian technology center? No. Pay for your own parking spaces, garages, etc.

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