Vote on North of South project's bond financing delayed

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A City-County Council committee’s vote on whether to allow the city to issue $98 million in bonds to finance a portion of the $155 million hotel-retail-residential North of South project downtown has been delayed until Feb. 2.

The Economic Development Committee made a few changes to the financing proposal on Tuesday and chose to wait until its next meeting to vote on the proposal.

City-County Councilor Mike McQuillen, a Republican committee member, said he expects the measure to pass next month and advance to the full Council for its consideration.

At Tuesday’s meeting, committee members approved capping the interest rate on the bonds at 6.5 percent. The original rate was set at 8.5 percent.

“They never would have gone to that [high of a] rate,” McQuillen said, “but it made people more comfortable to cap it.”

Committee members also agreed to give the Council authority to review the city’s involvement in the project, once it gets started, if there are substantial changes in financing, he said.  

Locally based Buckingham Cos. is leading the development, set to be built on 14 acres of land owned by Eli Lilly and Co.—now home to a parking lot north of South Street between Delaware Street and Virginia Avenue.

The city is offering to provide an $86 million loan and build $9 million in infrastructure to get the project off the ground. Plans call for a boutique hotel, retail space, a YMCA and 320 upscale apartments.

The price tag includes a $7 million contribution from Buckingham, a $6 million grant from the Indiana Economic Development Corp., the $29 million in land Lilly is providing, and $18 million for the YMCA branch.

Instead of $86 million, however, the city actually will borrow $98 million to pay for administrative costs related to the bond sale and for interest payments while the project is under construction.

City officials say the additional $12 million adds flexibility to the bond issue because it’s often impossible to know how the bond markets will perform between the time of filing and issuing of debt.

The project’s site plans also still need to be approved by the city’s Regional Center Hearing Examiner. Because the site is within the Regional Center overlay district, its design needs to comply with Regional Center Urban Design guidelines.

A regional center meeting to consider the site plans is scheduled for Feb. 10.


  • hard sell
    I am all for local govt. supporting projects that benefit general society or further development. I don't think this city does enough in that regard. However, this is a hard sell. Lilly is basically giving the land, they have YMCA lined up as an investor, city/state is doing infrastructure improvements and giving a grant, a good downtown location, and banks are still not willing to finance this project.

    They are getting $6 mil grant money, $9 mil for infrastructure (ok, this you can argue city would have to do anyway), $XX mil for interest payments (or is the city getting reimbursed for that?), and taxpayers get pretty much all the downside in case project flops.

    I think this project will commercially succeed, but even then it would be good to see how much money the city ended up investing (and projected benfit from higher tax collections), and how much money was made by private investors involved in this project.
  • Marcus
    Your on point except the other irrational party is the city officials and the sycophants will be getting the work. I would be willing a guarantee of 25-30 million from the city might have gotten this over a Federal Lending Institution's goal line in terms of credit enhancement.

    In present form this smacks of sophistry and corruption and at its barest minimum is poor stewardship of taxpayer assets even if on a contingent basis beyond the infrastructure $.
  • A common critique
    One of the most common criticisms of the NoSo plan is that private banks turned down this plan, so the city taking it up is foolhardy. Under ordinary market conditions I might agree with that position. However, we have seen that banks are not acting rationally in the light of the current economic downturn. Bank stockpiles are high (far higher than necessary) and lending is reduced. Banks are nervous, and so they aren't lending to anyone but the best-of-the-best plans. Now, this doesn't necessarily mean that NoSo is a bad plan, only that the banks didn't see enough in it to overcome their irrational fear of loosening the purse-strings.

    I will agree that perhaps the city could have given half of its current commitment, and let the investors go back to the banks with that assurance. A bank would be far more likely to invest a smaller amount and with more security. If such a plan were arranged, would the critics still oppose it?
  • This is Not an Editorial
    Michael, the IBJ most certainly has printed comments from individuals critical of the project. So, your post is inaccurate. Moreover, this article is not an editorial, I did not read anything in the article in which the IBJ took a position endorsing the project. The article simply reported the facts of what happened at a public meeting--that's called reporting. If you want to read an opinion piece, then read the editorial section. What really gets old, Michael, is a U.S. population so used to being entertained with staged debates and rambling opinion-piece "news" monologues, instead of simply being informed and allowed to make their own decisions.
  • This is aiming higher?
    This proposal is a embarrassment to anyone who makes a living in real estate or economic development.

    The market research with currently low occupancy rates do not currently support the need for additional retail and hospitality development as evidenced by every private sector bank declining to provide financing.

    Additionally one has to question why government officials chose to devote such a large amount of the cities scarce public money savings for a development that is projected to create so few low paying service jobs.

    There is no better project proposal out their that would produce a better return on the publics investment in terms of greater number of higher paying jobs with more private sector equity investment and financing??

    $12 million extra to pay political insiders and 100% of the city backed financing for years until after the next election when it will be obvious that this development is a failure and a burden to taxpayers.
  • One-sided
    Why doesn't the IBJ ever talk to critics of plans like this? The one-sided reporting "rubber stamping" the mayor's ideas is getting old.

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