The city’s plan to provide an $86 million loan for the mixed-use North of South real estate development adjacent to the Eli Lilly and Co. campus has drawn criticism from those who think the city should focus first on other needs, such as IndyGo and public libraries.
We’d like more details before throwing our full support behind North of South, but we’re generally in favor of the city’s efforts to stimulate downtown development. And we reject the notion that the city should choose between development and other needs.
Casting the debate as a choice sounds good, but it risks shortchanging both the libraries and IndyGo. Both need dedicated, long-term funding sources, not short-term fixes that could mask the need for more enduring support.
IndyGo is chronically underfunded and barely qualifies as transportation of last resort. We’ve advocated before and still believe that the city’s bus system should be the centerpiece of a vastly expanded transit system, but that won’t be possible if the Indiana Legislature doesn’t act—either next year or in 2012. It should pass legislation that would allow voters in the region to approve capturing state sales or income tax revenue to fund transit over the long haul.
The city’s library system also needs more than a life preserver. Unlike transit, the libraries are generally healthy, but their funding is shrinking because of property tax caps. Two bills to be introduced in the 2011 legislative session could offer long-term relief. One would allow the library system to capture county option income tax revenue. The other would give libraries the power to ask voters for property tax hikes that could fund library operations.
Finding long-term funding solutions for services is preferable to pitting them against downtown development.
The latest downtown proposal, the $155 million North of South project to be developed by Buckingham Cos., would cover 14 acres at South and Delaware streets. The main components would be a 148-room Dolce Hotel, a YMCA, 320 apartments and 40,000 square feet of retail space.
The city’s $86 million loan, funded through the sale of municipal bonds, would be repaid over 10 years from income generated by the project and the additional property tax revenue it creates. The balance of funding would be in the form of equity contributions from Lilly, Buckingham and the YMCA and grant money from the state.
The involvement of Lilly, the city’s largest private-sector employer, is surely driving the city’s decision to step in as lender for the project, which would be hard to finance through traditional means in an economy where loans for large-scale development are almost unheard of.
Each development project the city gets involved in needs to be judged on its own merits, and it’s hard to fully support this one without seeing the details that will be contained in the formal project agreement, which isn’t available yet.
But the project seems low-risk from a financial standpoint. It’s within walking distance of Lilly and Anthem Blue Cross Blue Shield, giving it a built-in market.
These are among the merits by which North of South should be judged.•
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