A proposal by Flaherty & Collins Properties to build an $81 million, 28-story apartment tower on part of the former Market Square Arena site passed a major hurdle Monday evening.
Members of the Indianapolis City-County Council’s Metropolitan and Economic Development Committee recommended to the full council that the project be built, with one key stipulation. The vote was 6-2, with Democrats Leroy Robinson and Zach Adamson voting against it.
Flaherty & Collins must commit in a letter to Mayor Greg Ballard before a council vote that 30 percent of the workers that it hires to build the project must live in Marion County.
The developer would only be penalized, though, if it fails to hit a 25-percent benchmark for local hires.
“If that’s the only hiring requirement and it doesn’t go up at the council meeting, I would think the developer could live with 30 [percent],” said Deron Kintner, the city’s deputy mayor for economic development.
David Flaherty, CEO of Flaherty & Collins, said the developer can achieve the hiring goal.
“We have a very good track record of hiring locally and training locally,” he said.
The committee also recommended the city help fund the project with a 25-year, $23 million bond, of which $17.5 million will go directly to construction costs while the remainder will be held as a safety net to fund unexpected expenses.
The committee had delayed action on the development’s financing and hiring goals after failing to receive information it requested from Flaherty & Collins.
The proposed Market Square Tower—if it’s built as planned at 28 stories and 370 feet—will be one of the 10 tallest buildings in Indianapolis. It would rank as the tallest apartment building in Indianapolis.
The tower would include 300 luxury apartments renting for $1,300 to $2,400 per month. About 500 parking spaces and 43,000 square feet of ground-floor retail space would be included. Flaherty & Collins said it prefers that a specialty grocer occupy the space and is pursuing Whole Foods as a tenant.
The development would be backed by a combination of public and private funds, with the city agreeing to contribute funding from the bond sale and land for the project appraised at $5.6 million.
But before the city commits, committee members had asked that Flaherty & Collins provide it information on the project’s financing structure, plans to hire local contractors and parking specifics.
City-County Council member Vop Osili, who represents the district in which the project would be built, said he supports Flaherty & Collins’ commitment to ensure that 30 percent of workers are local.
“You have my commitment that I won’t ask for a dot over 30 [percent],” he said.
Kintner has said he believes real estate taxes on the $81 million project, estimated at $1.3 million per year, will be adequate to cover payments on the 25-year bond.
The deal is essentially tax-increment financing, but Kintner said it hasn’t yet been decided whether to expand the downtown TIF district to encompass the site. By law, tax revenue can be captured outside a TIF district, as long as it benefits the district, he said.
The remainder would be financed by Flaherty & Collins, which requested the second-lowest amount of public incentives of five development teams vying to develop the nearly 2-acre property. The city chose Flaherty's proposal in July.