Software company Bloomerang says it plans to spend at least $8 million on a corporate headquarters complex on the former Fort Benjamin Harrison in Lawrence, part of an attractive deal that involves free public land and a roughly $300,000 grant.
The company, which sells donor-management software to not-for-profits, plans to break ground Tuesday on a new building at Lawrence Village at the Fort, a mixed-use complex near East 56th Street and North Post Road. It intends to add two more buildings in coming years on roughly three acres of land that the Fort Harrison Reuse Authority donated.
"This is a very unique situation," Bloomerang CEO Jay Love told IBJ on Monday. "Very seldom do you find brand-new, high-tech startup firms having the wherewithal to pull off building their own building."
Launched in early 2012, the software-as-a-service company has about 1,000 clients nationwide, including the St. Baldrick's Foundation, The Chicago Parks Foundation and the Anne Frank House. In October 2013, when it had nine employees, it reached a deal with the Indiana Economic Development Corp. to employ 79 by 2023 in exchange for $700,000 in conditional tax credits.
Today it has 35 employees and expects a headcount of about 50 by the end of the year, Love said.
Bloomerang said it plans to build three buildings on the site, about 20,000-square-feet each, including one three-story facility that's expected to be complete in November.
The buildings are slated to cost between $2.5 million and $3 million each, Love said.
One of the floors in the first building will be used to host a non-for-profit incubator, which officials have likened to Launch Fishers—but for those looking to start charitable organizations.
In exchange, the Reuse Authority donated the land and is contributing $290,000 toward the project. The first phase entails spending $2.5 million for the building and roughly $900,000 for infrastructure improvements.
The free land is based on the condition that Bloomerang hire 50 employees by December 31, 2017. If not, Reuse Authority officials said the entity will exercise lien-holder powers.
The Reuse Authority, which was created after Fort Benjamin Harrison closed in 1991, has been charged with facilitating economic development at the site.
According to its website, it will "sunset at the completion of all land sales, transfers, public land dedications, repayment of all loans, and architectural oversight of new vertical development."
In a phone interview Monday, Reuse Authority Chairman Ed Treacy said the authority seeks to incentivize economic development, but doesn't intend to frequently craft deals involving free land.
"As time goes on, we want to lessen our involvement with each and every deal," the former Marion County Democratic Party chairman said.
Love, 60, is best-known as the founder of the donor-management firm eTapestry, which was acquired for $25 million in 2007. He later served as CEO of the digital marketing firm Slingshot SEO, but left after less than a year at the helm.
Bloomerang currently occupies 3,500 square feet at 5625 N. Post Rd in Lawrence. The first building, to be built by Indianapolis-based Commercial Team Construction, will sit at 5724 Birtz Road.
The first building should be able to host about 130 people. The other two buildings should increase that capacity to more than 300.
"If you're growing rapidly like we are, ... it's hard to plan out where you're going to have your offices," Love said. "You either have to bite off more than you really want right now or move every 12 to 24 months."
In this deal, Love said, Bloomerang didn't have to choose between leasing too much space and repeatedly hitting capacity.
The Reuse Authority donated the land to Love and two other Bloomerang investors Love declined to name. The three will then rent the space to Bloomerang through a long-term lease "with the option for taking additional space as needed," Love said.
Love also declined to disclose what Bloomerang will pay per square foot for the space, but he said the graduated lease is structured with "below market rates at the beginning and then it moves up from there."
"It's a very tight handshake between the two [parties]," he said about the real estate agreement between the investors and the company. "So it's a lot of flexibility built in there."
The $290,000 contribution is essentially a forgivable mortgage, said Russell Brown, an attorney who sits on the Reuse Authority board. If Bloomerang doesn't fulfill employment obligations before the end of 2017, the authority could foreclose on that mortgage and demand repayment, Brown said.
The same is true if Bloomerang sought to sell the property before that date. The authority would be in second position behind the construction lender, Brown said.
"If they owed their construction lender $1.5 million," Brown said, "they would have to sell the property for $1.8 million for us to release our lien."
"But nobody's going to do that," Brown said.