Indianapolis Public Schools staffers are expected to ask the board this week to reject two bids to buy the district’s downtown headquarters, after the offers came in well below expectations.
The bids for the block-long John Morton-Finney Center at 120 E. Walnut St. were submitted in late 2018 by a pair of local housing developers who proposed using the property to add high-density housing units to the downtown corridor. The building sits on a 1.7 acre parcel about a block north of the Cultural Trail, a block east of the Central Library and near a variety of long-standing apartment buildings such as Riley Towers.
Both bidders, Onyx+East and Core Redevelopment, are Indianapolis-based firms that specialize in housing projects including apartments and townhouses.
Onyx+East proposed the demolition of the building to make way for 63 townhomes on the site. The company proposes to buy the property for $2.4 million, with a total project cost of $18.5 million.
Core Revelopment’s bid for the building purchase came in a bit lower, at $2.2 million. However, the group would have kept the headquarters building and redeveloped it—in addition to new construction—to create a mixed-use development with 150 market-rate apartments and 30,000-square-feet of commercial space. The project cost is estimated between $18 million and $20 million.
Both proposals would keep IPS in the building until March 31, 2020.
Core Redevelopment owns and manages more than one dozen local properties, in addition to sites in Lafayette, Terre Haute and Cincinnati. Onyx+East, which spun off from Milhaus in 2015, oversees a variety of upscale projects throughout the Indianapolis area.
In its request for proposals sent out in November, IPS called for any redevelopment of the area to maximize the financial return to IPS, in addition to creating a demographically diverse neighborhood through the addition of “high quality jobs and amenities.”
However, each of the offers for the property came in well below what IPS had been anticipating. According to a presentation slated to be given to the board on Tuesday by Joe Gramelspacher, the district's special projects director, the recommendation from staff is to reject both bids.
“Neither bid provides sufficient value for the near-term relocation of Central Services—and the highest bid is well below estimated market value” for the building, Gramelspacher's presentation reads.
According to IPS, the market value is about $92 per rentable-square-foot. Although the building contains 200,000 square feet of gross square footage, it only has about 75,000 square feet of rentable space. Its value would be just under $7 million–or about $4.6 million more than the highest bid.
The next step for IPS, if the bids are rejected, would be charted out by members of the school board and administration. The board could still accept the “highest and best” bid at its own discretion.
The effort to sell the John Morton-Finney Center is part of an ongoing district effort to unload certain buildings to firm up its coffers. The district first considered the sale of the building last June, heading into a school year where it faced a $45 million deficit.
The cash-strapped district is continuing to see a decline in enrollment, serving 31,000 student in the 2017-2018 academic year, down from its peak in the late 1960s of about 109,000.
An IPS spokeswoman declined to comment for this story, and said the district would wait until the board made its decision.