A local developer with plans to build two new hotels on downtown's Pan Am Plaza has acquired a piece of real estate vital to moving the project forward.
Kite Realty Group Trust closed last week on the $30 million purchase of the underground parking garage beneath Pan Am Plaza, a source with knowledge of the deal told IBJ. The plaza has been proposed as the site for the hotels and a $120 million expansion of the Indiana Convention Center.
The purchase of the 1,200-space garage from New York-based Dali Associates comes as publicly traded Kite continues negotiations with the city about the specifics of its hotel project, which could have a huge impact on tourism business in the city.
Records of the sale have not yet been made public, and Kite has not responded to repeated requests for comment. Dali Associates principal Armand Lasky twice told IBJ he could not speak about the matter because he is bound by a confidentiality agreement.
Kite has been trying to acquire the garage since it bought Pan Am Plaza in 2008 with hopes of redeveloping it. Kite signed an agreement with Dali Associates in 2011 that obligated it to notify the garage owner—and get its approval—of any development plans for the site.
Kite’s plan for the plaza, which was championed by the Capital Improvement Board in October and endorsed by Mayor Joe Hogsett, calls for two Hilton-branded hotel towers that together would have more than 1,400 rooms. The hotels would be owned by Kite. The CIB would own the 80,000-square-foot convention center expansion, which would be funded by taxpayers.
A price tag for the hotel portion of the project—to be privately funded by Kite—has not been announced. The CIB is seeking approval from the Indiana Legislature for the ability to collect taxes for the convention center expansion.
The future of the entire project on the plaza was reliant on Kite's gaining control of the underground garage.
Hilton announced in February it would brand the 38-story, 800-room hotel that will be the centerpiece of Kite’s development as a Signia Hilton. The convention-style hotel brand is expected to compete directly with the 1,000-room JW Marriott.
A second Hilton hotel with 600 rooms is also being planned for the development, but a flag for that hotel has not yet been announced.
The owners of JW Marriott and other downtown hotels have expressed concern over the impact the hotels might have on the city’s hotel occupancy rate.
CIB and Visit Indy officials, who have long advocated for more hotel rooms and more meeting space near the convention center, say they believe the project is necessary for the city’s future as a tourism and convention hub.
For its part, Kite has sought to stay out of the limelight since being selected by the CIB from three developers that submitted proposals for a downtown "convention hotel" project last year. It instead has focused on how to move the project forward with the acquisition of the garage, IBJ's source said.
The source told IBJ that past proposals for projects at the site have failed because Kite has long faced resistance from Dali Associates to give up the garage, which it has controlled since 1993.
This includes a 2014, two-tower proposal by Kite that was ultimately abandoned in part because Dali Associates wouldn’t sign off on the project.
The hotels and convention center expansion are plotted for construction directly above the garage. Kite had to buy or gain control of the site in order to properly prepare for construction.
The city, Visit Indy and the Capital Improvement Board all declined to comment.