Ambrose Property Group backed out of its $1.4 billion plan to redevelop the former General Motors stamping plant site just two weeks after the city of Indianapolis rejected a request from the developer for substantial increases to the project’s public subsidy.
The Indianapolis-based firm, which Sept. 27 announced it was withdrawing from the Waterside project to focus on other types of developments, asked the city in mid-August for a more than $10 million increase to its $26.7 million subsidy. But following a series of meetings and email exchanges, city officials flatly rejected the request, calling it “not feasible,” according to records obtained through a public records request.
Ambrose’s request for more money followed its decision to substantially increase the size of Phase I of its project from $92 million to $300 million. Ambrose found that the expanded Phase I would require $75 million in infrastructure work.
“We are at a crossroads, and we need to make some tough decisions” Ambrose founder and CEO Aasif Bade wrote in a Sept. 19 email to city officials. “To cut to the chase, without more material support from the city, this project will not occur.”
The original $26.7 million subsidy was expected to be doled out in three portions. The first—about $8 million—was allocated for the project last year.
In rejecting Ambrose’s proposal, city officials provided three options:
—Maintaining the original project agreement, and moving forward with the $8 million already allocated for the project;
—Ambrose could enter into a “build-operate-transfer” agreement with the city. Ambrose would build public infrastructure, such as roads, and the city would pay annual lease payments to use that infrastructure using up to 80% of Ambrose’s annual property tax payments. In other words, the city would pay Ambrose back 80% of its property tax bill as a lease payment. At the end of the agreement, Ambrose would transfer the infrastructure to the city.
—Using tax-increment-financing bonds to cover infrastructure improvements. Up to 80% of the additional property taxes generated by the development would go toward paying down that debt, with the developer on the hook if tax proceeds fell short.
“In our view, if Ambrose’s investment in Phase I is larger than originally anticipated, pledging 80% of the project-based increment … offers Ambrose flexibility and a project fund sufficient to complete critical portions of the infrastructure needed to enable the Phase I vertical development,” said Scarlett Martin, community and economic development administrator for the city, in a Sept. 12 email.
Ambrose said it couldn’t proceed without the additional funds.
“Beginning in March 2019, Ambrose asked the city for increased financial support that was necessary to realize the full potential of the property under Ambrose’s expanded vision for the site,” Ambrose said in a statement Friday. “After several months of discussion … the city declined to provide it.”
The statement also indicates the city “made it clear that it could not commit to providing the necessary support for even Ambrose’s smaller initial plans for Waterside because the City did not have an identified source for the funds.”
Martin told Ambrose in her email the city only has identified the sources of funding for the first two funding installments, but never said the city did not intend to find a source for the third installment.
“Ambrose made clear to the city in September that it was not going to move forward with the project it was contractually committed to complete unless the city would guarantee it at least another $10 million in taxpayer money,” city spokeswoman Taylor Schaffer said in a statement Friday.
The city has engaged in a public dispute with Ambrose for most of the month, after sending a letter to the firm Oct. 2 indicating it would like to purchase the site and would use eminent domain to do so, if needed.
While Ambrose has said it is open to working out a deal with the city, it also claims the city has no right to claim eminent domain. The developer said the city’s threat has made it “impossible” for the firm to sell the land to another developer to take on the Waterside project. Ambrose has worked with JLL to market the property.