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Charge Gershman 15% on the cash like a personal loan because that is basically what it is….
Obviously the developers are in over their heads and/or the market for the proposed project doesn’t really exist. That’s part of the risk of development and I don’t want to see any city money extended to ensure this group is insulated – much less profit – from not being able to deliver on their promises. Businesses across the city have to hustle every day to keep their doors open and have no chance of a government bailout if they make bad decisions, this should be no different.
No city money will be extended. The land underneath will revert to the city if the loan fails, which won’t happen. And: IBJ and the reporter are to be commended on this article. It’s extremely in-depth.
This is a perfect example of developer over-reach. But, the underlying real estate requires a long-game approach.
@Rick S – City to consider $18M bailout loan – the only money the city has is taxpayer money unless they are getting a grant for this.
Questions:
– You state that the land underneath will revert to the city of the loan fails. What happens to the building? Who will own it?
– The real estate and building do require a long-game approach. Who hired this developer? The city?
Answers:
* the land would revert to the city. In the absence of a long-term lease or similar document, the building, if it’s still standing, would also revert to the city.
* multiple proposals were presented, and the city chose this development team. That team in turn selected a multi-tiered financing approach…and it started in the throes of Covid, which was a wicked mortgage/finance environment.
Gershman is a good developer, and of course they’re local. When a complicated finance deal gets sideways, it’s vital to have a local developer in the driver’s seat. And if their plan has to go back into the finance market, it’s a much better borrowing climate now than four years ago.
I’m a finance guy with commercial real estate experience and I got lost in the web of 8-figure transactions on these properties. Not bad writing, just a huge flub on the part of the developers. Not sure why the city is so eager to bail these guys out. I’m with “21 R.” – the market (the banks) have spoken. Take your lumps instead of wishing for a bailout. If the bank thinks it’s dumb, let it fail.
The entire project has become a joke. Forcing City Market tenants out over two years ago with no construction started is an embarrassment to the City. The site is overgrown with weeds and both buildings and site have become an eyesore. The City needs to be more careful on selecting local developers. The City Hall/21C project seems to be following the Gold Building/City Market project with no construction started. Maybe Hendricks Development Group should take over these projects.
You’ve hit the nail on the head – there appear to be no local developers who can deliver reasonably on time or reasonably on schedule.
Not these guys. Not Keystone. Not Kite. Not Buckingham.
Amen on being more careful hiring local developers. Appropriate funding from a developer, an established timeline and a project manager that is able to drive the project should be vetted and established before a project is awarded.
The least the city should do is keep the outside area cleaned up and maintained–and that cost should be billed back to the developer.
Indy has no good local developers. Or at best, they do their best work out of market. Freeze them out.
Good article, although saying the Metropolitan Development Commission is ‘independent’ is stretching the facts a bit beyond reality. In legislation and theory maybe, but the commissioners are appointed by the mayor and council. The DMD director is appointed by the mayor with CC Council approval, and the DMD staff works for the director, the mayor, and at times the council.
The old ‘too important to fail’ adage, is another failure by the city and the developer, although the developer has bitten off more than they can chew, and were unable to focus on the actual gold box. Basically 6 projects at once and no real ability to focus on the original single project without dragging the surrounding shiny objects into the mix, while they all grow weeds.