Commission unanimously approves $18M bailout for Gold Building developers

An Indianapolis commission unanimously approved a loan for the owners of the Gold Building downtown, giving a lifeline to a planned conversion of the building after three years of delays.

The Metropolitan Development Commission on Wednesday afternoon approved the loan 8-0 with no discussion.

The commission’s vote means city officials and local developers Gershman Partners and Citimark can finalize their loan agreement, allowing the developers to complete their financing for the project by the end of the year, which they told the commission is their intention.

While Gershman and Citimark first proposed the $185 million redevelopment in 2022 as part of a public-private partnership focused on the entire City Market block, they have yet to close on financing leading to challenges with their lender on their 2019 mortgage on the property.

The conversion of the building at 151 N. Delaware St. is expected to replace 400,000 square feet of office space with more than 350 apartments and nearly 8,000 square feet of ground-floor retail, as well as a cleaned-up Wabash Street alley between the northern and southern halves of the block.

IBJ reported earlier this week that the developers faced foreclosure on the Gold Building and its two adjacent properties without the loan.

The city is expected to pay the developers a lump sum that would then be passed on to First Financial to satisfy the original mortgage balance. The city would then assume the debt on the project—giving it legal authority to take the properties if the redevelopment funding plan fell through.

According to the agreement, the city would be able to withdraw its loan offer if Gershman and Citimark don’t secure construction funding. The agreement also requires the developers to meet monthly with its financial partners, the Department of Metropolitan Development and Indianapolis Economic Development Inc.

And it allows the city to foreclose on the Gold Building and the other north-block properties if the developers’ financing plan falls through after the city pays the loan.

Carmel-based Merchants Bank will provide the construction loan while local developer Milhaus has signed on as an equity and development partner.

If the construction loan or other parts of the developers’ plans fall through and prevent the redevelopment from securing the needed funds, the developers would be required to repay the loan immediately, with 7% interest—and to give up all three of the buildings on the northern half of the block.

Gershman and Citimark have been eyeing updates to the Gold Building since early 2020, although initial plans evolved from office space renovations to a focus on multifamily and retail in the wake of the coronavirus pandemic.

The city announced in June 2022 it had chosen Gershman and Citimark’s $175 million proposal for City Market from three finalists, besting concepts from TWG Development LLC and Flaherty & Collins. At the time, city officials said the companies’ ownership of all three buildings immediately to the north significantly affected planning around the market house.

But the delays have caused angst within Indianapolis Mayor Joe Hogsett’s administration because it has also stymied development on the city-owned portion of the block.