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The City-County Council’s Metropolitan and Economic Development Committee voted unanimously Monday to recommend approval of a $66 million loan to an Indianapolis-based developer for the redevelopment of Old City Hall and the construction of a 29-story tower in the adjacent parking lot.
TWG Development plans to spend $249 million on the project, which includes rehabilitating the 116-year-old former municipal building at 202 Alabama St. and building a 387-foot tower with 186 apartments, 23 condominiums and 156 hotel rooms.
The plan calls for the former city hall building to be converted into an art gallery and private office space. Louisville-based 21c Museum Hotels would operate the gallery space and hotel. Once complete, it would become the ninth 21c Museum Hotel in the luxury hotel chain.
The total projected cost is an increase of $109 million from the original budget of $140 million when the project was announced in August 2023.
Chase Smith, vice president of market-rate development for TWG, said at the Monday meeting of the Metropolitan and Economic Development Committee that the $66 million loan was necessary for the project. He cited increases in construction costs and interest rates.
“I’m up here tonight because there is a gap,” Smith said. “And talking with [the Indianapolis Department of Metropolitan Development], the concept of this [financial] structure came about. This does make the project work.”
Smith also shared a chart with the committee that showed TWG’s financing plan with and without the loan. Without it, Smith showed that TWG would attempt to cover $114 million of the project costs with private loans at an interest rate of about 8.5%. With it, TWG would lower private construction loans to $69 million.
Under the proposal, the DMD will issue the bonds to the Circle Area Community Development Corp., a municipal institution with nonprofit status. It will also lease the property to Circle Area Community Development Corp.
The Circle Area Community Development Corp., in turn, will loan TWG the proceeds from the bonds with the developer making lease payments to the entity to cover the bonds’ debt service. The developer is expected to pay off the bonds in 10 years.
About $50 million would go toward construction. The remaining $16 million is allotted for the cost of issuance, capitalized interest and surety to fund a debt service reserve.
The city would hold and disburse the loan funds to the developer.
If the loan is approved, Smith said TWG is prepared to break ground in July. Construction will take about three years.
The city has already committed $17.9 million to the project through tax-increment financing bonds. Smith said TWG is expected to receive $20 million from the Indiana Economic Development Corp. That funding will come from redevelopment tax credits and a $250 million gift provided by Indianapolis-based Lilly Endowment Inc. to support blight-reduction efforts and the creation of new arts and culture initiatives across the state.
TWG will also apply for federal historic tax credits “at the appropriate time,” Smith previously told IBJ.
The historic building and its adjacent parking lot have been fenced off for a year while awaiting construction. The developer plans to rehabilitate Old City Hall and build the tower simultaneously.
The 156-room hotel is expected to occupy floors six through 13 of the 29-story tower, while a lobby, restaurant and curated retail space would take the ground floor. The apartments are to occupy floors 12 to 23 and condos to occupy floors 24 to 27. The garage will be on levels two to five.
Residents would enjoy a separate entrance and amenities away from hotel guests. A first-floor corridor will connect the interiors of Old City Hall and the planned tower.
A public museum operated by 21c Museum Hotels will take over the first two floors of Old City Hall, while the top two floors will be used as private office space.
The Metropolitan Development Commission will consider the loan on April 2. On April 7, the full City-County Council will vote on the proposal.
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How many try’s is that for this building and how much tax $?
BtW, isn’t it odd that Nate’s Flock isn’t ranting about the single party government on the Indy CC?
Heehaw! 😂