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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis mayoral candidate Jefferson Shreve said Monday he’s concerned that the structure of a proposed deal for the development of a $510 million luxury hotel at Pan Am Plaza could have a “chilling
effect” on future private investment in the city.
The Republican businessman and former City-County Council member told IBJ he disagrees with the decision by Mayor Joe Hogsett’s administration to take over financing and ownership of the Signia by Hilton—a decision announced Friday after developer Kite Realty Group determined it wasn’t possible to secure practical interest rates on the private market to move the project forward. The hotel is part of a larger, delayed project that includes a major expansion of the Indiana Convention Center.
“This is a policy error, for the city to enter into the hotel ownership business in competition with all the private hotel owners and investors in the city,” Shreve said. “It’s flawed policy, and I think that beyond the one deal, it will have a chilling effect on future private investment in our downtown convention and hotel infrastructure.”
But Mark Bode, a spokesman for Hogsett, a Democrat who is seeking a third term, said failure to move ahead with the hotel would be a far costlier decision for the city. And he noted that Hilton will operate the hotel, not the city.
“The decision to move forward with the project represents a bold step that will ensure Indianapolis remains competitive at a national level,” Bode said. “Mayor Hogsett believes in the strength of our hospitality industry, an industry that has thrived with each expansion of the convention center and major hotel opening.
“Those who advocate for us to walk away will jeopardize our position as a top convention city, the strength of our local economy and the jobs of the more than 80,000 hospitality workers in our community,” Bode said.
Visit Indy, which books conventions for the city, told IBJ it supports the structure of the deal, and the Indiana Sports Corp. said it supports the continued efforts to fund and build the hotel. A number of organizations that host large conventions in the city—including the FAA, GenCon and FDIC International—have said the expansion of the convention center is crucial to their future plans.
Under terms of the modified deal between the city and Indianapolis-based Kite, the city will cover the cost of the project by taking out bonds—up to $625 million—backed by revenue generated by the hotel itself rather than by new taxes or taking money that could otherwise be used for other projects.
The city in total expects to spend $710 million on the project, including $200 million for the Indiana Convention Center expansion, although that figure could swell by the time funding is secured in the fall.
Originally, the hotel was expected to cost Kite $300 million, but the project was delayed by two years in 2020 to give the hospitality industry more time to recover from the pandemic. In the time since, interest rates and construction costs have climbed significantly.
Kite will still develop the site, with Fishers-based AECOM Hunt as the general contractor, but Kite no longer will have an ownership stake in the project once it’s completed. The city will own the property and is expected to to hire an asset manager to oversee the building. Hilton will manage the hotel and its event spaces, much like it does for the Kite-developed Conrad Indianapolis luxury downtown hotel.
As a city-county councilor in 2020, Shreve voted to support the original Pam Am project. At that time, Kite was to be responsible for fully funding the hotel. But Shreve said he doesn’t support the change in direction.
“This is a sudden, unexpected lurch forward that will undermine and will rattle the private lodging investment community in the core of our city,” he said. “I don’t think we want to inflict that damage.”
Shreve said if he’s elected he will look closely at the deal, and if it’s not yet finalized, he would “put the brake abruptly on a plan for city ownership” in favor of exploring the project once more through the private market. If the project was already underway, however, Shreve said he would be contractually obligated to see it through.
The Republican said that while he doesn’t believe the city should hold a hotel asset the size of the Signia for an extended period, he also wouldn’t abruptly sell it in a manner that caused the city to fail to recoup its expenses.
“I’m going to use my voice as our party’s nominee to message why this is a policy error that our council and [Metropolitan Development Commission] ought not make,” Shreve said. “If this administration and if this council makes this mistake, it will be papered and contractually bound. As a successor, I’m going to honor those contracts and try to minimize the damage that will have been inflicted on our city as best we can. But if that train leaves the station, it’ll be costly.”
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Kite should be booted from the project
I 100% agree. They will make their money on the construction side and now have no risk.
I never understood what a REIT company that specializes in neighborhood retail real estate was doing spearheading a major downtown convention hotel project. Seems far afield from their prime business.
They definitely bit off more than they could show, and now that fact is bare for the entire community to see.
John M.
+ 1
I didn’t get it either. How they qualified??? Just didn’t see it.
“Those who advocate for us to walk away will jeopardize our position …”
Mr Bode: Save your blame rant for when you get to a mirror. You people have been sitting around for 4 years making ZERO progress — as with everything else you touch.
Had you acted acted 3 years ago at the height of the covid scare you could have landed ridiculously low commercial financing and a construction contract for prices at world record lows amid a chicken little crisis. All you needed was an ounce of foresight and pint of courage. Every mayor in the modern history of our city would have seized that moment. Instead, you dawdled in fear.
And by the way …. is the Mayor going to ever speak on this or do you have him in a closet somewhere? Just curious.
All valid criticisms of Hogsett and all ignored by Shreve, who’s no better.
Shreve for the loss. Save your money goofy and Move!!!
It’s fine to be against it. But what is the alternative he’s proposing? We will lose conventions if we don’t expand the convention center. That much has been made clear to the city of Indianapolis.
Joe B.
Agreed, we must move forward. Makes no sense to stop and stagnate.
If I Indianapolis wants to be in the big leagues doing conventions, then we must
expand the convention center and build the hotel.
Had the IBJ officially come out as a Republican mouth piece?
It’s a business journal, not a liberal rag. You should stay with the IndyStar.
They both sides.
They play both sides
It seems that I have heard the Hogsett argument before. That’s right, these are the same talking points defending the city financing the United Airlines Hub.
Hilton Hotels could bail on this project just as easily, leaving Indy taxpayers holding the bag. There is a reason why developers are filling Hogsett’s campaign coffer.
I remember the the United Airlines Hub deal. The city and the state did
solid work winning the economic development plum of the decade.
Every city in the nation was trying to snag that project.
But Indianapolis prevailed.
It’s too bad the way everything turned out with that.
And Indianapolis must compete. So is the answer to do nothing or reevaluate several times, then proceed with a project even more costly that will require public support of private investment. Why not just continue with the project as stated as the city.
And oft-touted GOP plans to privatize everything, such as the Toll Road disaster, often turn sour and taxpayers stuck. For cities that are not experiencing explosive growth in population and income and revenue, projects are built only with pubic assumption of some projects or [direct or indirect] subsidies to the private sector.
What is Shreve’s plan other than defer and study? If that is his intended management protocol, the city will not be well served.
Toll Road disaster? That was a big win for the state. If you have ever driven I80 from Pittsburgh to Iowa you would see the best roads are through Indiana. When the original buyer went bankrupt Indiana got the road back and had already pocketed the money. That was essentially a cash deal all paid up front. BUT, this boondoggle is far from the same thing.
We could have made more if we’d just had the courage to raise the tolls ourselves. Same as Indy’s parking meter deal.
Privatization is just asset stripping.
And we didn’t get the road back.
https://www.in.gov/indot/about-indot/central-office/toll-road-oversight-information/
Here’s your analogy, Donald.
When you win the lottery, the big jackpot, you can quit your job.
You can either get the full jackpot over 30 years … or a lump sum, which is far less money but it’s up front.
Privatization is like winning the lottery and taking the lump sum … and blowing it. Eventually you’re out of money and have to go back to work.
If you’d have been patient and had the courage and smarts to just take the payments, you’d have never had to work another day in your life.
So let me get this strsught. The other hoteliers don’t want the new Hilton built because it will cause damage to the market here in Indy that the what a monopoly on? Now the other hotels are rallying behind the Republican candidate to voice their views? Shreve was very careful how he worded his comment. One minute he’s against the way the deal was made but also noted that if the deal goes through he’ll see it through and try to minimize any damage done to the city from the deal. Yet none that oppose the project has given an alternative to how to keep the largest conventions we have if we don’t build it. It’s already been determined thar the only way FFA, Gen Con and other larger conventions will sign on to coming or staying in Indy, is if the convention is expanded and the hotel is built. I’m confused at why the other hoteliers don’t see the impact and how they’re just sabotaging the economy in Indy? Yet Marriot and others has had years to come with a counter to build something just as big. Orlando and Atlanta both have built Signia hotels and through the city financing the projects. This is nothing new in the industry but new to Indy This is exactly how other cities finance huge projects and it’s why Indy lags behind in major developments. Nashville. Charlotte, Austin, Kansas City. Columbus Ohio all have surpassed indy. Indy needs bold progressive leaders that want to try to attract new talents and investments as well as keep homegrown talent. Sometimes being too conservative can make you lose out on growth