Zionsville is selling its amenity-rich Creekside Corporate Park to a local developer for $6.15 million.
The agreement with Rockland Development LLC will allow the town to continuing paying its debt associated with the office park and avoid having to market the property itself or hire a firm to help sell the land. And the developer with the company, Paul Kite, has been interested in the property since the very beginning of Creekside.
Kite initially wanted to purchase the land along 106th Street from Michigan-based Dow Chemical Co. in the early 2000s, but the company didn’t want to sell the property piecemeal. So, the town partnered with Zionsville Community Schools to purchase the property in 2013 for $3.4 million. The school district used existing bond money to finance the deal, and then sold the property to the town for $3 million, which was to be paid through 2028.
The town also agreed to share tax increment financing revenue with the school district and make Kite the primary developer.
According to the purchase agreement, which the Zionsville Redevelopment Commission approved late last month, Rockland will take control of the land in two phases—six lots in the first phase within 30 days and seven lots in the second phase one year later.
The cost is $150,000 per developable acre, for a total of $6.15 million. While the entire campus is more than 90 acres, including land occupied by the headquarters of Lids Sports Group, only 41 acres remain available for development.
The town has spent more than $4.4 million making improvements, such as installing electric, water, sewer and stormwater lines; building a road through the property; and constructing a one-mile trail system. Besides Lids, Zionsville-based health care consultancy DK Pierce & Associates is the only tenant to date.
The purchase agreement requires Rockland to have at least $14.5 million in building construction activity every 24 months on a rolling basis for the next six-and-a-half years. Any new development must have construction costs of at least $1.2 million per acre, and that amount will increase by 3 percent annually through 2030.
Rockland will also pay the town an annual maintenance fee for common areas of $944 per acre. If Rockland fails to meet its obligations, the town has the right to repurchase the property for the amount it sold it for, plus any improvements made.
Several Redevelopment Commission members initially expressed concerns about whether the development could be built out in a timely manner, but ultimately the board unanimously approved the final agreement.
Kite told IBJ in December that he thinks the park could be built out in two to three years. The overall investment could be more than $100 million.
The sale will allow the town to pay back Zionsville Community Schools by the end of 2018—10 years ahead of schedule.
A financial plan prepared by Crowe Horwath LLP for the Redevelopment Commission shows that revenue from the sale of the property and estimated tax increment financing dollars should be enough to cover debt payments in most years, but it would fall short in 2019, 2028, 2029 and 2030.
Town officials were OK with the deal though, because the commission is expected to have more than enough in cash reserves to cover the shortfall.
“I like the idea of getting this off the RDC’s plate,” commission member Luke Phenicie said.