Just recently it was announced that Indianapolis' libraries were cutting hours to save $15 million dollars and public safety was undergoing significant cuts. That comes on the heals of the budgets of the Parks Department and the city's bus service getting slashed.
The news out of the 25th Floor today is astonishing. The administration has decided to pick up $86 million cost of a private development that private lenders have refused to finance as being an unwise investment.
The Indianapolis Star reports:
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Indianapolis officials will finance most of the cost of a $155 million project to build a hotel, apartments, retail space and an office incubator building on land donated by Eli Lilly and Co. on the south edge of Downtown.
"This is a great project. It's an innovative project," Mayor Greg Ballard said today as he announced the project with developer Buckingham Cos. of Indianapolis and Lilly officials.
The Indianapolis Star reported in June that the Indianapolis developer was talking with the city and Eli Lilly and Co. about building a hotel and conference center with retail stores, apartments and a fitness center next to Lilly's headquarters campus Downtown.
The 10-building project, tentatively called North of South, will spread over 14 acres along South Street, bordered roughly by the rail tracks on the north, Virginia Avenue on the east and Delaware Street on the west. Groundbreaking is planned for late this year, with construction lasting about 2 years.
The 152-room hotel will be a high-end Dolce brand hotel that specializes in corporate bookings. It might open in time for the 2012 Super Bowl in Indianapolis. Plans also call for about 320 apartments, 30,000 to 40,000 square feet of retail space and 10,000 square feet of office space that will be leased to life-science-oriented start-up companies.
Buckingham President Bradley Chambers had said in June that the project could serve three nearby corporate campuses -- including health insurer WellPoint and Indiana Farm Bureau Insurance -- that lack nearby services to support them. Neither WellPoint or Indiana Farm Bureau Insurance would move offices to the site, though, officials at today's event said.
The YMCA of Greater Indianapolis also will build a 75,000-square-foot fitness facility to add to the services already offered Downtown and in surrounding neighborhoods.
The city will finance about $86 million of the cost by floating bonds guaranteed by revenues from the Downtown tax increment financing district, said Deron S. Kintner, executive director of the Indianapolis Bond Bank.
The bonds would be paid off over 25 years using rents and other income from the project, plus property taxes from the project, he said.
The city got involved in financing the project because private banks and other commercial lenders have largely pulled out of the market for new commercial development, he said.
Let me reiterate - the private sector found the project too risky and failing to provide enough of a return to make the development worth the investment. Yet Ballard administration officials feel competent to second guess the private sector on what is a risky investment and will turn a profit.
I guarantee you that if you look closely at the Lilly development you will find insiders and big law firms cashing in at the expense of our naive Mayor's re-election effort.'
Advance Indiana has an excellent take on this subject.