Pan Am hotel, convention deal could be finalized by late June

The proposed Pan Am Plaza project

Indianapolis could finalize details for the long-awaited Pan Am Plaza convention center and hotel project by mid-summer, a city official told IBJ.

City leaders have met regularly with Indianapolis-based Kite Realty Group Trust for more than a year as they’ve tried to iron out a project agreement for redevelopment of the downtown site across Capitol Avenue from the Indiana Convention Center.

Plans call for two hotels totaling 1,400 rooms and an accompanying $120 million, publicly-funded expansion to the convention center, along with a new skybridge across Capitol Avenue. Hilton announced in 2019 that the larger, 38-story hotel planned for the plaza will carry its new Signia flag.

Project negotiations were temporarily sidelined in March to allow the city time to deal with the coronavirus pandemic.

But deputy mayor Thomas Cook said the parties are still committed to the development, despite general uncertainty about how long the city’s hospitality and convention industries could take to bounce back from the havoc wrought by COVID-19.

“We’ll certainly be mindful in approaching the [completion] of that project in a way that makes sense, given everything else going on” with the pandemic, he said. “We are absolutely unwavering in our commitment [to the development] … and we believe that Kite, based on every conversation we’ve had with them, is ready to bring that project to fruition.”

In fact, Cook said, the project agreement could be finalized and shared with City-County Council—which has to approve any deal—by late June.

“Obviously, there’s a lot going on in the world right now and we need to address each of those needs and challenges in order,” he said. “We continue to believe we’re going to be in a great position to present it to the council and to other forms of legislative approval here in the next month.”

Additionally, the project is expected to maintain its original timeline, including having the first hotel and convention center expansion completed by mid-2023, with the second hotel coming in a separate phase, likely completed by 2025.

“We fully expect that the timeline for construction and opening, as we previously articulated, will hold true,” Cook said.

While he declined to specify what hurdles remain in completing the deal, Cook said having Kite and Hilton stay on board is important “given everything going on.”

The Indianapolis tourism and hospitality industries have taken their lumps of late, as occupancy rates have fallen to sustained record lows and a laundry list of conventions have canceled their 2020 events—including Gen Con earlier this week.

Uncertainty about the market’s ability to bounce back quickly from those losses has led to work stoppages and delays for a variety of developments, including several downtown hotels already in the works.

But the deputy mayor said the city doesn’t believe that will be the case for the Pan Am Project, because the public portion of the project will rely on property taxes, rather than income or sales, food and beverage or hotel taxes.

“This is a project that we believe from a city investment side has been largely insulated from harm, in the way we would fund it,” said Cook. “And, obviously, Kite and Hilton are two companies that are dealing with COVID-19 in their own ways. But we’re pleased that they remain committed to the project, as well.”

The city has long stated it is only funding the convention center portion of the Pan Am project. But many local hoteliers and critics have said they fully expect incentives for the hotels will be part of a project agreement, just as they were when Merrillville-based White Lodging was picked to build the JW Marriott ahead of the 2012 Super Bowl.

There also has been pushback on the project from many hotel operators in the downtown corridor who are concerned the rooms will oversaturate the market, although the city has contended the project is vital for maintaining Indianapolis’ track record as a convention city.

Heywood Sanders, a University of Texas at San Antonio professor and convention center expert, told IBJ in March he believes the city should be limiting its financial exposure and “rethinking a great many of its long-term commitments” until the market stabilizes again.

“The last thing that a public entity ought to do is get in the business of building or subsidizing a hotel in the current market environment,” Sanders said. “That’s exactly what you don’t want to conceive of doing right now.”

Kite declined to comment for this story.