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The city of Indianapolis is considering whether to provide more than $40 million in incentives to the Simon family-led development group that plans to build a new hotel and entertainment venue across from Gainbridge Fieldhouse.
The Metropolitan Development Commission gave preliminary approval last week for $15.6 million in bond proceeds from a single-site tax increment financing district to Boxcar Development LLC for the redevelopment of the former CSX property at 230 S. Pennsylvania St.
The $312 million project calls for a 170-room Shinola Hotel, a 4,000-seat live performance venue operated by Live Nation, an enclosed parking garage and a skybridge connecting to the fieldhouse.
Boxcar is a holding company for Herb Simon and his family, who also own the Indiana Pacers and Indiana Fever basketball teams.
The firm has worked with the city over the past several months to assemble funding assistance for the project.
The developer-backed bond of up to $15.6 million would be secured through a new single-site, tax-increment financing district. The city would allow for up to 80% of the property tax collected from the development to be used to repay those bonds. The developer would either sell the bonds to a third party—and later repay the funds with interest—or buy them itself and recoup the money through the TIF.
Under current negotiations, the two sides also are discussing a $25 million forgivable loan that the developer would receive from the city, according to sources familiar with the process. The developer has made a formal request for the loan, which is expected to go through city approval processes in coming months.
The city would provide Boxcar the loan funds in three annual tranches of about $8.3 million starting in 2025. The structure of the loan would allow for its forgiveness after 10 or more years.
The loan is also expected to include a shared appreciation clause, through which the city could reap some financial reward if a refinancing or sale of part or all of the property meets or exceeds a certain, to-be-determined threshold.
Megan Vukusich, director of the Indianapolis Department of Metropolitan Development, said the city is willing to provide incentives for the project as part of its larger vision for development along Georgia Street, which over the years has become an entertainment artery parallel with the southern border of the Mile Square.
“We’re excited to have Boxcar at the table, who’s willing to be a good development partner with us and really invest in this exciting block that’s going to see a lot of change in the coming years,” Vukusich said, pointing to the planned redesign of Georgia Street that’s set to start in 2025. “So, because of the value add to the local economy that this development will bring, we are excited to be able to support the development.”
The Metropolitan Development Commission gave preliminary approval for the TIF bond request last week. The City-County Council then referred the TIF bond request to its Metropolitan and Economic Development Committee for a hearing in December.
According to a source close to the project, Boxcar is also in discussions with the Indiana Economic Development Corp. on a potential award of redevelopment tax credits, which is expected to be on the agency’s board agenda for December. Details of those discussions were not immediately available.
“The state and city provide incentive opportunities to amplify private investment in making transformative projects a reality. Boxcar Development is poised to create hundreds of construction jobs and over 175 permanent jobs. Our $300 million project will grow tourism in Indianapolis and build on the vibrancy and economic vitality of the capital city,” Phil Bayt, a spokesperson for Boxcar, said in an emailed statement to IBJ.
The proposed Shinola hotel would be the upscale hotelier’s second location, joining Detroit, and is expected to feature a mix of deluxe rooms and suites, as well as an upscale restaurant, a bar and, potentially, a Shinola retail store that would specialize in high-fashion merchandise such as watches and handbags. Retail space along Pennsylvania Street likely would be entertainment-focused.
The 13-story hotel would also have an indoor-outdoor terrace, as well as meeting and event space, including two ballrooms and a board room. The entire building would be about 226,000 square feet and have a covered skywalk connecting the building across Pennsylvania Street to the club level of Gainbridge Fieldhouse. The parking garage planned for the project would have 253 spaces across two floors.
Along with the hotel, the project calls for an 87,000-square-foot live performance hall operated by Live Nation, which also manages the Murat Theater and Everwise Amphitheater downtown and Ruoff Music Center in Noblesville, among other venues. Pacers Sports & Entertainment, which operates Gainbridge Fieldhouse and Bicentennial Unity Plaza on behalf of the Capital Improvement Board, would not have any involvement in the project.
The full development could be completed by the end of 2027.
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It’s cool the US defeated the fascists in WWII, the commies in the Cold War, yet all I read in this paper are about “businessmen” getting government funds. I hope Mike Braun’s property tax reform lowers property taxes for all and helps get rid of these insane arrangements.
These subsides are ingrained in the fabric of most cities that have a major league sports team and Indy is no exception. Mike Braun isn’t going to change that even if he wanted to, (which he likely doesn’t).
This isn’t about property taxes. It’s about milking as much from the cash cow as you can to reduce the amount you actually pay for the development that will make you richer down the road.
Weighing? Ha! Since the process takes time and has to go through the approval process, weighing is actually waiting. We all know this will be approved, and why shouldn’t it be.? The Boxcar team are all very smart folks, and very wealthy, and very connected, and very successful. Not sure how the ‘forgivable’ part has any relevance in a small loan when a larger amount is TIF financed?
Many cities are revisting the TIF approach to development. They are beginning to realize that what was meant to help stimulate growth in “blighted” areas is being abused by developers and city planners to build massive “mixed use” developments in areas that are already gentrified. Once it starts a developer won’t build a project unless they get TIF dollars to help fund the infrastructure for the project.
“a $25 million forgivable loan”
If it is not repaid, it is corporate welfare!
Remove “Boxcar” and replace with “Simon Property Group” everywhere in this article, time travel back to September 1991 and let me know how it’s worked out for the city. More important how it’s worked out for the taxpayers of Marion County.
Better yet, flash back to 1983 and tell Bill Hudnut it’s better to have the Pacers fold instead of the Simon’s buy them. And make sure Hudnut doesn’t build a football stadium with absolutely no tenant, either.
Some deals work, some don’t, and some work for a bit because they don’t. Just a couple weeks ago someone was complaining that downtown Indianapolis needed a performing arts center. Well, here it is. I don’t know that it’s worth $40 million, but it’s worth some kind of assistance … unless the response is that those kinds of shows are now the domain of Carmel and Fishers from now on.
“some work for a bit before they don’t“
This is getting embarassing.
Can IBJ staff investigate whether Dan Gilbert is involved in the project considering his involvement with the Shinola brand?