SoDo proposal faces stiff odds

If Circle Centre mall were built today, it would cost $420 million.

Throw in another $60 million, and you've got the price of Legends District-SoDo, a proposed mixed-use development on
the south edge of downtown.

The project's staggering $480 million price tag illustrates both the ambition of the development team and the colossal
challenge it is facing.

The proposed hotel, entertainment, retail and residential district is one of the most expensive private development proposals
in the city's history, a strong sign that decades of investments in the mall, sports venues and the convention center
are paying off.

But to build the project as proposed, observers say the developers will need tons of savvy, a little luck and at least $100
million in equity, including some form of public subsidy or a public-private partnership. The pitch for public money could
be especially tough, given mayor-elect Greg Ballard's promises to cut spending and rein in development incentive deals.

Despite the challenges ahead, the development team led by 35-year-old real estate broker Ryan Zickler has made impressive
progress. In the last two years, his Legends Entertainment LLC has quietly gained control of all six properties it needs,
only one of which had been offered for sale.

Partners in the development have substantial financial muscle, but they'll have to stretch for this one. A project of
this magnitude would typically be out of reach for all but the heavyweights, like locally based developers Simon Property
Group Inc. and Duke Realty Corp.

Add to that a tight lending market, sparked by the subprime mortgage mess, and an already-complicated deal becomes even more
difficult, said Mike Wells, president of Indianapolis-based REI Investments, a partner in the development of a 1,000-room
J.W. Marriott convention hotel along West Street.

"These guys are very qualified developers, but you're kind of swimming upstream," Wells said. "Even for
the most seasoned and experienced developer, this is a tough, tough project."

A new downtown

The proposal–reported first on ibj.com Nov. 9–calls for 500 hotel rooms, 200 condos, a 3,400-seat theater and 175,000 square
feet of retail clustered in several buildings, the tallest of which would be 15 stories. It would replace 11 acres of mostly
surface parking lots and a suburban-style Arby's and Subway.

The project would be adorned with video screens and monuments honoring Hoosier legends such as Larry Bird, David Letterman,
John Mellencamp and the Andretti family. The theater would be an anchor, targeting acts such as Bruce Springsteen that don't
make regular appearances in Indianapolis. The developers are working with Dave Lucas, CEO of locally based Live-360, who developed
Deer Creek and other concert venues.

The project's retail portion would be designed to complement Circle Centre mall. The developers are talking with retailers
such as Target, Dick's and Best Buy, along with casual and upscale restaurants. Asked how big-box retailers fit in with
the Indiana legends theme, Zickler said the district would be unified by common architectural features and recurring tributes
to big-name Hoosiers.

The project would have 2,200 parking spaces, most of them underground. The developers plan to include "green" features
such as porous concrete surfaces, high-efficiency windows and mechanical systems, and green roofs.

The project would sit south of South Street, stretching from Madison Avenue past Pennsylvania Street to the railroad tracks,
and south past Merrill Street. A main entrance plaza would face the intersection of South and Madison, beckoning Lucas Oil
Stadium visitors to head east.

Making progress

Land acquisition costs for the project will exceed $30 million, said Zickler, principal of Indianapolis-based Zickler Associates,
who previously has brokered real estate deals with Wal-Mart, Menard's and Home Depot.

Legends Entertainment LLC recently closed on the first parcel, a 1.2-acre lot at the southeast corner of South Street and
Madison Avenue, for $3.5 million. While the company has reached purchase agreements with all property owners, it still needs
to buy out the lease Arby's has with its landlord. Legends already has reached an agreement to buy out the Subway lease,
Zickler said.

Zickler has two partners in SoDo. One is Tim Shrout, president of locally based Cedar Run Ltd. Cedar Run developed Heartland
Crossing, a 1,300-acre mixed-use project along State Road 67 south of Indianapolis. Shrout's companies also own and manage
more than 10,000 apartment units across the United States.

The final partner is Doug Mennen, principal of Mennen-Gutwein LLC, a fledgling development company based in Lafayette. The
company is funded by the 2005 sale of the Lafayette-based Morning Song birdseed business. Ohio-based Scotts Miracle-Gro acquired
the business for $77 million.

Zickler said the group has the experience and vision to pull off the project. He said the group isn't approaching Legends
as a "walk-away" if the city scoffs at a request for public money. The partners want to build something that's
feasible.

"Even though we're not sophisticated urban developers and have not developed a substantial urban project, we have
an excellent location, we have a very strong partnership in experience and business success, and we have interest from retailers,
hoteliers and a theater," Zickler said. "It's just a matter of fine-tuning the project plans to make sure it's
the most feasible for everybody."

Enough demand?

Several local brokers said the deal has merit. The south side of downtown is home to thousands of employees at the corporate
campuses of Eli Lilly and Co., Farm Bureau and Anthem. The new stadium will host visitors to major events and conventions.

Yet development has been slow in this part of downtown.

Developers in other cities are doing similar projects that seek to capitalize on sports arenas. In Dallas, a modernistic
mixed-use project called Victory Park is under construction near American Airlines Arena, home of the Dallas Mavericks. And
the owner of the New England Patriots is building a huge mixed-use development anchored by a Bass Pro Shops Outdoor World
next door to Gillette Stadium.

"Conceptually, [the Legends project] seems like a very neat thing and certainly seems like an attraction," said
Abbe Hohmann, senior vice president and principal in the local office of St. Louis-based Colliers Turley Martin Tucker. "If
it's dependent too much on incentives, I'd say it's less likely to gain much traction."

Hohmann and many others wonder whether the city needs more hotel rooms. Other major projects, including the J.W. Marriott
and the Penn Centre proposal for Pennsylvania Street across from Conseco Fieldhouse, would add hundreds of rooms. Locally
based Urban Space Commercial Properties is planning a $60 million hotel, retail and condominium project called Ralston Square
just opposite South Street from the Legends project.

Most of the hotel rooms are being added in anticipation of a $275 million expansion of the Indiana Convention Center that's
scheduled to open in 2010.

Real estate observers also aren't sure how many more condo projects downtown can support. The Legends project calls for
about 200 condos, including 70 in the first phase, Zickler said. Prices mostly would be in the $300,000 range.

By the time the residential units would be ready, the housing market could be a lot more favorable to sellers, said Joe Everhart,
a real estate agent with locally based The Sycamore Group.

"I think that area is ripe, and I've always wondered why more people haven't done more," said Everhart,
who follows the downtown market closely. "It's really the last frontier with close proximity to downtown. It will
be a challenge given the current market, but not impossible."

Not one feature of the Legends District-SoDo is a slam-dunk. But if it gets built, the project could be a big win for downtown.

"It's ambitious and would be good for downtown," said Todd Maurer, president of locally based Halakar Properties.
"But they have a lot of hurdles."