U.S. 31 project means massive changes for booming retail corridor

Lauth Properties alleges in a lawsuit that the state’s plan to rebuild 13 miles of U.S. 31 in Hamilton County to freeway standards
will cut off access to a property it owns in Westfield, killing plans for a Wal-Mart there.

The case filed in Hamilton Superior Court could be the first of many legal challenges involving the estimated $673 million
highway project, which will thread through some of the most lucrative retail spots in the region, including Clay Terrace and
nearby Village Park Plaza. Almost 50 commercial buildings and dozens of homes could be displaced, according to INDOT estimates.

Others, like the Lauth property, could see key access points eliminated by the project, which is set to begin in 2011. It
will eliminate dozens of intersections — some clogged with traffic signals — and replace them with 10 interstate-like
interchanges
and collector/distributor ramps. Indianapolis-based Lauth seeks unspecified damages from the state in its suit filed Dec.
22 against the Indiana Department of Transportation.

The tract in question is a sliver fronting U.S. 31, on the northeast corner of the highway and 161st Street. Lauth said Arkansas-based
Wal-Mart in August 2006 agreed to have Lauth develop a store on the site.

The bulk of that corner, or about 64 acres, is held by Northbrook, Ill.-based Pine Tree Commercial Realty, which plans 430,000
square feet of retail development to be known as Lantern Commons.

Pine Tree said previously the upscale Lantern Commons would have at least three national anchors.

Although Lantern Commons would have access to its site via a planned 161st Street interchange, Lauth said its only access
point was to be via a 50-foot strip along U.S. 31, under terms of an agreement between the previous owner of its land and
INDOT.

But last August, INDOT sent a letter to Lauth stating that all driveway permits would be denied as part of a plan to reconstruct
the highway to freeway standards between Interstate 465 to the south and State Road 38, to the north.

"INDOT will deal with the effected [sic] property owner if any damage to their property is occurred [sic]," stated
a letter
an INDOT district supervisor sent Lauth on Aug. 28.

Lauth argues in court that its parcel is now landlocked.

"INDOT’s denial of the access request has, among other things, prevented Lauth from going forward with the Wal-Mart project,"
court documents said.

Lauth officials did not return phone calls seeking comment on the case. Lauth shelved plans for a Wal-Mart at 161st in 2004,
after residents complained to Westfield Town Council.

INDOT officials also declined comment, citing the pending legal action.

In January, the agency filed a motion to dismiss the case, arguing that Lauth had failed to file an administrative appeal
with the agency.

In a reply, Lauth argued that the court has jurisdiction "because INDOT made it clear that its decision was final and
any
attempt to change it was futile."

Decisions that could affect dozens of other parcels are anything but final. Asked how many pieces of property could be cut
off, INDOT spokesman Will Wingfield said, "It’s hard to say."

The reasons for the uncertainty are many. For one thing, engineers are still designing interchanges. INDOT hasn’t begun right-of-way
discussions with property owners. The state estimates it needs 350 acres, at a cost of $146 million, which is included in
the $673 million project price tag.

INDOT plans to construct service roads to numerous properties, in some cases tying into the new interchanges or into nearby
streets, Wingfield said. Until planning progresses, it’s not clear just how many sites will not get service-road access.

The uncertainty doesn’t make things any easier for landowners in the area who are trying to sell their property at what is
already an inopportune time because of the economy.

Paul Dick, senior adviser at Resource Commercial Real Estate, in Indianapolis, is trying to sell 5.7 acres at 16708 U.S. 31
— the
old Edward Hines Lumber (and before that Wickes Lumber) — at a listing price of $1.3 million.

He figures it has big potential not only for its U.S. 31 "beachfront" location, but because its western edge juts
up to the
old Monon rail corridor, which is destined to become a recreational trail.

But complicating matters is future access to the site. Now it’s via a road parallel to the highway that runs north to 169th
Street. Under current INDOT plans, 169th will no longer tie directly into U.S. 31 but instead pass under the highway. INDOT
has yet to reveal plans for access roads in that area.

"There’s just a lot of uncertainty right now because of access points. That’s one of the challenges I have," Dick
said.

"Long term, [the highway project] will enhance the value," he added.

"Westfield’s dream is to have office buildings lining the corridor," he said, just like Carmel does to the south.

Also upbeat about the highway’s potential is Craig Kaiser, a Coldwell broker with tons of land to sell, including 25 acres
at the southeast corner of U.S. 31 and 161st Street. That’s just south of the Lantern Commons site, some of which is land
Kaiser used to own.

If there’s a silver lining in the uncertainties over the highway project, it is that the state ought to have answers ready
by the time the economy — and demand — rebound, Kaiser said.

But might INDOT be able to use the downturn in the economy and real estate meltdown to low-ball property owners from whom
it needs to buy land?

Kaiser and other real estate types argue that the state must take into account recent comparable sales that pre-dated the
meltdown.

At least one high-profile property near U.S. 31 and I-465 is being listed for a steep price — $16.7 million for 11 acres
— about
$1.5 million an acre. The land is own by a corporation controlled by the Valinet family.

Local real estate broker Ross Reller, of Resource Commercial Real Estate, recently told IBJ
the land normally wouldn’t be
worth more than $500,000 an acre even in an up market. He theorizes the Valinet family and their broker, Colliers Turley Martin
Tucker, might be posturing to get a high price for whatever portion of it INDOT might seek for the U.S. 31 project —
a theory
CTMT says isn’t true.

The biggest single potential land grab by INDOT for the highway in Hamilton County involving retail stores might occur across
from Village Park Plaza, which sits between 146th and 151st streets.

All the properties are on the western side of U.S. 31 in the congested shopping area north of Clay Terrace. One of INDOT’s
conceptual photos shows the disappearance of Charleston’s Restaurant, Lasik Vision Institute and Don Pablo’s.

Next to and north of those three businesses in Greyhound Plaza are the most concentrated group at risk: 10 businesses including
a Region’s Bank, M&I Bank branch, F.C. Tucker real estate office, 21st Amendment liquor store and a Wendy’s.

Finally, on the northern-most portion at risk, the conceptual images also show the highway running directly alongside the
Target store at 151st Street.

INDOT’s Wingfield said he can’t say whether the Target is a goner.

"I wouldn’t categorize that as a complete take," he said.

Any properties in the bustling retail area displaced by the highway project could wind up moving up the road, to the Lantern
Commons project at 161st, said Mark Perlstein, a principal at Sitehawk Retail Real Estate in Indianapolis, which is working
with Pine Tree.

"That definitely will be a recipient of some of the potential relocations," he said.

Over all 13 miles, INDOT estimates its preferred design will displace 33 commercial buildings, 13 office buildings, three
industrial facilities, 63 single-family homes, two multifamily residences and two churches.

It estimates a loss of tax base in Carmel/ Clay Township of 0.07 percent and 1.97 percent in Westfield/Washington Township.