City considers eminent domain in quest to acquire abandoned apartment complex

The city of Indianapolis is hoping to acquire—through a traditional purchase or eminent domain—a vacant, troubled far-east-side apartment complex that has been frustrating city leaders and standing in the way of new development for years.

The Indianapolis City-County Council's Metropolitan and Economic Development Committee unanimously approved a proposal approving a request from the Department of Metropolitan Development to buy the Oak Tree Apartments near 42nd Street and Post Road from Indy Diamond LLC.

However, the purchase might not go smoothly considering that Indy Diamond LLC is in contempt of court for refusing to comply with a judge's order to tear down the apartments. So the city is weighing eminent domain as a last resort. The Marion County Department of Public Health condemned the buildings in 2014, when the last residents were forced to leave because they had unreliable water service.

Emily Mack, director of the DMD, told council members that exercising eminent domain was “an absolute worst-case scenario” but that the city was prepared to act.

Mack said it was important for the city to “remove these blighted structures to remove public safety hazards, public health hazards and improve the public safety for our residents, businesses and groups that are in the area.”

“We want to improve the quality of life at 42nd and Post,” Mack said.

Mack said there are “truly opportunities” in the area if the property, which has 28 buildings on 19 acres of land, is demolished. It could make way for new mixed-use, mixed-income, transit-oriented development along the planned path of the IndyGo Purple Line rapid-transit bus route.

Mack said the process could take months after DMD extends a purchase offer. 

“If that property owner simply does not respond to DMD, or comes back and grossly rejects it and offers something that is unreasonable, we would like to have the ability to file suit in court and let a judge decide,” Mack said. 

A representative from Indy Diamond did not attend the council meeting. The city said the owner has been in contempt since July.

The city would pay for the acquisition and demolition of the property using federal community development block grants, Mack said. It is unclear how much the project would cost. But the sale price would take into account two appraisals the city will have done.

Republican council member Jefferson Shreve said he believed the city would end up spending more on the acquisition and demolition of the property than it would make when it eventually sells the the land to another developer or group, but he voted for the proposal anyway.

Republican Janice McHenry, who also voted for the proposal, told Mack that she is bothered that the city would have to spend any money on the property. 

“To take a company who has blatantly ignored you, blatantly ignored the courts and to give them one dime, it is bothersome to me,” McHenry said. “They obviously owe the city money.”

Democrat LaKeisha Jackson, who said she has been working on tearing town Oak Tree Apartments for years, said “this community has been overlooked for the last 30 years.” Several residents of the neighborhood spoke in favor of the proposal at the meeting, with no one speaking against it.

“We want to make it where people feel safe, developers want to develop, and that we do something good for other people to help uplift and provide quality of life for families rather than just handing out money to millionaires,” Jackson said. “It’s a blight. Residents and stakeholders deserve better.” 

The council committee also unanimously advanced a related proposal to designate the North Post Road area as a redevelopment area.

IBJ previously reported that the designation, which is defined in Indiana code, is designed to stimulate redevelopment in distressed areas where “normal development and occupancy are undesirable or impossible” because of economic challenges.

Mack previously told IBJ the designation increases those areas’ chances of scoring state or federal grants and also opens the door to using other economic development tools.