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The Indianapolis Department of Metropolitan Development is open to additional conversations about additional funding involving the redevelopment of Old City Hall and an adjacent property following a drastic increase in the project’s budget, the DMD’s director said.
Indianapolis-based TWG Development LLC now says it will cost as much as $264 million to overhaul the historic building and build a 32-story apartment and hotel tower on a lot directly to its north—an increase of nearly 90% from the original budget of $140 million when the project was announced in August 2023.
The project, known as the “Alabama Redevelopment,” calls for a 387-foot glass tower containing 190 apartments, 24 condominiums, 150 hotel rooms and 8,000 square feet of retail and hospitality space, along with a partial conversion of 114-year-old former city hall building into an art gallery.
Megan Vukusich, director of the DMD, said TWG—which was selected following a request for proposals process—has not asked for additional money from the city beyond $14 million in tax-increment financing bonds that have already been allocated for the development.
The project is being recommended for an undisclosed amount of funding through the state’s Regional Economic Acceleration and Development Initiative, a program overseen by the Indiana Economic Development Corp., through the Central Indiana Regional Development Authority, or CIRDA.
Vukushich confirmed the increased cost for the project, which was first reported this week by The Indianapolis Star, citing public documents tied to a CIRDA meeting held last week. She said if TWG indicates it needs additional support from the city, or it does not secure funding through READI 2.0, city officials are open to having conversations about additional funding.
“I don’t know if I expect them to [ask for more] or not,” she told IBJ. “We are just continuing to be good partners on this project. We did select them through this RFP process, so it’s something that we’re excited about. … We’re hopeful that they receive funding through IEDC and the READI program. If if they don’t, then I think we have to continue conversations on how we make this project successful.”
The city in 2022 issued an RFP the 0.65-acre parking lot immediately north of Old City Hall, at 222 N. Alabama St., with at least five developers responding with bids. The call for proposals was later modified to include Old City Hall after several developers incorporated that building into their pitches.
TWG’s project is one of three Indianapolis projects put forth by CIRDA for the state’s consideration, although each are expected to compete for funds outside the $45 million awarded to the region as part of READI 2.0 program. Instead, they will vie for a share of a $250 million gift provided by Indianapolis-based Lilly Endowment Inc. to support blight reduction efforts and the creation of new arts and culture initiatives across the state
The city of Indianapolis owns the property on which TWG plans to develop, and is expected to continue having a major hand in the redevelopment plans both through the DMD and through the Indianapolis Historic Preservation Commission. TWG leaders in October told IBJ they anticipated the cost of the project would increase because of the historic preservation element, but they hadn’t at that time taken full stock of the property to assess challenges and potential cost elevators.
“We are the property owners … so this is truly a public-private partnership, and it’s a little bit different from a traditional economic development deal,” Vukusich said. “So, I can’t say that we aren’t going to continue to discuss how to make this project successful in the future, it’s really going to depend on how [it] progresses.”
She added that the city is continuing to evaluate ways to help the company reduce its costs, but noted it would do so in a way that doesn’t “compromise on the quality and the character of the development.”
Even with a ballooning budget, the project has continued to move forward. TWG President of Development JB Curry told IBJ this week the firm had finalized its operating agreement with Louisville-based 21C Museum Hotels to manage the lodging and art gallery component of the project.
Curry said he was unable to comment further on the partnership—noting more details will be made public in the coming months—and declined to discuss the increased budget for the project.
“I can tell you that TWG has a signed agreement with 21c Museum Hotels and we’re excited about the partnership and continue through the design process,” he said.
Vukusich said while city officials are aware of the agreement being completed, the DMD has not received a copy of the contract.
The hotel is expected to be the ninth for 21c, which was first approached about a project at Old City Hall during Mayor Greg Ballard’s administration in 2015. That project called for a conversion of Old City Hall into a 21c Museum Hotels-branded hotel and art gallery, without consideration for the adjacent property. But that deal fell apart after the Louisville-based hotelier failed to meet financing deadlines set by the Hogsett administration.
Under the new plan, the 150-room boutique hotel is expected to occupy floors six through 13 of the 32-story tower, while a lobby, restaurant and curated retail space would take the ground floor. The apartments and condos are to occupy floors 14 to 26 and floors 27 to 30, respectively. The garage will be on levels two to five.
Built in 1909 and 1910 and clad in Indiana limestone, the four-story Old City Hall housed the Indiana State Museum from 1966 to 2001 and temporarily housed the Central Library during renovations to the main library building early this century.
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