Democrat-controlled council poised to OK Pan Am Plaza hotel financing

A renderingn of the Signia by Hilton planned as part of the Pan Am Plaza redevelopment.

The Democrat-controlled City-County Council is poised to approve a Hogsett administration plan for Indianapolis to publicly finance and own a new downtown convention center hotel, despite objections from some private hoteliers and a Republican contingent that includes Hogsett’s mayoral opponent.

Through interviews with councilors, IBJ found that Democrats have the majority needed to approve up to $625 million in municipal bonds for the project at Monday night’s council meeting.

Of the 19 Democrats on the 25-member council, 13 told IBJ they support Democratic Mayor Joe Hogsett’s plan. Four additional Democrats who didn’t respond to IBJ’s interview requests are considered likely “yes” votes because they voted for the measure in committee in mid-May. Only 13 votes are needed for the measure to win the council’s final approval. 

The council’s two other Democrats did not respond to IBJ interview requests and either did not attend the committee hearing or were not on the committee, which sent the proposal to the full council for review. They are councilors David Ray and Jason Larrison.

Council President Vop Osili, a supporter of the proposal, told IBJ Thursday that he thinks the fiscal package will pass.

“We’ve been told by some of our major conventions that they will move on if we don’t [expand our hotel offerings],” Osili told IBJ. “And we are in a place—and have been putting ourselves in a place these last 20, 30 years—to be a top-tier convention destination, and we will continue to pursue that.”

The proposal also calls for the city to assume ownership of the planned Signia by Hilton hotel on Pan Am Plaza. The hotel, which carries an estimated price tag of $510 million, would be constructed using proceeds from up to $625 million in municipal bonds, leveraged against revenue generated by the property rather than existing or new tax revenue.

The 40-story Signia is part of a larger redevelopment of the Pan Am block that is to include a $200 million expansion of the Indiana Convention Center.

The hotel deal has become a contentious issue as Hogsett seeks a third term as mayor. His Republican opponent, Jefferson Shreve, has called the proposal a “flawed policy.”

“This proposal is a political ploy to obscure the reality that downtown cannot attract private investment in its current state,” Shreve wrote in an op/ed published by IBJ.

Hogsett and other Democrats have defended the effort as critical to maintaining Indianapolis’ position as a convention destination. Hogsett decided to try to publicly finance the hotel after Indianapolis-based Kite Realty Group determined it wasn’t able to get favorable enough interest rates on the private market to move ahead with securing financing for the project.

Osili noted that bonds financing the project would be paid off with the hotel’s revenue, meaning that taxpayer dollars are not going toward the debt for the hotel. 

Democratic Councilor Monroe Gray said he supports the proposal but would like to see some kind of backup plan developed in case the hotel doesn’t generate enough revenue to pay off the debt. Democrat Dan Boots told IBJ that project consultants and the city’s own fiscal analysis have assured him that the project is a good use of the city’s bonding authority and that the bonds will be more than paid off by hotel revenue.

“We’re at a point where we need to put on a fresh coat of paint [for convention business] and step back up. This project serves exactly that purpose,” Boots told IBJ.

Four council Republicans and independent Ethan Evans told IBJ they plan to oppose the proposal. One Republican, Michael Dilk, did not respond to interview requests.

While no councilors have publicly disagreed with the stated purpose of the hotel—to maintain and boost Indy’s convention business—council Republicans expressed concern about the city’s publicly-owned hotel competing with private hoteliers. Hoteliers have shared that concern.

Minority Leader Brian Mowery said Hogsett’s plan “sounds kind of like communism.”

Mowery is a member of the board that leads Visit Indy, the nonpartisan not-for-profit that markets the city for events. He told IBJ he understands the importance of getting the hotel built but has “heartburn with the city being an owner of a hotel that is then competing directly against private industry owners.”

GOP Councilor Joshua Bain compared the Hogsett administration plan to socialism and echoed the concern of some hoteliers.

“I think it’s one step away from socialism. … I know that the administration has said that the additional rooms are needed, but the hoteliers downtown have all disagreed with that,” Bain told IBJ.

Bain suggested the city let other developers bid on the project rather than stick with Kite Realty Group, which was unable to secure financing for the Signia hotel.

The entire IBJ newsroom staff contributed to this report and surveyed city-county councilors.