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The Indianapolis Department of Metropolitan Development is trying to incentivize denser residential development along transit routes by providing tax-increment financing deals to developers of three upcoming apartment projects.
Pending City-County Council approval, TIF funding is in the works for the 1827 Lofts on Meridian Street, the Guilford development at the site of the former Broad Ripple Kroger, and the Links project at the former Fountain Square White Castle operations center.
The three developments encompass a total of 606 units and a investment of more than $155 million transit-oriented housing, according to Scarlett Andrews, director of the DMD.
A September 2021 zoning code change prioritizing transit-oriented development during the creation of the IndyGo Red Line helped pave the way for the projects. It prioritizes moderate- to high-density housing near transit, more walkability and safety along the transit line and easy access to commercial development in neighborhoods.
The Metropolitan and Economic Development Committee approved incentives for the first in the package of transit-oriented developments, 1827 Lofts, on Monday. TWG Development LLC plans to spend $45 million on the 1827 N. Meridian St. project and requested $4.9 million in TIF bonds.
Plans for the near-north side development were bulked up in August. As presented Monday, 1827 Lofts will have 166 apartment units: 32 studios, 81 one-bedrooms, and 53 two-bedrooms. In accordance with TIF requirements, 5% of the units will be designated for those making 30% of the area median income. A studio would rent for about $494, a one-bedroom for $564 and a two-bedroom for $635.
The remainder of the units would be priced for those making from 80% to 120% of area median income, with rents ranging from $1,200 to $1,975 monthly.
At 1827 Lofts, a studio would be 550 square feet, a one-bedroom would be 750 square feet, and a two-bedroom would be 1,000 square feet. The development will also include an 1,500-square-foot retail space along Meridian Street and the route of the Red Line.
The proposal was passed onto the full council unanimously. Financing proposals for the other two projects are likely to be heard at the next Metropolitan and Economic Development Committee meeting on Nov. 14.
The Guilford mixed-use project, at the site of the former Broad Ripple Kroger, is being created as a partnership between Gershman Partners, Citimark and Milhaus. It will have 232 units and a 3,820-square-foot commercial space. The developers are asking for $7.5 million in TIF bonds to create the $62 million development.
Link will bring 204 units and 14,000 square feet of commercial space to the Fountain Square neighborhood, directly off the Cultural Trail at 921 Virginia Ave. The developers, Gershman Partners and Deylen Realty, are asking for $8.36 million in TIF bonds for the $60 million development.
In addition to transit-oriented development, the DMD also is open to more of downtown’s vacant office space being repurposed as housing, like the Gold Building, which will become 350 apartments through the $175 million City Market East project.
Density is a priority for DMD due to Indianapolis’ low vacancy rate for multifamily developments, Andrews said, which is currently at 6.5%.
The demand for housing is driving up the price of both market-rate and affordable housing, she said. Market-rate rent for the city currently averages $1,049 per unit, according to the DMD. By adding more units to the market, the DMD hopes to calm the demand and the rising costs of housing.
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There is absolutely no reason these projects should be receiving TIF dollars.
They are receiving TIF dollars in return for meeting the affordability and density requirements. Most of the projects would likely get built without TIF dollars, but they would be constructed without the affordable units and generally at a lower-density. It is a policy choice, just like when they city and its related tax authorities choose to funnel billions of dollars to profitable private business, including privately owned professional sports franchises and a certain large pharmaceutical company.
Christopher, I think the vast majority of TIF-backed projects do NOT include and affordable housing components. As to density, I advocate for letting the market decide. While I tend to agree with your thoughts that they are overly generous with Irsay/ Simon/ Lilly, I’d rather they dial that back than use that as a reason to ease the risk for developers on private housing.
Randy S. I know it is current city policy that if a residential project receives TIF funding it generally must provide some level of affordable housing (whether the requirement is set high enough is another question).
We have always had a mixed economy to some degree, so the issue for me in most cases is not whether the government should subsidize certain goods and services (of course the government shouldn’t subsidize things that cause harm), but whether the benefit of these subsidies substantially outweighs the cost of the public subsidy. For some development projects, I think this is true, and for others I disagree with a subsidy.
Should be a stipulation that all buildings need to be 10 stories minimum to receive that type of financing if they want to be along a mass transit oriented line.
Such a mandate would force developers to ignore market conditions, potentially resulting in the construction of apartment buildings that would have very high vacancy rates. Also, to meet fire codes apartment buildings are restricted to four stories of wood-frame construction which also makes the apartments more affordable. To build the 10-story building you advocate would a “base” of six stories built of concrete and steel with the four stories of would framed used on top. The use and cost of concrete and steel makes the project more expensive and the units less affordable. Bottom line, mandating bigger, taller apartment buildings is not a good idea for the developer or the average renter.
They are at almost 100% occupancy downtown currently. I doubt there would be a shortage of people looking to rent. They need to build it and people will rent them. That’s the problem with these four-story wooden structures is they are going to require more upkeep in the long term
Murray,
No TIF and/or other incentives, no projects.
Nope, Daniel. These projects should stand or fall on their own economic merit. TIFs siphon off sorely-needed property tax revenue from the surrounding neighborhoods. And such projects also typically get free infrastructure improvements to support the new buildings. The only reason the projects wouldn’t get built in this specific locations is that there is some other locality that will offer it to them. And, BTW, there is usually an incestuous relationship between the developers and the people who approve such arrangements, who get political contributions from the developers.
Randy S., the real problem with the lack of property tax revenue is not due to TIF funding, but rather from property valuations that fail to meet the state requirement that they be based on “fair market value” and the property tax exemptions granted to religious and non-profit entities.
Brent – those issues may very well be true, and likely way more $ is involved, but there’s little political appetite among most people to change the rules and start imposing tax on religious and NFP orgs (much as I might personally agree with the concept). I don’t know how to get solid data on how under-valued all other property is.
I admit I don’t have the background to understand why a project should or shouldn’t receive a TIF grant, but the city definitely needs as much housing density along these transit lines as possible. Perhaps these TIF deals aren’t necessary for each individual project to break ground, but they encourage more projects faster overall?
Build taller!!!
Hopefully the City will hold these high profile projects to a higher design standard than in the past.
You know that they won’t.
In exchange for TIF funding, the developers must simply accept a lower rent amount on 5% of the units, but the TIF subsidies equal between 10-15% of the published costs for each entire project.