City mulls 6 proposals for use of Old City Hall

Six developers have submitted proposals to breathe new life into Old City Hall.

Three aim to move crowded local government or economic development offices
inside the shuttered granite-and-limestone landmark. One hopes to establish an international
immigration museum. Two of the most ambitious propose a boutique hotel on an adjacent parking lot, possibly
connected via elevated walkway to Old City Hall’s north side.

With the help of locally based Venture Real Estate, the
city administration is evaluating the proposals, which were solicited in response
to a September request for information issued by the city. IBJ recently reviewed all the responses
after a public records request.

Mayor Greg Ballard
doesn’t consider any of the proposals on the table perfect, according to Kristen
Tusing, the city’s manager of enterprise development. Ballard’s staff plans to spend the
next few months narrowing the field to two or three preferred developers and identifying the best use for the building at
Alabama and Ohio streets.

Ballard’s Enterprise Development Director
Michael Huber noted that the mayor turned to the private sector because “we
lack the capital funds at the moment to make millions of dollars of improvements to the
building.”

“We wanted to cast a really wide net and get
the most creative and innovative ideas for utilizing that space,” Huber said.

(For an exclusive tour of the local landmark, see the video below.)

The city is working with the state to include the state-owned parking
lot immediately north of the Old City Hall into whichever plan is chosen, said Huber, though most of
the proposals don’t envision developing the lot soon.

A challenging space

Finding
a use for the building, which was built in 1910, has been a challenge since the city
offices it housed moved to the City-County Building in 1962.

Built in 1910, Old City Hall has
been shuttered since the library left two years ago. (IBJ Photo/Robin Jerstad)

A
redevelopment proposal from the locally based Lazarus Group LLC notes a 1958 story in The Indianapolis
Times that reported there were no offers for Old City Hall’s purchase or
reuse in the two years leading up to the opening of the City-County Building.

“[Old City Hall] isn’t built for a modern office building … we
couldn’t sell it for salvage. Nobody wants these big hunks of stone nowadays,” the story
said.

Back then, the answer was to block the windows
and house the Indiana State Museum inside. Two generations of schoolchildren became
familiar with its famous gravitational pendulum, which swung from the 85-foot open rotunda. But in 2002,
the Indiana State Museum moved to White River State Park. The building then housed
the interim Central Library until two years ago.

Old City Hall’s
very design limits its potential reuse. Its most unique feature is the rotunda, topped with stained glass,
which makes for a majestic foyer and a lot of empty space across the three upper floors.

Locally based Mansur Real Estate Services Inc., which proposes renovating
Old City Hall for courts, office space or university classrooms, notes that only
45,600 square feet of its interior, or about 61 percent, is actually usable.

“The building definitely has its challenges because there’s so
much circulation space, so it’s not efficient by today’s standards,”
said Mansur CEO Cornelius Alig. “That rotunda in the middle, it’s historically significant.
But it comprises a substantial proportion of the building. This is not the way you’d build a building
today for a number of reasons.”

Most of
the developers hope to make Old City Hall green and efficient, promising LEED certification for
their projects. They also want to reopen the windows and let light inside. Some—like Mansur, Municipal Consultants
LLC and the Preservation Group LLC—want to consolidate all local economic development offices there, from the Greater
Indianapolis Chamber of Commerce to BioCrossroads; move some city administrative offices back inside the building; or move
local courts there.

Municipal Consultants is led by brothers Tom and
James Longest, owners of local civil engineering firm Beam Longest and Neff LLC.
The Preservation Group’s principals are local developer W. Robert Bates and Tilmon Brown.

Developers’ experience varies

The potential developers’ credentials are as varied as their ideas. Several, such as Mansur,
are well-known in local development and architectural circles. Others, like Lazarus, have never attempted
a large project.

Locally based Lazarus Group LLC hopes to build a boutique hotel, restaurant and bourbon bar
connected via skyway to a redeveloped Old City Hall. (IBJ Photo/Robin
Jerstad)

Lazarus is led by Chris Harrell, 38, the city’s brownfield
redevelopment coordinator. He formed Lazarus two years ago, hoping to redevelop a
building in his hometown. With the volunteer help of Architecture for Humanity Indianapolis,
he’s proposed erecting a boutique hotel, restaurant and bourbon bar on the parking lot parcel immediately
north of Old City Hall.

Harrell admits erecting a boutique hotel on
the lot is an “aspirational” proposal on his part, but he believes it
would be a perfect fit with the arts and entertainment district on nearby Massachusetts
Avenue.

“Indianapolis is a great city, and it deserves great
treatment of its landmark structures,” Harrell said.

Louisville-based City Properties Group also envisions a boutique hotel. And
it already has a template for Old City Hall: the Henry Clay building in downtown Louisville. Built in
1924, the building sat vacant for 17 years until City Properties redeveloped it
in 2006. Now it’s a mixed-use structure, home to condominiums, office space
and a theater. City Properties also built a hotel and residential building next door.

Barry Alberts, managing partner of the company’s CityVisions consulting affiliate, said the Henry Clay is now
often used for wedding receptions and public gatherings. Last year, more than 60,000 visited the Henry Clay.

Keystone Group CEO Ersal Ozdemir, a native of Turkey, pitches transforming Old City Hall into
an Immigration Museum, International Non-Profit Hub and International Business Center. But he’s
hedging his bet. Ozdemir’s Keystone Construction is also listed as a construction partner in Municipal
Consultants’ proposal.

Most any of the ideas on the
table could be developed to the liking of preservationists. Mark Dollase, Historic Landmarks Foundation
of Indiana vice president of preservation services, is eager to see Old City Hall
brought back into the daily course of local civic life.

“It needs
attention, and we know that,” Dollase added. “[For] a true restoration, it needs a tremendous
amount of work. At the same time, it’s doable and something our organization will champion in coming years. To their
credit, the current city administration is doing a good job getting in front of this issue.”

Financing is a hurdle

Implementing a plan quickly, however, isn’t likely because of the challenges facing the commercial
real estate market.

Most of the redevelopment proposals the city has
received lean heavily on the use of historic preservation tax credits and other
public incentives. But even if those can be secured, few banks are willing to consider new
commercial real estate projects these days, said Michael Fritton, the principal in charge of locally based Somerset CPAs’
Real Estate Team.

“The lending environment right now is practically
non-existent,” Fritton said. “Traditional lenders already have, by most
of their internal standards, too much exposure to real estate in their portfolios. Their appetite
for new real estate loans is going to be very limited.”

Some
developers, like Municipal Consultants, hope to boost their chances of landing financing by securing
long-term leases with city agencies that would occupy Old City Hall. Municipal Consultants was the only
developer to list a financial partner, Old National Bank, in its proposal. And it’s the only proposal
that specifies it would buy the property from the city.

Fritton noted
securing such leases will be key for any Old City Hall developer.

“Banks are not going to finance something purely speculative in this market,” he said. “You
can still shop around to some extent, but most of the lenders honestly are pretty wary of new projects.”•