Gold Building developers cast $18M loan lifeline by City of Indianapolis

INDIANAPOLIS — Three years ago, Gershman Properties and Citimark unveiled a grand plan to remake the City Market block between Market, Delaware, Ohio and Alabama streets in downtown Indy.

The Gold Building would be turned from office space into 350 apartments with retail on the ground floor, Wabash Street — an alley behind the City Market — would be reimagined, the Market House would receive tens of millions of dollars in renovations, Whistler Plaza on the west end would be opened up, an apartment building would rise above the eastside plaza, and a parking garage and office building along Ohio Street would be renovated.

But the developers couldn’t find financing, the Gold Building’s conversion budget doubled from $90 million to at least $180 million, the city took back control of Whistler Plaza, an operator is being sought to advise on the Market House renovation, and there are no viable plans for putting a high-rise on the eastside plaza.

And Gershman and Citimark need $18 million from the city to keep what’s left of the whole project from falling apart.

”The $18 million loan is a bridge loan,” said Metropolitan Development Director Megan Vukusich, “and what it’s intended to do is replace the existing mortgage that First Financial Bank has on the property and then we have stipulations related to that loan and one of those stipulations is the project needs to close on financing for the redevelopment within nine months.”

If the developers get their financing in line by the middle of next year, the loan will be forgiven.

If not, the city will be repaid with interest.

The loan replaces a $13 million grant previously approved.

”We have plenty of reassurances in our loan agreement to make sure we have a seat at the table,” said Vukusich, “to make sure that we’re learning as much as we can about these office conversion projects and why they’re so challenging, particularly this one and how we can see it across the finish line.”

The Gold Building has been vacant for three years.

Vukusich said the building’s proximity to the shuttered City Market makes the project too important to fail.

”What we found is that to support additional retail in downtown, we need additional rooftops. And this is one way to make that happen,” she said. “Since we are making such a significant investment in Whistler Plaza and in City Market, revamping the City Market building itself, we do have an interest in making sure that the surrounding properties are supporting that redevelopment effort.”

A letter from Indy Economic Development, Inc., the city’s development arm, written to the Metropolitan Development Commission on Tuesday, advised that, “The Gold Building has the potential to spur adjacent private investment downtown, bolstering the momentum of revitalization in neighborhoods in its vicinity. The opportunity for the City Market to be activated for 18 hours instead of just a hub during the lunch hours is a major feature for that area of downtown.”

The letter warns that financing delays suffered by the developers, “have already had negative externalities, including deterioration of the site and lost economic opportunity. Approving timely support helps avoid further cost escalations and preserves momentum.”

The MDC approved the loan unanimously and without debate.

The project has also qualified for $20 million in state incentives.

For the city to get its money back, the project would have to sell within ten years and turn a $36 million profit for the loan to be repaid, though there is the potential for receipt of tax revenues to cushion the public investment commitment.