Indianapolis signs off on hotel financing

Register now

The Indianapolis City-County Council unanimously approved plans to issue $16.7 million in bond anticipation notes to help finance a $141 million plan to redevelop two historic downtown Indianapolis buildings.

The city anticipates issuing about $17.5 million in developer-backed bonds to help finance the project. Keystone Realty Group is the developer.

Keystone is seeking the money and the city’s partnership as part of a $141 million redevelopment plan for the Illinois Building at 17 West Market Street and the former AT&T building at 220 North Meridian Street. Keystone plans a 180-room Intercontinental Hotel in the Illinois Building and a mixed-use high rise office and residential building at the former AT&T office building.

The developer would use 80% of the tax revenue generated by the projects to pay off the bonds, which last for a period of 25 years. The projects are both in the consolidated downtown tax-increment financing district.

In return for its financing help, the city is getting a 5% equity stake in the Intercontinental Hotel, a similar arrangement to what it has at both the Conrad Hotel and the JW Marriott.

Cost of the Intercontinental project is estimated at $61 million and at $80 million for the redevelopment of the former AT&T building.

The Illinois Building currently generates about $420,000 per year in tax revenue, largely from ground floor restaurants.

The former AT&T building generates about $120,000 per year for the city in tax revenue. The city anticipates receiving an additional $341,000 in annual taxes from the buildings once the projects are completed.

For reprint and licensing requests for this article, click here.
Tax increment financing district City of Indianapolis, IN Indiana