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:: The North of South development
The city according to Lilly Co.
By David Hoppe
Mayor Greg Ballard's been raising a lot of eyebrows lately. The man who some have called "the accidental mayor" because of the way he came from literal obscurity to beat an incumbent who had the support of the city's corporate class, has lately discovered his wheeler-dealer muscle. He seems to like the way it feels.
This is not necessarily a bad thing.
Ballard's initiative to deal the city's water system to Citizens Gas for $425 million is a highly defensible proposition that promises to net the city a significant amount of infrastructure repair as well as the overdue razing of some of the city's worst slums.
On the other hand, the mayor's proposal to lease our parking meters to a private firm in Texas for the next 50 years has been roundly criticized for the way it puts control of one of the city's most valuable assets - its streets and how they're used - in the hands of a corporation for a relatively modest sum compared to the amount Indianapolis stands to gain if it does the job itself.
Last week Mayor Ballard flexed his newfound muscle again. He announced that he wants the city to guarantee an $86 million loan to a local real estate developer, Buckingham Companies, to build a project with the kind of name the Scarecrow from the Wizard of Oz might have invented: North of South.
North of South is to be a large-scale mixed use development at the intersection of South and Delaware streets. It is a not particularly veiled attempt to curry favor with the city's Number One corporate resident, Eli Lilly and Co., which will lease 14 acres of its own land for the project's site.
Ten buildings are to be constructed. They include a 152-room hotel, a full-service YMCA, 320 apartments, 40,000 square feet for restaurants and retail space, and another 10,000 feet for potential life sciences start-up companies.
The plan calls for the city's loan to be paid back at a rate of $7 million a year in anticipated profits and property taxes from the project. But if this doesn't work out and the project goes into default.the city will own it.
Ballard says the city needs to put up money for projects like this because banks aren't willing to lend for commercial real estate development at the moment. He has also said that the city should be investing in projects that show a high probability of paying for themselves.
These ideas have drawn fire from critics who think the city should be investing in things like public transit and libraries. These critics are correct in pointing out that the city needs these services for its viability. But funding nonprofit services can't be dependent on loans because these services will never be able to pay loans back -- nor should they be expected to.
Critics have also derided the very idea of the city financing for-profit enterprises. Conseco Fieldhouse and the Luc come immediately to mind. But if a city isn't willing to invest in itself, why should anyone else?
In the case of projects like the stadiums, the issue should be our priorities, not our willingness to back ambitious development. In fact, I would argue that, if anything, Indianapolis hasn't been willing enough to make strategic investments in itself.
Less than a month before the announcement of the North of South project, we were told that the city would soon begin to pave the longstanding waste that is the former Market Square Arena site. For nine years, the most valuable piece of real estate in Indianapolis has served as a gravel parking lot for lack of anyone willing to invest in a suitable project. It's hard to say what's been greater in this sorry saga - the lack of imagination the city and developers have brought to this challenge, or the rude way the failure to do anything with the site has pointed out the city's underlying economic vulnerability.
That successive administrations have not managed to find a way to broker a deal for the Market Square site, using city financial backing to leverage a vision that could be both profitable and of public benefit in all these years is pathetic, a testament to the fundamental dysfunction of our local politics.
Under these circumstances, it comes as no surprise that the key player in the North of South proposal is Lilly. Without Lilly's participation, Ballard might not have stepped up to the plate in this part location. Given its close proximity to corporate headquarters, this project will enable Lilly workers to barely interact with the rest of the city. They'll have their own apartments, hotel, shops and even a workout facility. That's one way to make up for our lack of public transit. Let's hope the city demands high architectural standards in exchange for its cash.
Thanks to Lilly, this deal meets the mayor's means test for local projects. Given Lilly's presence, North of South is probably a decent bet. It's worrying, though, that in this time of economic unpredictability, one corporate Goliath remains the only game in town.