Mayor Joe Hogsett is asking the City-County Council to approve a 25-year bond for the long-anticipated $150 million expansion of the Indiana Convention Center.
The mayor's office plans to use tax revenue largely from two proposed Hilton-brand hotels to fund a 300,000-square-foot addition to the convention center onto Pan Am Plaza, featuring the state's largest ballroom at 50,000 square feet. A skywalk over Capitol Avenue would link the new space to the rest of the convention center.
The timing might seem odd given the economic downturn resulting from the COVID-19 pandemic, but Chief Deputy Mayor Thomas Cook argues the project essentially will be a stimulus package for Downtown Indianapolis hitting right when the outlook is less grim.
"We're in this scenario metaphorically right now where the big Downtown boat has taken on water and we’re aware of that and we’re bailing it out as fast as we can and were plugging the leaks," Cook said. "But this is building a really big sail, because when that wind comes back, we want to be able to capture that energy better than any other convention city in the country."
Construction would start in 2022 and last up to 5 years, when Cook predicts the convention business should be back in full swing. Kite Realty Group, which owns Pan Am Plaza, and its contractors would hire 1,500 construction workers and the Hilton would hire 600 full-time employees.
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Officials estimate construction to cost $125 million, higher than the previously announced $120 million price tag, with finance costs and interest bringing the total to $150 million. That would be a big chuck of change hitting the Indianapolis economy during the recovery, Cook said.
The Metropolitan Development Commission will examine the proposal Aug. 5 and the council will get its first look Aug. 10. The mayor's office hopes the project is approved by September.
Project would reshape skyline
The expansion would be the sixth since the convention center opened in 1972.
As part of the project, Kite Realty Group would reshape the skyline by building two towering Hilton hotels along Georgia Street in between Capitol Avenue and Illinois St. that would collectively add 1,400 hotel rooms.
The project was announced in October 2018 but has been slow to gain the necessary approvals. It's been met with sizeable backlash from other Indianapolis hoteliers who worry there's not enough business for the 1,400 new rooms Hilton proposes to build as part of the project.
With that in mind, the mayor's office proposes to delay construction of one of the hotels.
When ground breaks on the convention center, Kite would build a 40-story, 800-room newly developed luxury Hilton brand known as Signia. Only Indianapolis, Atlanta and Orlando have Signia hotels in the pipeline.
If capacity at the Signia reaches 72% over two years, Kite will build the second hotel, which would have 600 rooms. Otherwise, the developer has to wait at least 5 years to break ground.
Tom McGowan, president and COO of Kite Realty Group, indicated Hilton is bullish on the project. Both he and Hilton, he indicated, hope to start the second hotel sooner rather than later.
Hilton also is pledging to hire the 600 full-time workers at an average minimum wage of $14 per hour, which McGowan said is unprecedented. It's also a nod to political realities in Indianapolis. The mayor's office said the City-County Council has made it clear hotels that come to the city for subsidies will need to commit to providing their workers with a living wage.
"There’s no question that Hilton hotels want to make a more significant impact in the city of Indianapolis," McGowan said. "It's a market they've had their eye on for a long period of time. It’s a key objective way up to the top of the executive ranks in Hilton."
Tourism officials say expansion is necessary
Chris Gahl of Visit Indy said the expansion will help keep Indianapolis among the top convention cities.
The Indiana Convention Center's last expansion, a $275 million overhaul in January 2011, doubled its size to 1.2 million square feet, which gives the city the 17th-largest convention center in the nation.
But since then, Gahl said, other cities are catching up.
He said the new expansion would allow the city to bid for 82% of the nation's top 250 trade shows, up from 75%.
He said the expansion will help Indianapolis retain conventions that have an annual economic impact of $287.7 million and put the city in play to land another 208 conventions with $1.1 billion in economic impact.
"We're going to go back to each one of those 208 conventions and were gonna say, 'we have this in place, we're expanding, we have new hotels, we want to get your attention again,'" Gahl said.
City would use property taxes for the project
Kite would bear the cost of construction for the two hotels. The city's portion of the funding would cover the convention center expansion. Kite would own all of the space, but city-related officials would book the convention space.
The 25-year bond would be paid off through property tax revenues generated by the hotels through the city's Downtown tax increment financing district (TIF).The Marion County Capital Improvement Board would also contribute a sizable chunk of the $8 million it annually receives from the TIF for operations, perhaps as much as $6.7 million.
"What the convention center can do for the city of Indianapolis is obviously monstrous in terms of taking us out of the conditions that we're in today and push us forward," McGowan said. "But in addition to that, this northeast corner where the location of the 800-room Signia hotel will be will then take us to another level."
Call IndyStar reporter Amelia Pak-Harvey at 317-444-6175 or email her at apakharvey@indystar.com. Follow her on Twitter @AmeliaPakHarvey. Call IndyStar reporter Chris Sikich at 317-444-6036. Follow him on Twitter: @ChrisSikich.
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Indianapolis to consider bond for $150 million expansion of Indiana Convention Center - IndyStar
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