Brian Eason

brian.eason@indystar.com

The Indianapolis City-County Council on Monday night faced an unusual question about the planned development of an old Coca-Cola bottling plant on Massachusetts Avenue: How much is a seat at the negotiating table worth?

Despite objections from both sides of the aisle, the council voted 14-8 to approve a proposal that gives the city the chance to hammer out a project agreement with the proposed site developer. But there's a catch: The city also had to agree to buy the plant for $12 million from Indianapolis Public Schools if the deal fell through.

Today, the building is owned by IPS and is used as a service center for school buses. But the district in 2015 announced plans to sell the plant for redevelopment. In May, the School Board set in motion a tentative deal to do just that.

Under the proposed deal, Wisconsin-based Hendricks Commercial Development would buy the property for $12 million and develop a $260 million mixed-use project, with apartments, a hotel and a dinner-movie theater. The plans also call for 339,000 square feet of office space, 67,000 square feet of retail and a day care.

With Monday's council vote, the sale is now contingent on Hendricks entering into a project agreement with the city, giving the Hogsett administration some influence over how the project is developed, and how soon.

IPS names preferred developer for Coke plant on Mass Ave.

"We have a different set of responsibilities when it comes to the site than IPS does," Jeff Bennett, the deputy mayor of community development, said at a recent committee hearing.

"How does this site become catalytic for neighborhood development both west of College and east of the interstate?”

Although the city hasn't been asked to provide local tax incentives, administration officials believe it gives them the chance to negotiate other things that the city typically requires of developers who receive taxpayer assistance. One example: a requirement that the developer try to hire local workers and contractors owned by women and minorities. It also could give the city some influence over how the development connects with nearby roads and affects the surrounding neighborhood.

The city's proposed role as a backstop, though, caught many council members by surprise when the School Board agreed to it in May.

Some expressed concern about one clause in particular: If Hendricks discovers extensive environmental contamination that would cost millions to clean up and bust the project's budget, the developer can back out of its deal to purchase the property. The city would have no such protection, and preliminary environmental testing has already found some contaminants from the site's former industrial days.

“They can walk; the city can’t," said Fred Biesecker, the council's attorney. "We'd have to clean it up before, presumably, we can sell it."

On Monday, several council members said they saw no reason to subject city taxpayers to such a risk. And they worried that the developer, who so far hasn't requested local tax incentives, would now do so in exchange for whatever the city requests in negotiations. In its initial proposal, Hendricks sought only $2.4 million from the state for site work, by far the least incentives of any proposal IPS received.

“I feel that we’re going to be setting a (bad) precedent by voting in support of this," said Councilwoman Marilyn Pfisterer, a Republican. "I don’t see that the city should put itself on the hook for this particular development.”

Others, though, said that the benefits outweighed the risks. And if the developer ultimately asked for city tax incentives, it would require future council approval.

“The community won’t have representation at the table without this proposal," said Council Vice President Zach Adamson.

That the city even wants to get involved with an IPS property speaks to how important the city believes the site is to Downtown. Built in the 1930s, the ornate, art deco-style building is viewed as something of an architectural gem. And the Hendricks development is projected to generate $161.9 million in assessed value. That would translate to new property taxes for the city and the school system alike.

In the administration's view, the risk to the city in buying the property isn't much of a risk at all.

Officials know there's a market for the building: Developers bid between $11 million and $18 million to acquire the site from IPS. And because it's situated on 11 acres on Mass Ave., a thriving Downtown commercial corridor, the city would want to clean up any environmental problems, anyway, Bennett said.

“At that point, really, who else is going to do a development but us?” he said.

City wants say in Coca-Cola bottling plant redevelopment

IndyStar reporter Chelsea Schneider contributed to this story.

Call IndyStar reporter Brian Eason at (317) 444-6129. Follow him on Twitter: @brianeason.