2,425 jobs propel new Clarian project 10.15.10

City to supply $38 million in TIF funds for for-profit neuroscience development
October 15, 2010
The Indianapolis Star

Clarian Health's proposed neuroscience and office complex on 16th Street will be a rich job generator, bringing 1,225 transferred jobs to the site and creating 1,200 more jobs within 10 years after it opens.

City officials said Thursday the $192 million project's impressive job-creating potential was a big reason the city has agreed to subsidize it with up to $38 million in tax money.

"This project holds the potential for positive transformation of the 16th Street corridor. It is the next exciting step for our city," Mayor Greg Ballard said at a news conference in a grassy field at 15th Street and Capitol Avenue, where details of the project were given.

Officials at Clarian, the state's largest hospital group, called the city subsidy essential to the project, which includes cleaning up four old contaminated industrial sites, relocating a city fire station and Clarian medical clinic, and rerouting parts of three streets in a six-block area just south of Methodist Hospital. Construction will start in the next two months and last about two years.

The Clarian complex becomes the fifth project this year promised money from a Downtown tax increment financing (TIF) district set up to assist economic development.

The city has tapped the TIF recently for $9 million for a private hotel-apartment-retail-office complex next to the Eli Lilly and Co. corporate campus; $3.5 million for City Market renovations; $600,000 to help build a sky bridge to connect the Indianapolis Artsgarden to the Hyatt Regency hotel and office complex, and $8 million to support the Indianapolis Convention & Visitors Association.

Though Clarian Health is nonprofit, its new development will be structured into two for-profit partnerships that will pay property taxes on land that's now off the tax rolls and more than 500,000 square feet of new office, lab and research buildings.

New property taxes from the complex should top $3.8 million a year, more than covering the city's payments of $3 million to $3.5 million a year on the bond that will be sold to investors to raise the city subsidy of about $38 million, said Deron Kintner, executive director of the Indianapolis Bond Bank.

The bond bank expects to sell the 25-year bond for the Clarian project in November at an interest rate of about 4.5 percent, Kintner said. "It's a great time to be going to market. Interest rates are low . . . which is an enticement to doing this project now."

The City-County Council voted 18-11 last month to approve TIF funds for the project to help pay for public infrastructure improvements, including street, sewer and sidewalk reconstruction and the relocation of Fire Station 5 at 16th Street and Capitol Avenue.

Brian Mahern, a Democrat who voted against the measure, said he continues to question the city's involvement in the project and thinks city officials misled the council by suggesting that Clarian, not the city, was paying to relocate the fire station.

Money from the TIF is supposed to be limited to paying for public infrastructure, and if a fire station qualifies, then so should buying new buses for the cash-strapped IndyGo system or aiding the library system, Mahern said.

Officials in the Ballard administration have rejected requests to use TIF funds for the city bus system or library, saying the law prohibits those uses.

Ballard's press secretary, Paula Freund said city officials didn't tell the council at its meeting last month that Clarian would pay for the relocation of Fire Station 5, which will cost $6 million.

"The city made it very clear that Clarian and other partners are committed to building a $6 million fire station. They did not use the words 'fund' or 'pay,' " she said.

Although the law limits uses of TIF money to street work and other public improvements, in a large project like the one Clarian is doing, money from the city ends up being intermingled with private funds, said Kristen Tusing, director of enterprise development in the mayor's office.

"It's hard to say what is (city) money, because it's all thrown into the same pool and then allocated. From a developer's standpoint . . . they don't look where it comes from."

While the fire station disagreement was an issue in political circles, economic development officials pointed to the Clarian project as a large job creator that will transform a stretch near 16th Street that for decades was given over to parking lots and run-down industrial buildings.

"This project represents public-private partnership at its very best. . . . This is better than a home run for us," said Michael Osborne, president of Near North Development Corp., which serves the area.

Osborne said the coming of 1,225 Clarian jobs initially and 1,200 more over 10 years will have "a greater impact than we can even conceive" on the area, attracting retailers such as restaurants, along with new apartment and housing development.

The $104 million neuroscience center will consolidate much of Clarian's research and patient care in brain and spine disorders in two state-of-the-art buildings, served by a parking garage. They will be connected by a pedestrian sky bridge over 16th Street to Clarian's People Mover train station that runs to the campus of Indiana University-Purdue University Indianapolis.

Clarian's development partner in the neuroscience hub project is Landmark Healthcare Properties Fund of Milwaukee.

For the administrative office building, Clarian's development partner is Shiel Sexton of Indianapolis.

Clarian will transfer 1,225 jobs to the complex from about five Clarian sites in Marion County, said spokeswoman Margie Smith-Simmons. After the moves, Clarian will retain its presence at those sites, she said.

Clarian expects robust job growth at the complex as it expands its hospital system across the state and as patient volume and research needs grow at the neuroscience center.

"This is going to be the next Cleveland Clinic, the next Mayo Clinic for those in need of neuroscience services," said Jeff Cardwell, a Republican city-county councilman who chairs the council's economic development committee.
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