Indianapolis hotel owners ask council to pause $625M hotel bond proposal
INDIANAPOLIS (WISH) — The president of the City-County Council on Wednesday said city leaders would not have chosen to pursue a hotel bond if they didn’t feel it was safe to do so.
Council members on Monday introduced a measure that would authorize the city to borrow up to $625 million in bonds to pay for an 800-room, four-star hotel on Pan American Plaza, across the street from the Indiana Convention Center.
The authorization followed an announcement last week that the city would assume all responsibility for funding the project. Construction itself would cost $510 million.
Council president Vop Osili, a Democrat, told News 8 the city is authorizing an extra $115 million to provide breathing room in case of cost overruns. He said the hotel would provide the city with additional capacity and give it a way to draw top-tier conventions away from competitor cities.
Osili said that a four-star hotel “is, for those top-tier conventions, a pretty essential component. We don’t want to be drowned out by the other cities.”
On Tuesday, the Downtown Hotel Owners Coalition sent the council and Democratic Mayor Joe Hogsett a letter asking them to pause work on the bond proposal until third-party experts can review the proposed hotel’s financial viability. In the letter, obtained by News 8, the coalition members wrote that the private market already has concluded the hotel is not feasible.
“This proposed gamble with public funds is inviting significant risk on behalf of its residents even though the private financial market has done its due diligence and determined the project is too much of a financial risk for support,” coalition members wrote. “This all at a time when there are more pressing matters that are increasingly keeping visitors and conventions from coming to Indianapolis.”
Republican mayoral candidate Jefferson Shreve, himself a former council member, said the project puts other hotel owners at a disadvantage due to the city’s control over the Indianapolis Convention and Visitors Bureau.
Shreve voted for an earlier version of the project in 2019, when he was still on the council. He said, at the time, it was a public-private partnership that would not have brought the city into direct competition with the hotel owners. Shreve said if city officials wanted to move forward with the hotel, they should have done so when interest rates and construction costs were lower.
“The interest rates on these bonds is going to be threefold what it would have been back in 2019 when I voted for it,” he said. “It’s a complicated deal that has come to our citizens with way too little time to digest.”
Osili said, because the city would borrow the money rather than a private company, officials could do so at lower cost and lower interest rates. He said this means it actually would be cheaper for the city to fund the project.
News 8 directly asked Osili if taxpayers would owe anything in the event the project fell apart.
“We wouldn’t be going into this if there was that level of concern,” Osili replied. “We venture into this with that level of confidence that this will be successful.”
Osili said committee hearings on the bond proposal could begin as early as Monday.
The next full council meeting is scheduled for June 5.