Garment factory plans hung up

Members of a city board are questioning how a $1.4 million investment of taxpayer money into a private development will be protected in case plans to renovate a downtown Franklin building fall through.

Local developers Todd and Billy Bemis want to turn a former factory at 101 E. Wayne St. — currently being used for storage — into an event center, retail space and condominiums.

They have asked for $1.4 million in property tax dollars from the tax-increment financing district to help pay for the project, including buying the garment factory, five neighboring buildings or homes and spending $302,000 on renovations. In addition, the Bemis Group plans to invest $2.5 million to renovate the garment factory building, improve plumbing and electrical work and transform one home into office space.

Redevelopment commission members said they are in favor of the project but want to ensure the investment is protected if the renovation is not completed or the project would fail.

“I’m very much for this project, and I’m excited about it, but I also want to make sure from our side of it that we structure it in a fashion that we’re protected as much as we can be,” redevelopment commission member Keith Fox said.

With that concern in mind, the city board gave an initial approval to spending $1.4 million from the TIF districts on the project — but only after the city and the Bemis Group reach an agreement that lists conditions to protect taxpayer dollars in case the garment factory renovation is not completed.

“I just want to make sure the project is completed,” said redevelopment commission member Richard Wertz. “In our track record, we’ve always had a little bit of skin in the game until the job was completed.”

The resolution that had been drawn up between the Bemis Group and the redevelopment commission did not include a way for the board members to protect taxpayer money, board attorney Rob Schafstall said.

The city board was going to write the developer a check for $1.4 million, which is not what the city has done in the past, he said. In the past, developers would have a mortgage with the city on the property or list the city as a beneficiary in their life insurance policy as collateral, in case a project wasn’t finished, Schafstall said.

The redevelopment commission will most likely hold a mortgage so that if the project does not go through, the city is still protected for its investment, said redevelopment commission president Bob Heuchan. Despite the successful track record of the Bemis Group and their work in the community, the $1.4 million should still be protected through the completion of the project, he said.

In the past, the redevelopment commission has held mortgages that include conditions so that if a developer decided to sell the property quickly, the city would still have their money protected, Heuchan said.

“Best practice is ‘what could go wrong and how do we mitigate that risk?’” Heuchan said.

Schafstall suggested the city board needed to purchase the six properties, then give them to the Bemis Group. Since the Bemis Group already has all six properties under contract to purchase, the Bemis Group would have to sell the homes to the redevelopment commission, then the redevelopment commission give some of the properties back to the Bemis Group, Schafstall said.

Another condition of the economic development agreement will include having two professional appraisals done of the six properties, so the redevelopment commission pays the accurate value of the property, Schafstall said. He suggested the appraisals to the redevelopment commission on Tuesday, and they unanimously agreed to bring in the two independent appraisers.

“I am attempting to do my best work to protect these volunteers who are controlling taxpayers’ money,” Schafstall said. “This is the way that it is done in Indiana, and if we’re going to do something else, then we can try to figure something else out. I don’t think this slows down the project, it’s just a glimpse of what is going to have to happen behind the scenes in order to get the money flowing.”

The developers do have a reason to stick to their promises with the garment factory because they need the city to construct a parking lot and create more street parking, Todd Bemis said. Without the parking lot and street parking spots, there will be zero parking for the event center and retail space, he said.

“We’re trusting that the city will build a parking lot there because there is risk on our part, too,” Todd Bemis said. “It’s a trust issue between both entities.”

Now, the Bemis Group and the city need to sort out how the $1.4 million will be given to the Bemis Group in order to cover the project costs.

And that is expected to add another 60 to 90 days to what was already a short timeline to have the new event center open by December.

“The basic rule is that the redevelopment commission has the legal authority to make purchases of real estate and personal property,” Schafstall said. “We want to structure the deal so that you (the redevelopment commission) are buying something. You’re not just cutting someone a check.”

If the city board buys the properties, the redevelopment commission would have to wait 30 days for anyone else to put in an offer for the properties before they could give it to the Bemis Group, which is required by Indiana law, Schafstall said.

Mayor Joe McGuinness said that another developer would offer additional money to purchase the garment factory, instead of the Bemis Group getting the property for $1 from the city.

“I have concerns that there will be developers besides Bemis Group that are interested in this project,” McGuinness said. “They know what money is on the table, they know who the other partner is in this project. My frustration level at this point is running extremely high.”

The Bemis Group was also only expecting to secure funding for the garment factory — not the residential homes, Todd Bemis said.

“I’ve been securing money for closing the garment factory, and that cost is not the same cost as acquiring the five other properties,” Todd Bemis said. “So now I’ve got to go back and start acquiring loans to get the other properties closed, and that’s going to take me some time.”

On Monday night, the Franklin Board of Works and Public Safety approved to spend $78,500 toward redesigning Wayne Street, which includes repaving the road and adding more than 100 parking spots along the street and in a new city parking lot to serve the new development.

History of Incentives

Old Post Brewpub

Brewery moving into former Franklin City Hall

Incentives offered: The city sold the building for $10,000 and invested $260,000 into renovations of the building.

What the city required: The developer, Phil Warrenburg, to have an extra life insurance policy on himself, raise $450,000 in investment and the city redevelopment commission has a mortgage on the property.


Former pharmaceutical manufacturer in Greenwood

Incentives offered: $6.5 million in tax dollar-backed bonds, $500,000 in cash for equipment and construction costs and a $1.5 million loan to cover expenses related to pursuing Food & Drug Administration approval for generic insulin.

What the city required: City got ownership of the building, equipment and any patents when the business folded, and was able to recoup some costs by selling them.


Formerly proposed indoor athletic complex and hotel in Greenwood

Incentives offered: $2 million in infrastructure improvements at the site

What the city required: None of the incentives were planned to kick in until construction started at the site, and that didn’t happen, so the city didn’t lose any money.

The legal issues

Members of the Franklin Redevelopment Commission want additional security in place for the $1.4 million investment that they are putting toward the former garment factory renovations. Here’s a look at the legal issues at play:

  • The redevelopment commission would have been writing a reimbursement check to the Bemis Group, instead of purchasing property outright
  • The redevelopment commission did not have any protection for its investment, in the case that the renovation is never completed or if it is not successful once it is finished

At a glance

The Franklin Redevelopment Commission and the Bemis Group have both offered financial investments into the renovation of the former garment factory. Here’s a look at how much each group is investing:

Bemis Group: $2.5 million toward renovations and upgrades

Franklin Redevelopment Commission: $1.4 million; $302,000 will be reserved for garment factory renovations while the remaining dollars will be used toward property acquisition for six properties including the garment factory