With several million dollars in taxpayer funds approved to help pay for a sports and retail complex in the city, Greenwood officials are working to set up a contract that ensures the city protects its investment.
The city has signed letters of intent — non-binding initial contracts — with both developers, and the Greenwood Redevelopment Commission has approved $8.5 million in incentives. Final contracts, which will set up how the incentives will be awarded and what measures the city will take to make sure the funds are used appropriately, are still being negotiated, and are to be complete by the end of the month.
Those steps are key, say city officials, because with the amount of taxpayer dollars being offered for the project, it is vital that the city get a return on its investment. Those measures are important since they ensure the developers follow through on the projects the city is providing funding for, something that hasn’t always been the case with prior financial incentives. The majority of the incentives will provide money only after work has been finished and will be tied to the sports and retail complex remaining open.
Earlier this summer, Indy Fuel owners Jim and Sean Hallett, Indianapolis-based developer Gershman Partners and the city reached an agreement for Greenwood to provide $8.5 million in financial incentives to help fund a sports and retail complex to be developed on a 105-acre site east of Interstate 65. Plans call for the Halletts to spend $25 million on the sports complex with ice rinks, turf fields and basketball courts, and for Gershman Partners to spend $15 million bringing in a movie theater, entertainment center and up to 10 additional restaurants or retailers.
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Several other projects have been proposed at this property in the past. The site was a new location for Cabela’s, an outdoor sports retailer, then an indoor sports complex and hotel, but each of those plans fell through.
For a project as complex as this one, several months is a fairly standard amount of time for finalizing the contracts, and the city needs to ensure the proper protections are in place to make sure the promised developments occur, redevelopment commission president Brent Tilson said. These measures are prudent because otherwise the city could be stuck in a situation where it has given money out to a development that ends up falling through, he said.
In 2011, the city offered more than $8 million in incentives to Elona, a pharmaceutical company that went bankrupt in 2013. The city ended up spending $10 million on loans, attorneys fees, building maintenance and other costs associated with the incentives and the bankruptcy. Since then, the city has made sure to attach more conditions to the money it gives out, often having money be paid out as a reimbursement or having measures in place to have money paid back if the development falls through.
Stringent protections will be in place for the sports and retail complex. That means not paying developers until after work is complete, tying reimbursements to whether a development remains operational and other measures to make sure the city’s investment is paying off, Tilson said.
The $8.5 million in financial incentives — one of the of largest incentive packages ever awarded by the city — is divided into three pieces: $3 million in reimbursements to the Halletts for construction of the Sportsplex, $3.7 million in reimbursements for infrastructure improvements to the Gershman’s property and $1.8 million for work on nearby roads and intersections.
The money for the incentives will come from property taxes collected by the city’s tax increment financing, or TIF, districts.
The money for the Halletts will be paid in annual installments of $300,000 for 10 years once the Greenwood Sportsplex opens. The money is intended as a partial reimbursement for the costs of constructing the sports complex, according to the letter of intent.
The structure of the financial incentive for the Halletts is a first for Greenwood, but it has been done elsewhere in the state, Tilson said. Some of the other cities that were in competition with Greenwood for the sportplex may have been offering similar types of financial incentives as well, he said.
A tax break, one of the city’s go-to financial incentive options, may not have been available for the sportsplex because of state laws regarding the types of projects that can receive tax breaks, Greenwood Mayor Mark Myers said.
That meant, instead of a standard 10-year tax break, the city is giving the Halletts a 10-year reimbursement, in an amount similar to what the Halletts would have saved with one of the city’s standard tax breaks, he said.
The money will go directly toward paying off loans on the building, Myers said.
The Halletts will only receive the payments as long as the Greenwood Sportsplex is open, which ensures the city is getting a return on it, Greenwood city attorney Krista Taggart said.
“We don’t pay money unless it is open and operating,” she said.
The scope of the sportsplex project is also expanded, while initially envisioned as a four-rink Iceplex to be built in Freedom Park, the sportsplex facility east of I-65 will also have basketball and volleyball courts, and additions such as indoor skydiving and water skiing are also being considered.
The Halletts have filed requests with a Greenwood city board to allow them to use a retention lake for recreational activities such as water skiing. They’ve also requested permission to set up indoor skydiving at the site as well.
Those requests are based on possible options for the sportplex, but aren’t any guarantee of what will be built, Sean Hallett said. Gershman Partners’ website lists Greenwood Sports, Xscape Theatres, Main Event Entertainment and iFly Indoor Skydiving as tenants for the property.
The incentives to Gershman Properties will be paid out in a similar fashion, with the city reimbursing the developer for sewer, storm water and street work only after the contractors have submitted their bills, Tilson said.
The $1.8 million in improvements for work to County Line Road and Graham Road, including new traffic signals at the I-65 interchange, will be paid directly to the contractors by the city.
All of the infrastructure improvements are necessary to make the site viable for development, even if the current project falls through, Myers said.
The city is negotiating other provisions to make sure the funding is used appropriately, but Taggart declined to say what those steps may be since the contracts haven’t been finalized.
The redevelopment commission gave the mayor and his staff the authority to approve the final contracts on behalf of the city.
Greenwood is negotiating an $8.5 million incentive package for a development near Interstate 65 that includes the Greenwood Sportsplex. Here’s a breakdown of the incentives
$3 million construction reimbursements to Sean and Jim Hallett for building the Sportsplex
$3.7 in reimbursements for infrastructure improvements to Gershman Partners for the work on the property
$1.8 million in work on nearby roads and intersections, paid for by the city to the roadwork companies