by Thomas P. Healy
The most recent public meeting to discuss the future of the Broad Ripple High School (BRHS) property followed a predictable pattern: A standing-room-only crowd viewed a series of slides crammed full of details that left viewers with more questions than answers.
While the March 26 event at the Indianapolis Art Center included a public input session that permitted some attendees to engage in a structured discussion, there was too much information to process in one sitting.
Thank goodness Indianapolis Public Schools (IPS) posted the slide show materials on its website, along with supporting materials and a feedback form. After reviewing the online materials, Indy Midtown Magazine reached out to the main speakers for interviews.
IPS special projects director Joe Gramelspacher elaborated on his statements on the night of the presentation that IPS faces constraints imposed by the Indiana General Assembly for disposing of the BRHS site. “Our belief is—and our attorneys confirm—that IPS has very limited opportunities under current law for determining what happens next for BRHS and the broader site,” he said. “As a public entity, IPS is bound by Indiana Code 36-1-11 [PDF] for property dispositions. It spells out a transparent public process that safeguards the public interest.”
Gramelspacher said IPS is advocating for modification of Indiana Code 20-26-7-1 [PDF]—dubbed the “dollar law,” since it establishes provisions for allowing a closed, unused, or unoccupied school building to be sold or leased to a charter school for $1. He said IPS seeks more latitude for managing the sale and future development of the 16.27-acre BRHS site as well as other properties in IPS’s real estate portfolio.
One statistic of note from the presentation was the revelation that IPS is currently servicing $23 million worth of debt for the BRHS property. Gramelspacher said that amount is the outstanding debt from an original bond issuance attributable to the high school. “$23 million was the original principal amount that went to BRHS, but it’s part of a larger issuance for schools district-wide.”
Gramelspacher said there is no amortization schedule for that debt. “Our bond attorneys looked at what IPS has paid over the life of the issuance and calculated that the payment IPS needs to make to relieve the outstanding obligation is $5 million,” he said. He cautioned that the final total would have to be verified by bondholders and the bond trustee. “It’s around $5 million, which means any sales price above that would be cash proceeds to the school district,” he said.
While it’s anyone’s guess if or how the General Assembly may alter the “dollar law” before the legislature adjourns in late April, Gramelspacher said that “IPS is focused on getting a law that is suitable for getting the best use of the property. No matter what framework emerges from the General Assembly, we’ll be taking action as soon as possible.” A timeline presented at the meeting suggested that IPS could seek requests for information (RFI) from interested bidders as early as May. Gramelspacher said the RFI would solicit ideas, not a price, for the site. “IPS would then share the ideas with the community, and then recommend action to the board of school commissioners,” he said.
MARKET ANALYSIS
Some potential suitable uses were presented March 26 by representatives of SB Friedman, a Chicago-based development advisor group retained by IPS to conduct a market analysis of the site. Why a Chicago firm? Impartiality, according to IPS’s Gramelspacher. “They didn’t have existing relationships with a development team that might bid on the project.”
Ranadip Bose, a senior vice president at SB Friedman, said that while redevelopment could include an educational use, the firm’s study scope did not include analysis of public or institutional uses, only a market analysis. “When we look at a market, we look at land use class and see how that is viewed in the marketplace,” he said. “We look at development and the core asset classes being built—residential, retail, office—and we characterize the typology.”
“We’re looking at competing submarkets for each individual land use so we’re constantly zooming in and out—looking at relevant areas,” he added. This involves comparing Broad Ripple’s commercial core with development activity occurring in the region, such as in Keystone at the Crossing, Glendale, Nora, and Carmel, as well as in the region’s major market downtown. “Broad Ripple is a vibrant urban district that provides an authentic urban experience outside of downtown,” he said. “It’s different from downtown in that it’s not driven by daytime population.”
OFFICE SPACE
In addition to a statistical analysis, Bose and his colleague Caren Kay conducted interviews with local real estate sources. “We talked to tenant-side brokers and developer-side brokers,” he said. Both groups tend to be aware of what is referred to as ‘pre-lease activity’—clients willing to commit to renting space prior to construction. “Who are the tenants looking for space? Without pre-lease, you have no project,” Bose said, adding, “No bank will finance an office building without pre-leased space.”
Bose said that the top brokers in the market were “very confident” they could pre-lease 30,000 to 40,000 square feet in the Village. He said that while his firm is “normally very cautious,” the interviews spurred the consultants to project that Broad Ripple could support between 70,000 and 90,000 square feet of office space with tenants coming from finance and real estate, technology, creative, and medical fields.
“We would not have been as strong on office had it not been for strong transit,” Bose said. “Employers are looking for multi-modal transit access. Younger folks are open to using transit and Millennials are the largest sector of the workforce. Those folks want the Broad Ripple environment,” he added.
RESIDENTIAL DEMAND
According to SB Friedman’s analysis, Broad Ripple has captured approximately 5% to 7% of the metro region’s active residential apartment market since 2010. While 370 units have been added to the Village mix in that time, Bose’s team noted “significant demand” for more rental housing (450 to 570 units) and for owner-occupied housing (35 to 70 condos and 175 to 210 townhomes/detached units.)
A question remains: Will new housing be affordable for people who work in the Village’s service industry? Bose has some familiarity with the issue as his firm is tackling a workforce housing solution project for the City of Chicago. “In practice, inclusive growth becomes very hard to do,” he said. “In our experience, for this to work it has to be tied to broader overall policy. If you put the burden on one project, the developer will either reduce the land value or ask for public subsidy.”
Developers like to build projects for the high end of the market, where profits are greatest and financing is easy to obtain. The affordable market requires a form of subsidy such as low-income housing tax credits, property tax abatements, or TIF. “The challenge is that there are very few financing programs out there for something in the middle of those two market segments,” he said. While acknowledging the problem, Bose said that articulating solutions was beyond the firm’s brief. “Our scope was, ‘Here’s the market; what will work?’ It wasn’t addressing every policy, but what we found is that to do mixed-income affordable housing, the policy has to be systemic rather than site-specific.”
RETAIL GROWTH
SB Friedman projected a demand for 20,000 to 30,000 square feet of retail on the BRHS site. “Frontage on Broad Ripple Avenue is where retail would go,” Bose said, as it would offer a natural continuation of the Village’s commercial corridor.
Given fears of an overabundance of bars and a retail apocalypse caused by online commerce, the notion of more retail for Broad Ripple seemed questionable. Not to Bose. “We did not say brewpub or sports bar. That was out. If you look at our final program—fine dining, fast casual, personal services—all of those are essentially Amazon-resistant,” he said. Bose said his firm is very sensitive to the Amazon effect, which is why it stressed a focus on service-oriented retail. “Every retailer and every tenant has to be its own niche—specialty stores where it’s all about the experience,” he said. “Find a niche so you’re not competing but leveraging the cluster of retail users there.
“Having said that, it’s not accurate to think that every retail category is doomed by Amazon,” Bose said. “E-commerce totals including Amazon are at best 12 percent of the total retail market. The fear that brick and mortar is dead is overstated. In our interviews with folks, they viewed Broad Ripple as competitive because users and customers come from far away.”
A MIX OF USES
Bose recommended incorporating residential, office, and retail into a mixed-use project. “It’s clearly a mixed-use solution for the site, so you can expect premium developers to be interested,” he said. “When you’re talking about mixed-use, you’ve reduced the pool of developers drastically. But there are a few developers out there who understand mixed use, and when you’re talking of a development of the scale and size of the BRHS site, that should attract top developers.”
He agrees developers tend to be specialized but added that during interviews, they struck a note of cooperation. “They said that because of the strength of the site they were willing to partner. You’re not going to see a developer come in and put single use on a 16-acre site—they’re totally willing to partner.”
Whether the community will be a willing partner to a proposal that doesn’t include an educational use is another matter altogether.
A version of this article appeared in the April/May 2019 issue of the magazine.
