MHG ups ante to compete for hotel project in Trades District, Bloomington’s RDC puts off decision for now

It still seems likely that some kind of boutique hotel will be developed in the Trades District. But on Monday night, uncertainty emerged about who the developer will be.

On Monday’s agenda for Bloomington’s redevelopment commission (RDC) was a resolution to approve a letter of intent with Pure Development to build a $35-million, 150-room boutique hotel in Bloomington’s Trades District.

But at the RDC’s 5 p.m meeting, John Fernandez announced that two and a half hours earlier, around 2:30 p.m., he had received an updated offer from a different developer—MHG Hotels.

So Fernandez asked the RDC members to put off a decision on the resolution that appeared on that night’s agenda, and to direct him to go back and negotiate further with the three developers who have made offers on Tract 3 of the Trades District to build a hotel there.

The RDC heeded Fernandez’s request.

Fernandez is vice president of innovation and strategic partnerships for The Mill, which is now responsible for the marketing and promotion of the Trades District, which is located north of city hall.

About MHG’s proposal, Fernandez said at Monday’s meeting, “It’s significantly better for the city than their previous proposal.” But he did not want to try to sort out the differences and to size up how it stacks up against the other two proposals at a public meeting.

Fernandez put it like this: “I personally don’t think it would be good for us to have kind of a live auction negotiation over this.”

MHG’s previous offer to purchase Tract 3 of the Trades District, to build a hotel, had been $990,000. That’s under the $1.02-million appraised value of the property. Pure Development had offered the exact amount of the appraised value. A third developer, Alluin IU Trades District Hotel, had offered $1.2 million, or $180,000 more than the appraised value, of Tract 3, but also included Tract 4, which was appraised at $560,000.

The four tracts are north of Bloomington’s city hall, and make up part of the 12-acre Trades District, which is a portion of the city’s larger 65-acre certified technology park.

The four were tracts were put on offer in summer 2023.

Here’s a complete rundown of the prices in the RDC’s public offering: Tract 1 (west of Rogers) $2,550,000; Tract 2 (east of Rogers just south of 11th Street) $2,050,000; Tract 3 (east of Rogers, north of 10th) $1,020,000; Tract 4 (east of Rogers, north of 10th) $560,000.

Even though the proposal from Pure Development was the one originally on the RDC’s Monday agenda for approval it was not the first proposal received, after the offerings for sale were made public last year. First to propose, and the only one before the July 17, 2023 deadline, was Alluin IU Trades District Hotel.

But according to the Bloomington RDC’s meeting information packet, even though Alluin’s proposal looked “very promising,” the two sides were not able to reach an agreement during negotiations in the second half of 2023. Starting in fall of 2023, Fernandez started marketing a potential boutique hotel to other potential developers.

According to the meeting information packet, Bloomington’s five-member RDC met in executive session two weeks ago, on March 4, to review a total of three proposals—those from Alluin and Pure Development, along with a third one from MHG Hotels.

After receiving input from the RDC during the executive session, the recommended choice of proposals was the one from Pure Development.

At Monday’s meeting, after revealing that MHG had submitted a new offer just a couple hours earlier, Fernandez said, “I would prefer that the redevelopment commission hit pause, withdraw this resolution, direct me to engage in further diligence with all three of the developers and then come back with a kind of final best proposal…”

The timeline for a final choice of the three was estimated by Fernandez to be in one to two meetings of the RDC. Given the every-other-week schedule of RDC meetings, that works out to somewhere between two weeks and a month from now.

Fernandez called the situation “a good problem to have.” He added, “The proposals are getting better, not worse. So I think we’re in a strong position.”

Based on H-T reporting from a decade ago, in 2011 Bloomington’s redevelopment commission paid Indiana University $9.3 million for the 12 acres that make up the Trades District, part of the larger 65-acre certified technology park.