Alley vacation needed from Bloomington city council, to make Trades District hotel deal work
By mid-April, about a month from now, Bloomington's city council could be considering whether to vacate an alley that is platted in the Trades District, north of city hall.
The alley vacation, which means the government gives up its claim to the public right-of-way, would make it easier for Alluinn IU Trades District Hotel to develop a 150-bed upscale hotel on two vacant parcels that are currently split by the north-south platted alley.
If all goes to plan, the hotel could be open sometime in the second half of 2026.
Alluinn IU and Bloomington's redevelopment commission (RDC), which is the owner of the land, have a pending agreement to purchase the property for $1.2 million. The alley vacation is needed in order for the purchase, and subsequent development to go through.
At its regular Monday meeting (March 17), Bloomington's RDC approved a resolution to petition the city council to vacate the platted alley.
According to the resolution, "the presence of said alley would significantly hinder Alluinn IU's development of a hotel on the real estate to be conveyed."
John Fernandez, who is vice president of The Mill, which is now handling the redevelopment of the Trades District, told RDC members at their meeting that the current platted alley poses design challenges for the planned hotel. Fernandez said that when architects for Alluinn IU started laying out the hotel on the site, it became clear that building over the alley is "suboptimal." Fernandez described the result of the attempt to create a structure above the alley as a "funky" design.
Instead of building over the alley, the developers have proposed vacating the southern half of the existing platted alley, which runs north-south, and replacing it with a new east-west alley that would run from Madison Street on the northern end of the current alley. The proposed alley swap is part of a larger site plan that aims to optimize the hotel's design and functionality, Fernandez said.
At the RDC's Monday meeting, Bloomington's director of economic and sustainable development Jane Kupersmith reported that planning and transportation director David Hittle was comfortable with the idea of a commitment from the developer for the alley swap.
Fernandez noted that the current alley doesn't connect to a network of existing alleys and has never been actively used, which he said makes it an ideal candidate for vacation.
In Bloomington, the criteria for vacating public rights-of-way are ensconced in a resolution, approved by the city council in 1987. [Res 87-02] From that resolution, the criteria are:
1. Current Status – Access to Property: the current utilization of the right-of-way in question – as a means of providing vehicular or pedestrian access to private property, churches, schools, or other public places, for public utility or drainage purposes, or for other public purpose.
2. Necessity for Growth of the City:
a. Future Status – the future potential for public utilization, possible future need for the right-of-way due to future changes in land use;
b. Proposed Private Ownership Utilization – the proposed utilization of parcel in question if it reverts to private ownership, potential for increased benefit to the City under private ownership (does the proposed use contribute to the orderly growth of the City);
c. Compliance with regulations – the effect of vacation upon compliance with all applicable regulations: subdivision, zoning, access control, off-street parking (does the vacation present a non-compliance problem or hinder future compliance upon anticipated development or change of use?);
d. Relation to Plans – the relationship of vacation with the Master Plan, Thoroughfare Plan, Neighborhood Plans, or any special studies that might apply
When the request for the alley vacation lands on the city council's plate in mid-April, the legal criteria could still be lodged in recent memory for the four councilmembers who were serving three years ago. That's when the council was asked to consider vacating an alley in connection with the proposed development next to the Johnson's Creamery building. (Those four councilmembers are: Matt Flaherty, Kate Rosenbarger, Dave Rollo, and Isabel Piedmont-Smith.)
The 2022 edition of the council did not treat alley vacation requests as perfunctory. But in early June 2022, the city council did eventually approve the vacation of some alleys in connection with the redevelopment of the former site of the IU Health hospital, now called the Hopewell neighborhood. That request also came to the city council through the RDC. It was the same proposal that had failed at the city council on a 4–5 vote in the first week of April 2022.
Part of the understanding that was reached for the approval of the 2022 Hopewell alley vacations was for the planning department to develop a new zoning overlay that was applicable to the Hopewell neighborhood, called the Transform Redevelopment Overlay (TRO). The city council then adopted the TRO.
For RDC members at Monday's meeting, it was uncontroversial that the petition for the alley vacation should be made of the city council. But there was a little bit of pushback on the idea that the RDC, as the owner of the property, should pay for the survey of the alley. The survey, which is needed so that a proper legal description can be given to the city council, will be done by Bledsoe, Riggert, Cooper & James, at a cost of up to $1,500.
RDC president Deborah Myerson noted that the developer will be saving cost as a result of the alley vacation, and might reasonably be expected to pay for the survey. Fernandez pointed out that for the new alley to be platted, the developer would be footing the bill, so that might be considered "a wash."
RDC member Randy Cassay added that it might work out to a long-term bigger cost if the alley were not vacated, because it could become the RDC's responsibility to construct an actual alley at some point, whereas now it is just platted.
RDC member Sue Sgambelluri said that "$1,500 is decidedly not a hill I would be inclined to die on."
RDC member John West said he would vote for the vacation of the alley, but agreed with Myerson's sentiment, saying, "We're tired of being the bank. So we're extremely conscientious of that."
No public commentary was offered during the time allotted.
