Bloomington moves to reduce private use of Showers West, 2 tenants agree to leave

On Tuesday, Bloomington’s redevelopment commission (RDC) approved the key terms of lease termination agreements with Merrill Lynch and the Bloomington Health Foundation, which are two tenants of Showers West. That’s the western part of the former Showers Brothers furniture factory building that also houses city hall.

The lease terminations are part of an effort to comply with the terms of the bonds that were issued in connection with the city’s purchase of the building. Bloomington’s city council approved the purchase on a 5–4 vote in early 2023. Bloomington’s bond counsel is pushing the city to transition the property to public use.

For Merrill Lynch, the agreement allows the firm to remain in its space another seven months, until March 31, 2026. Any furniture or equipment left behind will become the property of the Redevelopment Commission, and the Merrill Lynch will not receive compensation for termination-related expenses.
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For the Bloomington Health Foundation, the terms require the organization to vacate by Oct. 15 this year. In return, the RDC will waive rent for August through October and will pay the foundation $19,542 to cover termination-related costs.

As of early June the other tenants of Showers West were: Bloomington Board of Realtors; Monroe County CASA; Crash Research and Analysis; Probleu; Shrewsberry & Associates; and Warrant Technologies.

Bloomington’s proposed 2026 budget memo includes a breakdown of how the roughly $27.3 million in proceeds from the bonds, authorized by Bloomington’s city council in late 2022, has been spent. The breakdown includes about
$61,000 that has already been paid for lease buyouts. The balance of the bond proceeds is around $202,000.

About the Merrill Lynch lease termination, Dana Kerr, who is the assistant city attorney who provides legal support to the RDC, said, “We considered it a win-win, because the … RDC is not paying anything, and they will be out.” Bloomington corporation counsel Margie Ricel, added, “I think this is a great deal for the city of Bloomington. Frankly, it’s probably the nicest office space in Showers West. The fact that they want to leave their furniture … is to the city’s advantage …”

RDC members briefly discussed the need for an inventory of what would be left behind. But RDC director Anna Killion-Hanson told them: “I would feel that anything … that’s been left behind, would be an asset and not a liability.”

About the payment of $19,542 to cover moving expenses for Bloomington Health Foundation, Kerr said, “We’ve determined that this was within reason, based on what they declared their expenses would be.” Rice talked about the value of the foundation as a community partner: “We value them as a community partner. [I] don’t think that these … are unreasonable costs to pay …”

Both organizations are expected to remain in Bloomington, according to Rice. The terminations of leases with Merrill Lynch and Bloomington Health Foundation agreements are part of a broader effort to reduce private use of the building and increase public access, as required by the bond issuance.

It was in early June when the RDC voted to terminate the leases of the remaining tenants of Showers West. As recently as June, the city of Bloomington did not have any immediate specific plans for the space in Showers West that the tenants occupy. But the city is facing increasing pressure from its outside bond counsel to ensure that the space is put to a “public purpose.”

At Tuesday’s meeting, Rice was asked how city’s bond counsel sized up the extension of tenancy through March 2026 for Merrill Lynch. She told RDC members she hopes that will be the longest tenant holdover. Rice added, “We are slowly but surely reducing the percentage of space that is privately used and increasing the amount of public space.” Rice said, “We can prove that we’re actively working on getting the tenants out and reducing the private use.”

The bonds that were issued in late 2022 to pay for the cost of acquiring the Showers West building, as well as other public safety projects, come with a legal requirement that the building purchased with the money be put to a public purpose. That public purpose, as envisioned by then-mayor John Hamilton’s administration, had been to house the city’s fire department administrative offices and the city’s main police station.

The fire department was moved into Showers West. But Kerry Thomson’s administration, which took over at the start of 2024, opted not to pursue a move by the police department. That eliminated the immediate urgency for tenants to leave, which stemmed from the practical need to make way for a specific city use.

But the view of the city’s bond counsel is that it does not count as a public purpose for the government to collect rent from tenants and use the proceeds of the rent for a public purpose.

If Bloomington is not able to reach agreements with the remaining tenants, the issue could wind up in court to assess damages to the tenants for the early termination of their leases.