Bloomington RDC OKs transfer of parking lots to CIB, as step toward potential host hotel

Bloomington’s redevelopment commission (RDC) on Monday approved a resolution transferring city-owned parking parcels near the convention center to the Monroe County capital improvement board (CIB). It is a move meant to support development of a host hotel for the expanding Bloomington Convention Center.

The action authorizes the transer of parcels south of the convention center to the CIB. The transfer is part of a broader effort by city and county officials to assemble land needed for a convention center “host hotel,” which supporters say is critical for to maximize the benefit of the project. It has a construction budget of $52 million, and an overall project budget of $70 million. The project is funded with Bloomington’s share of the 1% countrywide food and beverage tax.

Construction of the expansion is now well underway south of 3rd Street between College Avenue and Walnut Street, east of the existing convention center building.

The parcels involved in the RDC’s Monday transfer are currently used for parking connected to the existing convention center. By transferring the land to the CIB, officials aim to consolidate ownership of property needed for the host hotel development and allow the CIB to negotiate with a private hotel developer.

In briefings in the last several months given to the convention and visitors commission, Visit Bloomington executive director Mike McAfee has stressed that securing big blocks of reserved rooms with a host hotel that is contractually obligated to provide the rooms is key to maximizing the capacity of the expanded convention center.

Under Indiana state law, the RDC’s action on Monday does not need further approval from Bloomington’s city council, because it involves transfer of real estate to another governmental entity.

Also a part of the current mix for governmental land transfers to the CIB, to support potential development of a host hotel, is real estate owned by Monroe County government.

On the county side of the deal, the Monroe County board of commissioners, in the last week of March approved a resolution authorizing the transfer of county-owned parcels near the site to the CIB. That transaction is also intended to support the host-hotel plan and still requires approval from the county council. The county council has a regular meeting scheduled on April 14, and could have on its agenda approval of the transfer to the CIB of the county-owned land.

The county’s transfer is controversial, because it is not vacant land used for a parking lot, but rather home to commercial and residential tenants. The apartments offer some of the cheapest rents in the city of Bloomington. Tenants have been given notice that their current leases won’t be renewed past their current end dates, in early July.

Housing advocates have called for the transfer of the property to a land trust or at least to preserve the use as affordable housing. As a barrier to that possibility, county officials point to the source of funding for the purchase of the property back in 2010, which was the 5% county innkeeper’s tax. Under Indiana law, proceeds from the innkeeper’s tax have to be used to promote tourism.

Assistant city attorney Dana Kerr told RDC members that the RDC real estate will be transferred to the CIB with a “condition subsequent,” that the land must be used solely to directly support the Bloomington Convention Center, like a hotel, parking, or similar uses, or else be under active development for that purpose. If the property is not used in that way for more than two years, ownership would revert to the Bloomington RDC, preventing its permanent diversion to unrelated private uses, Kerr said.

There is a potential indirect path that might result in the use of the county-owned land south of the convention center as housing, but it’s unlikely that the buildings currently there would be preserved. The indirect path relies on the recent context of negotiations between the Bloomington RDC and Dora Hospitality for the former Bunger & Robertson lot north of the existing convention center, which is owned by the RDC. It’s the one where Dora Hospitality would prefer to build a host hotel.

Dora Hospitality is the CIB’s preferred hotelier for the convention center. Negotiations broke down, for good apparently, at the start of the year, over the compensation for the former Bunger & Robertson real estate . Dora said it needed the property to be donated, in order to make the numbers work. The RDC was looking to recoup the roughly $7 million total that was paid for it, using TIF (tax increment finance) revenue.

One possibility is that the county land could then be swapped by the CIB to the city of Bloomington, in exchange for the former Bunger & Robertson parcel. It would then be the city of Bloomington that pushes the real estate towards affordable housing uses. But that’s an option that has only been spitballed and has not received serious consideration on Bloomington’s side, at least not publicly.

At Monday’s meeting, RDC member Randy Cassady focused on fiscal and historical clarity, emphasizing that the transfer essentially “cleans up” paperwork on property that was always intended for convention center purposes and was originally acquired for nominal amounts tied to past bond financing. He also underscored his desire to ensure the convention-center-related land decisions are financially responsible.

President of the CIB, John Whikehart, attended Monday’s RDC meeting, but did not speak during the time set aside for public comment about the land transfer. After the meeting, Whikehart confirmed to The B Square that the CIB was interested in having the land authorized for transfer by the RDC’s resolution as a part of the mix of real estate options as the CIB plans next steps for development of a host hotel.

During public comment, Bloomington resident Joe Davis told RDC members that the downtown parcels are “the people’s property” and should be reserved for uses that serve the community such as a new jail, justice center with co-located courts, or housing He characterized the convention center expansion and related hotel use as primarily benefiting a narrow set of business interests, not the general public.