This article is reported in collaboration between Mirror Indy and IndyStar.
On the campaign trail for governor, former Secretary of Commerce Brad Chambers talks about his experience as a business leader who can grow Indiana’s economy. After all, he is the founder and CEO of Buckingham Companies, which boasts of managing more than $3 billion in real estate with hundreds of employees across nine states.
But back home in Indianapolis, Chambers’ real estate company did not follow through on its end of a landmark agreement made with the city — missing a deadline to pay back the city not just once, but twice.
It stems from a deal struck during the administration of former Republican Mayor Greg Ballard. In 2011, the city agreed to issue nearly $100 million in bonds and then immediately loan the $86 million in proceeds to Chambers’ company to create CityWay on the southeast side of downtown.
Now that it’s built, the first phase of the $156 million development contains a high-end hotel known as the Alexander, where guests are treated to art collections, and luxury apartments that can cost as much as $3,700 per month.
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To get here, Chambers’ company counted on Marion County taxpayers to bear the risk of the investment thanks to what experts say is an unusually generous deal. In addition to using $31 million in state and local taxes to pay for nearly half of the project’s debt payments so far, records show, the developer also received a long leash from the city: It had 10 years to obtain private financing to repay the remaining debt to the city.
That deadline, though, was in 2021. Chambers’ company failed to meet it, leading the administration of Democratic Mayor Joe Hogsett and the City-County Council to come up with a new plan. They extended the deadline to December 2023.
New reporting by Mirror Indy and IndyStar reveals that the second deadline also came and went without Chambers’ company meeting the terms.
As a result, Chambers’ company still owes the city of Indianapolis about $69 million. That’s according to documents obtained by Mirror Indy and IndyStar in public records requests.
Meanwhile, campaign finance records show that Chambers has cut at least $9.6 million in checks to his campaign on his largely self-financed run for governor in the competitive Republican primary.
There’s little debate how transformative the CityWay development has been for downtown, turning a parking lot near a major employer into a bustling hub connecting neighborhoods. But the project demonstrates how the risky and pricey gambles often made by cities on economic development deals can impact taxpayers, years after the media buzz dies down and critics stop asking questions, regardless of the political party in power.
The Rev. David W. Greene Sr., an Indianapolis pastor who advocates for civil rights and improving homelessness, said he is frustrated by a system he views as designed to protect wealthy developers at the expense of ordinary residents.
“We can’t do things that will help citizens. It’s always a fight,” Greene said. “But obviously in this situation, we’re able to do it for Brad Chambers, no questions asked. And he’s got beaucoup dollars.”
Chambers, through a campaign spokesman, declined an interview request, but in a statement the campaign labeled the critiques in this article as a “political attack” and pointed to his company’s “40-year successful track record.” A spokesperson for NOS Innovation Partners, an affiliate of Chambers’ real estate company that owns CityWay, also declined an interview request. But in emailed statements, the spokesperson said the developer is proud of CityWay’s impact on the city and the community.
“Commercial real estate, including CityWay, and specifically its hotel, was not immune to the widespread and detrimental financial impacts of the pandemic and customary with other commercial loans, an extension was granted,” the statement read in part. “Throughout and currently, the CityWay financing was and is in good standing with the bondholders.”
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To be clear, the company has not missed any of its payments to bondholders, one requirement of the initial loan deal. But the developer’s failure to pay the remaining loan balance to Indianapolis, another expectation of the deal, has essentially locked the city into a role as a bank for a longer period of time with no certain ending.
It creates an uncomfortable situation: Should Chambers win both the primary and general elections, the governor of Indiana would own a company indebted to the state’s capital city. Chambers faces five others in the Republican gubernatorial primary election on May 7.
And by having tens of millions of dollars still tied up in a loan, Indianapolis officials are less able to issue new debt that could be used to solve the city’s many needs, including addressing downtown’s homelessness challenges or building safer infrastructure for pedestrians and cyclists.
In a second statement sent days after IndyStar and Mirror Indy continued to ask questions of the developer, Chambers’ company said it would pay back the city this year.
The statement did not commit to a specific deadline.
The 2011 deal
Critics warned of red flags when the initial deal with Chambers’ company was finalized back in 2011.
For one, if a bank wouldn’t loan money for the project, why would the city? At the time, the city dismissed those concerns, saying that unlike a bank, which is only looking at profits, the city could benefit from the creation of jobs and a better connected downtown.
But, the deal came on the heels of the Great Recession, when cities were making riskier moves to spur development. And, perhaps more significantly, Eli Lilly was behind it.
The influential Indy-based pharmaceutical giant pushed for the development to better connect its campus to the downtown area and help attract and retain talent. Eli Lilly had already approached Buckingham — calling it a “financially stable” Indianapolis company that Lilly leadership said they could trust — about the project three years prior and was willing to let Chambers use their land.
“When our largest employers speak, we listen,” Michael Huber, then deputy mayor for economic development, said during a 2011 committee meeting.
The deal NOS, an LLC that was majority-owned by Chambers, got at the time — without ever having to bid on the project — was viewed by some as lopsided. In one Indianapolis Business Journal article, an expert called it “poorly negotiated.”
It’s more common for a city to rely on bonds for the public infrastructure associated with a project, such as new roads or to provide money for a small portion of a development, such as a garage. In this case, the city was responsible for financing a majority of the cost of a development it doesn’t own, using bonds backed by certain city property taxes. Eli Lilly and the YMCA of Greater Indianapolis chipped in, too, with Chambers’ company’s contribution coming in the form of a waived development fee. In addition to the loan proceeds, the city also agreed to spend $9 million on infrastructure improvements in the area.
“This was an exceptionally generous incentive deal,” Greg LeRoy, executive director of Washington, D.C.-based economic development accountability group Good Jobs First, told IndyStar and Mirror Indy this week. “This is not gap financing. … That should give the government a great deal of authority in enforcing the terms.”
In exchange for the finances to build CityWay, the developer was required to cover debt payments on the bond. If it failed to pay, those bonds were backed first by a personal guarantee for $6.9 million by Chambers, and then by new property taxes generated within the tax-increment financing district. That meant the risk was on the city.
But Chambers wasn’t on his own. In order to make those payments, NOS could first tap into taxes generated by the project — taxes that otherwise would have gone toward state and local budgets.
It wasn’t just local property taxes, either. The developer benefited from a Certified Tech Park designation from the Indiana Economic Development Corp. — the entity Chambers would go on to lead a decade later — that enabled local and state income and sales tax dollars from within and nearby the development to reduce how much Chambers’ company had to pay toward the debt.
It’s not clear what the project had to do with technology.
There are fewer than two dozen such parks throughout the state, intended to “support the attraction and growth of high-technology business.” In Fishers, the local tech park is home to an “internet of things” lab and at the WestGate Tech Park in Daviess County in southwest Indiana, the park has attracted 855 high-tech jobs with an average annual salary of almost $80,000.
Comparatively, back when the CityWay deal was inked, documents show that Chambers expected the development, which contains amenities such as upscale apartments, a hotel and YMCA, to generate jobs with an expected average salary of $40,000 per year for those working standard 40-hour weeks.
IndyStar and Mirror Indy filed public records requests with the IEDC and the city for the annual reports the city submits to the state agency containing job and salary information, but the IEDC declined the request, stating the documents are exempt from public disclosure. The city did not provide the documents by publication time. Chambers’ company did not answer a question asking for that information.
In an email, IEDC spokeswoman Erin Sweitzer said CityWay qualified as a tech park in part because it created a “live-work-play environment” that helped attract talent and facilitated the opening of a coworking and incubator facility, Union Campus.
The latter, though, was built years later by another developer.
Still, the designation essentially resulted in statewide taxpayers footing a portion of the cost of the CityWay development.
With that pool of money at the developer’s disposal, NOS has not been required to pay as much toward the bond debt. Records obtained by Mirror Indy and IndyStar show that roughly half of the debt amount has been covered by the company’s cash — while the rest was paid using $31 million in tax dollars that otherwise would have gone to the city’s and state’s coffers for other purposes.
No amount of profits generated by the project, meanwhile, were ever intended to go directly to the city under the deal. Instead, all would go to developer’s pockets.
Former Ballard deputy mayor: CityWay remains a ‘home run’
Michael J. Hicks, director of the Center for Business and Economic Research at Ball State University, said the CityWay deal is another example of a culture in Indiana that favors business interests no matter the costs.
“We would be better off as a state if we were just a little bit more skeptical of all of these economic deals that merit businesses over taxpayers,” Hicks told IndyStar and Mirror Indy last week. “The question is: What could they have done with that money that would have made a difference in the lives of Indianapolis residents?”
Adam Collins, a former deputy mayor to Ballard who is now a partner at the real estate law firm Wallack Somers and Haas, spoke on behalf of the former mayor and dismissed criticisms of the 2011 deal. He emphasized how difficult it was for developers to obtain financing during the fallout of the recession.
The administration still wanted to act, though, because CityWay was key to the city’s goals of bridging neighborhoods around Fountain Square to activities happening downtown, while also attracting more residents so the city could benefit from their income taxes.
So city officials designed the agreement to require Chambers’ company to make the bond debt payments and eventually refinance the remaining debt to remove it from the city’s books.
“To get that kind of return in what was the worst real estate market in the last 20 to 30 years was extraordinary,” Collins said, “and a credit to all the parties involved.”
Collins described the CityWay development as a “home run” that spurred millions in additional investment, saying the project still would have garnered support even if the 2011 agreement with Chambers’ company lasted longer than 10 years. And he hopes no future mayor will need to again use TIF-backed bonds like the Ballard administration did.
“It is nowhere near as utterly frightening as the market was at that time,” Collins said. “To be able to look into the abyss and find a way that made economic sense not only to get that project done, not only to provide an assist to our largest company in town, but also to have the vision to know this would provide yield for decades to come … that took vision, courage, character — all things that (former Mayor Ballard) had in spades.”
The 2021 extension
City officials expected two things to happen by April 2021: Indianapolis would be reaping the benefits of the 2011 deal while also finally shedding the debt incurred to make it happen.
It’s true that the CityWay development has improved the southeast side of downtown. And with more help from taxpayers, Chambers’ company continued to expand the development into a second phase. It’s now filled with trendy apartments and hip restaurants such as Taxman Brewing and Tupelo Honey Southern Kitchen and Bar, as well as the always-packed Irsay Family YMCA and a CVS Pharmacy.
As for the loan repayment to the city? That still hasn’t happened.
On Feb. 8, 2021, two months before the deadline to repay the loan in full, representatives from Chambers’ company appeared before a virtual meeting of the City-County Council’s Metropolitan and Economic Development Committee to ask for help.
Andrew Klineman, general counsel for Buckingham Companies, explained during the meeting that the project had been performing better than expected before the developer found itself dealing with “something as dramatic” and “outside of our control” as COVID-19.
The hotel went from a healthy 73% daily occupancy to something in the 20% range by February 2021. The hotel’s profitability — or lack thereof — drove the company’s inability to obtain private financing, he said.
An extension, Klineman said, would put the developer in a good position to refinance. “Our track record is good,” he said.
Sarah Riordon, who is now the city controller but at the time led the Indianapolis Local Public Improvement Bond Bank, outlined the terms of the loan extension to city-county councilors at the meeting.
The new deal aimed to preserve much of the status quo through the end of 2023. But because interest rates at the time were so low, the city essentially refinanced the bonds to receive better rates.
The city also stopped allowing Chambers’ company to use tax dollars to make the debt payments. That meant millions in tax dollars — about $2 million in TIF dollars per year, according to the presentation — finally became available.
Still, Chambers’ company continued to need Marion County taxpayers to provide the loan.
During the meeting, Riordan acknowledged the “very unique transaction” that put the city in a position to act as a “bank.”
“It’s been a challenging process because we can’t help everybody who is suffering as a result of the economy,” Riordan told the councilors, “but this is one where we are actually their lender.”
Zach Adamson, a Democratic city-county councilor at the time, described the deal during the meeting as a “bailout from the city” for Chambers’ company. Adamson, though, said the city had little choice but to extend the deal or risk the developer just walking away.
Every councilor at the committee meeting voted to extend the deal for CityWay. And then at the full council meeting later that month, no councilors raised a question or shared a comment as the extension sailed through.
Adamson, who is no longer a councilor and now works as a Department of Public Works employee, declined to comment for this article when reached by phone.
Through spokespeople, Riordan and City-County Councilor Kristin Jones, a Democrat who sponsored the 2021 deal and whose district includes CityWay, declined requests for interviews. In a statement, Jones said the extension was granted because of the pandemic.
City-County Council President Vop Osili, a Democrat, also declined an interview request and, through a spokesperson, did not answer a list of questions emailed by Mirror Indy and IndyStar. In a statement, Osili described the new agreement as a “necessary framework for holding developers accountable.”
“It is imperative that CityWay developers fulfill their financial obligations to prevent the burden of debt from falling on the city,” the statement read in part. “Failure to extend the timeline would have forced the city into foreclosure, property ownership, and increased debt — an outcome detrimental to the best interests of Marion County taxpayers.”
But Chambers’ company failed to meet the new deadline of December 2023, too.
Democrats and Republicans both ‘act very kindly toward developers’
What the city plans to do about it is unclear.
Mayor Joe Hogsett, through a spokesperson, declined an interview request and referred questions emailed by Mirror Indy and IndyStar to the Indianapolis Local Public Improvement Bond Bank.
Joe Glass, executive director and general counsel of the bond bank, sent a statement saying the bond bank is “well-positioned and working in good faith with the developer to secure the full repayment of the loan balance related to the transformative 2011 CityWay development.”
“Any changes to the parties’ loan obligations must be authorized through the public City-County Council legislative process,“ the statement read in part, “and no such changes have been made since 2021.”
Julia Vaughn, executive director of the government accountability group Common Cause Indiana, criticized the city for giving the developer an extension.
While Chambers has centered his campaign messaging around his status as an outsider who has never run for office, Vaughn said developers like Chambers actually benefit from their deep political ties.
“I think this case illustrates that both Republican and Democratic administrations act very kindly toward developers,” Vaughn said. “If we get in arrears with the government, then they tend to come after us. But the same is not true for the folks in the high-priced office suites downtown.”
In a statement, Chambers’ campaign said his company has operated appropriately on the deal.
Questions asked by IndyStar and Mirror Indy “demonstrate a lack of understanding of complex real estate business,” the campaign said in a statement, “and improperly conflate Brad’s personal investment decisions just to produce a political attack.”
Indy residents: Fund affordable housing and pedestrian safety instead
A spokesperson for NOS didn’t say why the company still hadn’t paid back the loan in full, but it’s likely the high interest-rate climate played a role in the decision.
Doug McCoy, director of the Center for Real Estate Studies at Indiana University, said it’s still challenging to obtain a private loan for development projects such as CityWay. Plus, even if a developer and a bank can reach an agreement on a deal, interest rates would likely fall around 8.3%, McCoy said, compared to the 3.86% rate Chambers’ company enjoys now.
McCoy also disclosed that Chambers sits on the center’s advisory board.
Even if Chambers hadn’t loaned millions to his campaign, it’s his company, not him personally, that would be on the hook for the increased interest costs associated with a commercial loan if the developer paid back the city.
As it stands now, the refinanced bond is scheduled to last until February 2036 if Chambers’ company doesn’t repay the city. The ongoing loan, meanwhile, will continue to limit the city’s ability to issue debt and address other needs within the boundaries of the consolidated TIF district, primarily in the downtown area.
Indianapolis resident Eric Holt can point to the areas of the city he’d like to see money spent on instead. Holt tracks bicyclist and pedestrian incidents and fatalities in Indianapolis on his Indy Pedestrian Safety Crisis website, and says it’s a growing problem in the city. His husband was hit by a car while biking in 2021.
Go in depth on the issue:People keep dying in crashes on Indianapolis streets. What can actually be done about it?
There’s the portion of Michigan Street that winds through downtown where nine cyclists or pedestrians have been hit by cars since May 2022, according to Holt’s statistics. He’d rather see the city make that area safer by helping convert the road to a two-way street, as is being done elsewhere, or implementing protected bike lanes.
“We hear from the city a lot that there just isn’t funding for some of these projects,” Holt said. “To hear in this specific instance that we’ve loaned out this money, we’re holding specific funding every year back that we can’t use, it does become a little frustrating.”
Amy Nelson, executive director of the Fair Housing Center of Central Indiana, also suggested the city needs more help with building a homeless shelter and providing additional affordable housing.
“We have an affordable housing crisis. Overall, we have a housing crisis, period,” Nelson said. “It’s disappointing that this has stretched on this long when we need housing units, particularly affordable units, not necessarily luxury but affordable units.”
In a city with a limited budget, there’s always going to be disagreements about how to spend money. And in this case, city leadership under two administrations viewed CityWay as a good investment worth funding during the recession and saving during the pandemic.
Vaughn, with Common Cause Indiana, certainly didn’t foresee the COVID-19 pandemic. But, she did have concerns that taxpayers would be on the hook for project costs from the beginning.
And now, she said, it’s time for Chambers’ company to pay up.
In September 2023, records show Chambers’ company notified the city it would miss its December 2023 deadline. That same month, Chambers cut a $5 million check to his campaign — the first of at least $9.6 million so far.
“Just because he’s got $9 million tied up in a political campaign,” Vaughn said, “doesn’t forgive him of his responsibilities to taxpayers here in Marion County.”
Mirror Indy deputy managing editorRyan Martin is available at 317-500-4897 orryan.martin@mirrorindy.org. Follow him onX,LinkedIn andInstagram.
Contact IndyStar government and politics editor Kaitlin Lange atKaitlin.Lange@indystar.com or follow her on X@Kaitlin_Lange.
