City leaders are looking for a new partner to help with the planned $15 million overhaul of the historic Indianapolis Catacombs on East Market Street as the developers previously committed to the project navigate financing challenges involving another portion of the downtown block’s redevelopment.
The Department of Metropolitan Development last week relieved Indianapolis-based development firms Gershman Partners and Citimark from that portion of the massive proposed revamp of the City Market block adjacent to the City-County Building.
The delay in securing a developer for the project means the timeline for reopening the historic Indianapolis City Market has at least doubled from the original estimate of two years to four or more years, according to Megan Vukusich, director of the DMD. The City Market has been closed since March 2024.
While Gershman Partners and Citimark were announced as partners when the city unveiled its plans for the western plaza portion of the redevelopment in January, a formal development agreement between the parties was never finalized before the city’s decision to look elsewhere.
The companies own the northern part of the block through a joint venture and are continuing to work on a conversion of the Gold Building, 151 N. Delaware St., from office space to more than 350 apartments, a project that was included in a development deal with the city reached in mid-2022.
The redevelopment was originally set to include construction of an 11-story luxury apartment building on the east plaza, but the city still has ownership of the property and hasn’t finalized a deal for that portion of the site.
Gershman and Citimark are also overhauling the parking garage directly next to the Gold Building and have already completed more than $40 million in improvements to the office building at 251 E Ohio St.
Representatives for Gershman Partners did not return calls or multiple text messages requesting comment for this story. A representative for Citimark did not return a call requesting comment.
“We’re reimagining the entire block and City Market is one portion of that,” Vukusich told IBJ. “We’ve been coordinating with Gershman and Citimark, who own the northern half of the block, on these improvements … They’re still focused on those improvements on the north side, and really we need them.”
The city plans to issue a request for qualifications and proposals “within the next week,” she said, to find a new developer for the project meant to add green space, outdoor seating and an indoor-outdoor Catacombs cultural exhibit to the Charles L. Whistler Memorial Plaza, directly west of the main City Market building.
The DMD later said that request will go out the week of Aug. 11.
Gold Building financing challenges
In May 2024, Gershman principal Eric Gershman said the Gold Building revamp would cost about $200 million to complete, while filings with the Indiana Economic Development Corp. indicate a projected cost of about $182.6 million.
James Schellinger is a former state secretary of commerce and the CEO of Indy Economic Development Inc., a nonprofit formed last year to oversee the city’s job-creation and job-retention efforts. Schellinger said the Gold Building project encountered financial hurdles that delayed construction, including “significant difficulties” in finalizing a loan on the project.
He said city officials discussed multiple options, including buying the building and completing the work itself—reminiscent of what it did with the Signia hotel project at Pan Am Plaza. In that case, Mayor Joe Hogsett’s administration bought the hotel development site from Kite Realty Group Trust so it could fund the project itself and get work started in order to meet a late 2026 deadline.
“There’s a great deal of concern on the part of the mayor about the project, because it’s five years in the making,” Schellinger said, noting that discussions about potential redevelopment of the block date back to late 2019 and early 2020.
Ultimately, the economic development executive said, the best route was to bring in additional city and state help on funding and to have the DMD take over work on the west plaza project, which was largely separate from the Gold Building work.
The state in late 2024 had already awarded $10 million in redevelopment tax credits for the Gold Building project, and it’s already set to receive support through a single-site tax-increment-financing district established by the city. But Schellinger said he and city staff worked closely with Mark Wasky, senior vice president of the IEDC, to figure out what else could be done to support the Gold Building.
He said additional incentives for the project are in the works to help close the funding gap. The development is in line for a $10 million grant through Lilly Endowment Inc. and is expected to receive a city-backed bridge loan that will take the place of previously approved TIF bonds. However, the developers must secure a construction loan within nine months.
That bridge loan will be awarded as a lump sum and will be repaid once the construction loan is finalized, although Schellinger said the city plans to then reinvest that money back into the project. As part of that agreement—which must still be approved by the city’s Metropolitan Development Commission—Indy Economic Development Inc. and the city are requiring the developers to convene a monthly meeting involving those funding the project. It will also require commitments from any banks lending to the project by the six-month mark that they will close on their deals within a 90-day window.
“We are insisting to have a seat at the table with all the lending institutions,” Schellinger said. “We’re not giving [the developers] a free pass.”
The project is also set to receive $15 million in tax abatements, which will be applied to both the Gold Building and the adjacent parking garage.
“It’s such a key block within the city … this has to be done, and it has to be done right,” Schellinger said. “The different options we looked at were all over the chart. We talked about the city possibly acquiring it and moving forward, we looked at everything A to Z, and we finally said the best way to get this done, right and quick, is to stay with the developer, but help them get through their challenges with their financing and their incentives. So that’s what we did.”
Plaza work tied to City Market reopening
Schellinger also said the decision to move the companies away from the city-owned portion of the block’s redevelopment allows both projects to advance more quickly than they would have otherwise.
“There’s always a question of, ‘Why is the city doing this?’ and ‘What’s the benefit financially for the city to do this, rather than a private developer to do it?’” he said. “At the end of the day, the answer to that is that it gets done, in a case like this, rather than just sitting there not doing anything.”
Vukusich, with the city’s DMD, said she expects an agreement with a new developer on the plaza to be finalized by early next year, with construction completed by the first quarter of 2028.
But until then, she expects the City Market to remain closed—just as it has been since March 2024. At that time, officials predicted the closure would last at least two years, but that timeline has now doubled.
Vukusich said the hope is that the “investment in that public [plaza] space is going to help spur redevelopment and, really, attraction for a private operator of the market house.”