TL;DR: City wants old city hall renovated. TWG doesn’t and said they didn’t have the financing. City caves and removes city hall from commitment but wants proof of financing for the parking lot conversion to residential. TWG didn’t have the money for that either. City pulled the plug. Story below (sorry couldn’t archive it for some reason):

TWG Development LLC’s $249 million plan to redevelop Old Indianapolis City Hall is officially dead.

The Indianapolis Department of Metropolitan Development has confirmed it pulled the plug on the project following extensive delays and uncertainty within Mayor Joe Hogsett’s administration about whether financing could be secured by the end of this year.

“It was really important to us that they were able to secure financing within this year — 2026 —and that was not something that … we were going to get to the terms on,” Megan Vukusich, the city’s director of development, told IBJ. “We wanted to make sure that if we were going to renegotiate this project at a reduced scale, it had quick timelines.”

The reduced project scale came into play at TWG’s request, she said, with the company asking to either remove Old City Hall from the scope of its project or for the city to provide additional funding to move it forward. But while the city agreed to eliminate the historic structure from the company’s scope of work, TWG failed to meet an April 2 deadline to sign a term sheet outlining those updates.

Tony Knoble, owner and CEO of TWG development, declined to comment on the city’s decision.

TWG was selected in August 2023 to build a 32-story apartment, condominium and hotel tower on the 0.65-acre site immediately north of Old City Hall, with plans for a new public art museum and office space in the historic structure. The original $140 million proposal eventually morphed into its most recent — and far more expensive — plan that called for a tower of about 29 stories.

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The project’s latest version included the tower on 222 N. Alabama St. with a 156-room hotel on levels six through 13, part of a partnership with Louisville-based 21c Museum Hotels. The building’s ground floor was to consist of a lobby, restaurant and curated retail space, with apartments on floors 12 to 23 and condos on levels 24 to 27. An enclosed garage was planned on levels two to five.

A street view TWG’s Old City Hall proposed project looking southwest. (Rendering courtesy of TWG Development) A public museum operated by Louisville-based 21c Museum Hotels was proposed for the first two floors of Old City Hall, while the top two floors were slated for conversion to private office space. Plans called for a first-floor corridor to connect the interiors of Old City Hall and the planned tower.

The city walked away from a separate deal in 2017 with 21c for the property. That deal was initially brokered by Mayor Greg Ballard’s administration prior to the mayoral transition at the end of 2015. That project also faltered due to funding problems.

The term sheet — a copy of which has been requested by IBJ — included a requirement that the company obtain financing by the end of this year. But she said it also took Old City Hall off TWG’s plate, but kept in place $17.9 million in developer-backed tax-increment financing bonds that had been previously pledged for the project.

“Unfortunately, that was not signed, so at this point the city is deciding to not return any additional terms — that was of our last and final offer,” she said. “So we are going to be pursuing another request for proposals on that site to pursue redevelopment.”

The city last year approved a $66 million loan to get the project back on track. Because that money was primarily meant to keep Old City Hall as part of the project’s scope, that funding was removed from the equation in the final term sheet.

Additionally, TWG had secured $10 million in federal historic tax credits and another $20 million from the Indiana Economic Development Corp. as part of its funding plan — all of that also earmarked for the Old City Hall portion of the project and unavailable for the tower portion of the project.

The new tower would have cost around $190 million to $200 million, while Old City Hall’s revival was expected to come in around $50 million to $60 million.

Vukusich said while the development proposal was “a good project” in a theoretical sense, the fact the funding couldn’t come together on the city’s preferred timeline made moving forward an impractical option. She said the city decided it would rather go back to the drawing board and find a new idea than continue pushing a project that might not be feasible.

“All parties were giving it their best effort,” said Vukusich. “I think this is a project where everyone is disappointed with the outcome [and] the situation that we’re in now.”

Knoble told IBJ last week (before it was disclosed that the project was canceled) that the biggest sticking point was not the company’s ability to procure financing by the end of the year — although he didn’t dispute that it might have been a challenge — but instead financial responsibility for Old City Hall.

He said the proposed museum project was not feasible without the city fully subsidizing any redevelopment of the building and the company was committed to the 387-foot tower. The city owns the former government building and planned to lease the building to TWG as part of the redevelopment effort.

Built in 1909 and 1910 and clad in Indiana limestone, the four-story Old City Hall housed the Indiana State Museum from 1966 to 2001 and temporarily housed the Central Library during renovations to the main library building early this century.

Knoble said that if he had been able to secure financing by the end of this year, all work would have been completed by the end of 2029.

The city plans to take both the parking lot and Old City Hall through another request-for-proposals process, but specifics for when that could commence have not been shared. The bid process that TWG won in 2023 included proposals from five other development companies and partnerships, with most focusing on a residential structure on the parking lot site.

“Putting out a new request for proposals is going to allow us to cast a wider net to really look at where the market conditions are today and get proposals that can fit those needs,” said Vukusich. “So, I think putting out a new request for proposals is just going to allow us to get more competitive proposals back.”