INDIANAPOLIS — A city plan to take over financing of a hotel project on Pan Am Plaza has passed one important vote and has another on the way. 

The site where the 800-room, 40-story Hilton Signia Hotel would be is currently fenced off, preparing for a possible groundbreaking this summer on the project Indy leaders said is a need.

”If it doesn’t come online we risk losing millions of dollars in convention business,” said Chris Gahl, the executive vice president of Visit Indy.

Years in the making, the hotel is part of an Indiana Convention Center expansion already approved. The Hogsett administration recently announced it was taking over the financing of the hotel at the Pan Am Plaza after the original developer couldn’t secure financing.

Scarlett Andrews, the deputy mayor of Economic Development, said it made sense for the city to step in.

”By taking it over we were able to issue bonds on a tax exempt basis, and that’s what we plan to do,” Andrews said.

Monday night, the Metropolitan and Economic Development Committee voted 9-3 to approve up to $625 million in revenue bonds to support the hotel.

Andrews said the financial model they’re using has been used by other cities in similar situations before.

”This is a model that is tried and true,” Andrews said. “We are now working with a financial institution that had financed many of these projects.”

Piper Sandler Cos. is the firm the city is working with. The team there has been involved in these types of projects before.

Andrews said the project would not use any new or existing tax revenue, instead leveraging the bonds against the revenue created by the property.

”This proposal uses no new tax revenues so the revenues from the hotel itself will go into paying off the bonds,” Andrews said.

In the event the hotel does not make enough revenue to pay back the bonds, Andrews said there are various levels of debt reserves.

”There is a year and a half worth of reserves before we even have to call on the major debt reserve fund, so we feel confident that even if there were another pandemic we could withstand for a significant period of time before we’ve really having to tap into all of our reserves,” Andrews said.

The city would own the hotel but not have anything to do with the day-to-day operations. Hilton would run the hotel.

Gahl said the Signia Hilton hotel would be complementary to the JW Marriott.

“It allows us to keep conventions threatening to outgrow us, it allows us to attract new conventions, it also allows us to layer conventions,” Gahl said. “So while the JW Marriott is active on the north side, the Signia Hilton can be active on the south side and host two city-wide conventions simultaneously.”

Gahl said they have run the numbers and expect the hotel and convention center expansion to have big impact.

”Over the next 10 years, very conservatively, this new convention center expansion and hotel will generate $2.6 billion in economic impact,” Gahl said.

On Monday, Mike Wells of the Downtown Hotel Owners Coalition spoke against the plan. Wells said the city is going to compete with developers it has worked with for years all while the city does not need a new hotel.

”Indianapolis does not have a hot availability problem, it has a demand problem,” Wells said.

Ghal said hotel occupancy was at 70% this March, it’s highest since before the pandemic and a 4% increase compared to March 2022. Gahl said this suggests recovery will keep rising, and this hotel will be needed when it is completed in summer 2026.

”We are hearing customers say, ‘If you don’t expand and add new hotel rooms, we won’t be able to keep meeting in Indianapolis,'” Gahl said.

The Metropolitan Development Commission will meet Wednesday to vote on approving the city purchase of the land on the Pan Am Plaza for the hotel.

The plan would go before the full City-County Council for a final vote in June.