Joe Hogsett goes into the hotel business

Indianapolis appears all but certain to enter the hotel business.

Driving the news: The city is scrambling to keep alive its vision for a Signia by Hilton hotel at the Pan Am Plaza site after developer Kite Realty Group failed to finance the project, which was first announced in 2018.

• Mayor Joe Hogsett's administration is proposing $625 million in municipal bonds to build the hotel and has agreed to acquire the property for $54.3 million.

The big picture: The hotel is part of a broader expansion of the Indiana Convention Center, due for completion in 2026, which includes another $200 million in city financing.

Why it matters: Tourism leaders say big-name conventions including FFA, Gen Con, the Performance Racing Industry and others have warned they will outgrow Indianapolis without more convention space and hotel rooms, putting at risk $200 million a year in economic activity.

Between the lines: As the City-County Council's development committee approved the hotel financing last week, the Hogsett administration characterized it as a nonissue for taxpayers because the city intends to use hotel revenue, not tax dollars, to make debt payments.

Reality check: There's no such thing as a zero-risk hotel project.

• Hogsett officials shared 24 examples of city-owned hotels to show the model is commonly used.
• Baltimore's city-owned Hilton, one example shared, took 10 years to earn its first annual profit, and Baltimore has spent $16 million in taxpayer money through last year to cover shortfalls and make bond payments.

What they're saying: Council President Vop Osili told Axios the hotel plan is Hogsett's Hoosier Dome, a reference to when former Mayor Bill Hudnut built an NFL stadium without a team — a gambit that paid off when the Colts rolled into town on Mayflower trucks.

• "This will keep us at the very top tier of convention cities," Osili said. "We already have a good corner of the market on conventions. This will help sustain it."

The other side: Hogsett, a Democrat, has given Republicans one of their clearest targets for criticism yet — and during an election year.

• Jefferson Shreve, the Republican challenging Hogsett in November, addressed Kite's failure to finance the hotel during testimony at the council's Metropolitan and Economic Development Committee.
• "As smart as we are, the capital markets have a wisdom that is disciplining," Shreve said.

Meanwhile, Sarah Riordan, Hogsett's newly installed city controller, told Axios the city will have reserves to cover the debt.

• "If there is a downturn, whether it's just a slump in the convention business for a month or it's a pandemic for a year, there will be 1.5 years worth of bondholder payments in the bank," she said.

What's next: The Democratic-controlled council expects to approve the deal June 5.

💭 James' thought bubble: After more than seven years as a conservative, play-it-safe mayor, Hogsett is making his boldest move yet — financially and politically — to push through a city-financed hotel.