New details regarding an Indianapolis proposal to create a taxing district for a new soccer stadium include a financial analysis showing that about $2.1 billion in potential state and local tax revenue could be generated through the district over 32 years.
The Capital Improvement Board of Marion County on Friday shared more detailed plans for the new professional sports development area, or PSDA, with the Indiana Finance Authority, in an email that included a fiscal analysis recently completed by Chicago-based firm Hunden Partners. The board released the analysis to IBJ through a public records request on Tuesday.
Of the $2.1 billion in taxes Hunden anticipated will be generated within the district from 2025 to 2056–based on an assumption that current market conditions will carry forward—about $1.7 billion would come from state income and sales and use taxes. However, the amount of those taxes captured for use within the sports district would be capped at $9.5 million per year and used to pay bonds connected to the construction of a stadium, a stipulation in the 2019 state legislation authorizing a new PSDA.
Other tax revenue streams over the 32-year period using Hunden’s baseline assumptions include $328.5 million in local income taxes and uncommitted CIB tax revenue of about $193.3 million, which would be generated by countywide admissions and innkeepers taxes, both of which the board splits with the Indiana Finance Authority.
Hunden’s projections assume a 20,500-seat stadium opening in 2028, although an exact seat count has not been determined for the proposed stadium because design work on a facility wouldn’t begin until after the PSDA is vetted by the state.
The PSDA—an operational framework for which was finalized in June by the city’s Metropolitan Development Commission—is a key part of the city’s effort to secure a commitment from Major League Soccer for a club in Indianapolis. City officials have said plans to build a stadium will only move ahead an investor-operator group secures a full expansion agreement with Major League Soccer.
The PSDA proposal is expected to be analyzed by the Indiana Finance Authority and considered by the State Budget Agency and the State Budget Committee. The state has purview over the creation of the district because it was enabled under state law and would divert certain state tax revenues generated within the district.
The Hunden analysis considers three main categories for stadium-related revenue, comprising an MLS team with 17 home games and a National Women’s Soccer League professional team with 13 home games, as well as at least two concerts per year.
City officials have said they are open to the idea of pursuing a professional women’s soccer team after securing Major League Soccer. Indy Eleven previously secured rights to a club in the USL Super League women’s league, but those plans are now on hold alongside the Eleven Park project, which had been expected to be anchored by a 20,000-seat soccer stadium opening in 2026.
The city walked away from that project after it determined the development was not financially feasible, but the Hogsett administration has declined multiple requests to release detailed financial data, including a preliminary analysis completed by Hunden, when Eleven Park had been expected to receive its own PSDA.
The new documents submitted to the state did not shed any light on who might be involved in the investor group for an Indianapolis club.
Mayor Joe Hogsett and city officials have been adamant they expect the ownership group to make itself public before the state considers the PSDA. The ownership group under state law is required to contribute at least 20% of the costs for constructing the stadium.
The Hunden report projects the proposed PSDA will generate far more tax revenue than the $9.5 million annual cap that can be used in the district every year except the first, in 2025—the report pegs the figure for that year around $3.38 million—with totals ranging from $25.9 million in 2026 to as much as $66.1 million in 2056.
The PSDA would also allow for the capture of local income tax from within its boundaries, as well as the use of excess CIB tax revenue such as admissions and innkeepers taxes. Local income tax alone would generate $9.2 to $12.8 million annually, from 2028 onward. Innkeeper tax and admissions tax would generate $3.3 million to $5.4 million and $1.1 million to $2.2 million, respectively, on an annual basis once the venue opens.
The projections are based on the expected increase in housing and development throughout downtown Indianapolis, specifically within the patchwork collection of more than 120 parcels that were incorporated into the proposed PSDA, ranging from office buildings, to hotels to apartment projects.
The city expects more than $3.3 billion in development to come online in the next several years, including the revamp of Circle Centre Mall, several apartment buildings and conversions, the Signia by Hilton hotel project and the redevelopments of Old City Hall and the CSX site across from Gainbridge Fieldhouse.
The analysis also considers a handful of other potential redevelopments like the Jail I and Emmis Building properties and the possible buildout of several downtown surface lots.
The Hunden report considers four separate scenarios as part of its considerations for how much it projects the PSDA will generate in tax revenue for the district’s use. The base scenario, usually considered the most likely scenario, assumes inflation of 1%, with the market holding stable performance. An optimal scenario assumes inflation of 2.5%. The conservative case from Hunden calls for a decline in performance of 10%, while the stress case calls for a decrease of 15%.
The optimal market case, which theoretically serves as a “best case scenario” for city officials, projects tax revenue for use within the taxing district of $984.4 million over 32 years. That revenue includes the annual capped share of state income and sales and use taxes plus additional admissions, innkeepers and local income tax revenue that would be generated.
The base scenario—which would tally the $2.1 billion in total tax revenue—still calls for about $819.7 million in capturable tax revenue, while the conservative case anticipates $728.8 million. The stress case would see about $686.6 million in tax revenue generated for the project.
Tenley Drescher-Rhoades, a Faegre Drinker attorney representing the CIB, submitted the report and other documents to the state, including a resolution from the city’s Metropolitan Development Commission.
In a cover letter attached on the email, Andy Mallon, executive director of the CIB, asked the state to “undertake review of the report at its earliest opportunity,” noting its approval is critical to the city’s effort to work with a would-be investor group to submit a formal application to MLS by the end of this year.
On Tuesday, a Hogsett administration spokesperson acknowledged the documents had been submitted and city officials were awaiting confirmation of a date for a state hearing.
By Mickey Shuey and Taylor Wooten, Indianapolis Business Journal
