At the July 13th, 2020 meeting of the Lebanon Redevelopment Commission, Tom Hazinski from HVS Convention, Sports & Entertainment Facilities Consulting shared the firm’s findings on the property at the intersection of I-65 and State Road 39. Data was gathered for three potential uses:
- 400-Room Indoor Water Park Hotel
- Ice Facility with two NHL-sized Ice Sheets
- 100,000-square foot Indoor Mountain Bike Park
For the purposes of the RDC meeting, HVS’ 134 page study was condensed to a roughly 20 minute presentation, which can be viewed here. The entire report is available to the public as well: SR 39 Market Study – Complete Report. As one can imagine, the COVID-19 pandemic will likely delay the majority of redevelopment of the property known as the “Old Holiday Inn Site.” In short, HVS stated that while a destination water park was not favorable on the site, the ice rink and indoor mountain bike concepts provided some upside.
Nature of the Assignment:
The City of Lebanon, IN Redevelopment Commission engaged HVS Convention, Sports & Entertainment Facilities Consulting (“HVS”) to conduct a Mixed-Use Development Market Study in Lebanon, Indiana. The Mixed-Use Entertainment District could enhance the demand potential of Lebanon for transient business, provide opportunities to Lebanon residents under 21, and encourage further economic development in Northwest Indianapolis.
Water Park Conclusion:
The Proposed Water Park Hotel would require a public-private-partnership(“P3”) with local governments. Due to the significant shortfall in financing capacity versus construction cost, the governmental contribution to the P3 would be substantial. Current credit market conditions are favorable for hotel investment.
Ice Rink Conclusion:
Given the project would not be an income producing asset, private investment would not be available. Public resources would be necessary to finance this component of the project; accordingly, the funding gap for this asset equals its estimated construction costs.
Indoor Mountain Bike Park Conclusion:
HVS relied on industry trends to determine debt-equity splits, yield requirements, and capitalization rates. Based on these assumptions, an Indoor Mountain Bike Park would have a value of approximately$1.3 million. Development costs could range from $5.4 million to $8.0.Consequently, the funding gap ranges from $4.0 million to $6.6 million. In the absence of a specific project plan, these estimates should be considered rough approximations of value and costs. Significant uncertainties exist concerning the cost of developing an Indoor Mountain Bike Park on the site, including the following
- Timing of the project.
- The cost and size of the site.
- The ability to provide surface parking or the need for structured parking.
- The required development standards of the Indoor Mountain Bike Park.
- Debt and equity rates at project financing.