Developers outline $303 million Sola project, seek EID and TIF financing; council hears timeline, public-access concerns

Developers of a proposed $303,000,000 mixed-use project called Sola briefed the Michigan City Common Council at a July 7 workshop and asked the council to consider establishing an Economic Improvement District (EID) and approving tax-increment financing (TIF) bonds that developers say are needed to complete the financing.

Sola—short for “South Of Lake,” according to developer Alan Schockman—would include a nationally branded hotel and spa, roughly 242 hotel rooms, about 188 residential condominiums (including townhouses), roughly 21,000 square feet of retail, and enclosed parking. Schockman told the council that the development would provide public benefits including a publicly accessible fourth-floor deck, public parking in the garage, infrastructure work around the site and a $450,000 one-time donation to affordable housing to be used at the city's discretion.

Why it matters: Developers said the EID and TIF bonds are central to the project’s capital stack and that without bond proceeds the development’s metrics become difficult. The council received detailed explanations of how the EID assessments and TIF increment would work, and asked several questions about public access to amenities, parking operations and the financial risks to the city and residents.

The financing plan and tools described

At the workshop, Schockman and co-developer Scott Freeman presented a financing “capital stack” that the developers said includes cash equity, construction debt, mezzanine financing, condo deposits and bond proceeds. The presenters described bond financing as a site-specific tool. “There are no city guarantees, no city cash contributions, and no balance sheet impact to the city at all,” Schockman said. He added: “The city has 0 liability or risk associated with this.”

Developers said two site-specific mechanisms would be used: - TIF bonds paid from tax increment generated by new assessed value at the project site; and - An EID financed via special assessments/fees on the project (described as an occupancy/innkeeper-type fee on hotel room nights, short-term-rental stays and a portion of parking revenue).

Schockman described a range of numbers during the presentation. He said the project cost is approximately $303,000,000 and that the bonds “together total were about $60,000,000.” At other points he listed different bond figures: in one slide the TIF and EID were shown as $29,000,000 and $21,000,000 respectively; later he said the actual amounts to be issued would be about $43,000,000 for the TIF and $33,000,000 for the EID. Those multiple figures were presented by the developers during the same session (see Clarifying details below). Schockman said bond repayment terms may be up to 25 years for assessments tied to the EID.

How the EID would function

Developers explained that an EID is a site-specific district allowed under Indiana law (described in the presentation as “EIDs” or similar to business improvement districts). The presenters said EID assessments would be paid by property owners and would apply to hotel room nights, short-term rental stays and certain parking revenues tied to the project. They said condominium owners who place units in the short-term rental pool would be assessed; condo owners who do not rent would not pay the short-term-rental assessment.

The presenters described procedural steps required by the enabling law they referenced: filing a petition (the developers said they planned to file the petition the day after the workshop), notice and a public hearing, and adoption of an ordinance by council. Schockman said a petition must be signed by at least 60% of real property owners and owners representing 60% of assessed valuation in the proposed district; he also summarized procedural requirements including a 120-day timeline for certain steps, a required EID board of at least three members (a majority of whom must own property in the EID), an assessment hearing and an annual report and budget to be filed with the common council.

Public benefits and uses

As presented, Sola would include: - A full-service, nationally branded hotel and spa (developers said White Lodging has been selected as the operator and a formal announcement was expected); - Approximately 188 residential condominiums (developers said they expect to retain around 50–60 units for a developer-run short-term rental program and to sell the rest); - Retail, restaurants and food-and-beverage space, including a ground-floor coffee shop and a rooftop restaurant; and - Public space on a fourth-floor deck with access via a grand stair on Franklin, and public parking in the garage (developers said parking would be charged and that rates had not yet been set).

Developers also said the project would include infrastructure work (for example, straightening the intersection in front of the Lebesnitz/Beznick area) and be designed to connect the harbor, beach and new train station area.

Council questions and public-access concerns

Council members and attendees asked multiple operational and access questions. One council member asked whether the hotel and pool amenities were genuinely public; developers replied that the condo pool and fitness center would be private to residents, while the hotel pool and fitness center would be available to the public for a fee and to hotel guests. A council member said the phrasing in the presentation could be misleading if the public expects free or unrestricted access to pools and fitness facilities. The developers said hotel amenities would typically be fee-based (spa services, paid day access or memberships) and that retail and restaurant spaces would be publicly accessible.

Other substantive questions addressed parking capacity and management (developers said the garage would store roughly 385–386 vehicles, and condo ownership would include parking licenses rather than deeded stalls), construction timing, staffing and local-hiring expectations for the hotel operator, and the market interest the project has already generated for condos and retail.

Sales and market details presented

Developers said condominium sales had begun, reporting 31 fully executed purchase contracts plus five additional contracts out for signature (36 total). They said earnest money collected so far was about $2,000,000 and that condo pricing started near $400,000; the developers also described a range of higher-priced units and cited per-square-foot comparisons to Chicago-area pricing. Developers said retail leasing had not yet begun in earnest but that they had early interest from restaurant and specialty retail groups.

Timeline and next steps for council

The developers said they intended to file the EID petition the day after the workshop, submit a proposed ordinance to the clerk, and follow the statutory notice and hearing steps. They listed August 19 as a target date for ordinance adoption and an aggressive target of December 19 to close equity, debt and bonds so construction could begin before year-end. Developers said they would attend the council’s public hearings (first and second readings/public hearings) and that bond counsel, bond underwriters and outside accountants would appear at future meetings.

Risk, oversight and remaining due diligence

Developers acknowledged financing risk and noted they had a guaranteed maximum price (GMP) from a construction joint-venture contractor, ongoing discussions with equity and debt providers, and financial modeling prepared by Stifel and other advisors. They repeatedly stated that the city would not be on the hook financially for the bonds, but council members and attendees voiced reputational concerns and asked for clarity on who would ultimately pay assessments (condo owners who rent, hotel operators, or other property owners inside the EID).

What the council did (and did not) decide

The July 7 workshop was informational; no formal ordinance or vote was taken. Developers indicated they plan to file the EID petition and bring ordinance language and supporting bond documents to the clerk and to future council meetings for formal action.

Ending

Developers asked for the council’s support to move the project into the formal ordinance and bond-approval process and said they would return with underwriters, bond counsel and detailed documents for council review. The council did not act on the EID or TIF at the workshop; the developers and city staff identified August 19 as the target for ordinance adoption and December 19 as a target closing date for financing.