Article originally appeared in IBJ

A developer with plans for a $123 million third phase of the Proscenium complex in Carmel is seeking $19 million in tax-increment financing bonds for the project.

Carmel-based Novo Development Group LLC and the city of Carmel are looking to partner to construct Proscenium III at the northwest corner of the roundabout at South Rangeline Road and Executive Drive.

If built according to current plans, the development will feature 151 apartments, a 125-room boutique hotel, 63,000 square feet of office space, 15,000 square feet of retail space, 508 parking spaces and a public plaza.

“This is a project that is being driven by the need for office because we know that some office users are still moving into new headquarters,” Carmel Redevelopment Commission Director Henry Mestetsky told City Council members. “And, frankly, for every new office move that exists, they’re really picking between Bottleworks [in Indianapolis], Carmel and downtown Fishers when we need to make sure that they pick us.”

Proscenium III would be built on land west of Carmel City Hall currently occupied north-to-south by three single-family houses, a city-owned parking lot and an office building.

The project would be bounded by the Zeta Tau Alpha International headquarters (1036 S. Rangeline Road) to the north, South Rangeline Road to the east, Executive Drive to the south and Veterans Way to the west.

According to preliminary renderings, the boutique hotel would be built closest to the roundabout. Two office buildings would be built to the north along South Rangeline Road and an apartment building with a public plaza would be on the west side of the development along Veterans Way.

“We spent a lot of time on the architecture of the boutique hotel,” Novo Development Group founder Tony Birkla told councilors. Birkla Investment Group is the holding company for Novo Development Group.

Proscenium III would also have a 300-space parking garage, a 160-space parking garage and a 48-space surface parking lot. Eighty percent of the spaces would be open to the public, while the remaining spaces would be reserved for business and residential tenants.

“This is a project that is a primarily an office and luxury hotel project. This is not an apartments-first kind of project,” Mestetsky said. “This is what is desperately needed in the core, more walkable office, more walkable upscale hotel.”

The Carmel City Council’s Finance, Utilities and Rules Committee will next review Novo Development Group’s proposal to receive $19 million in developer-backed tax-increment financing bonds for the project. The developer would receive 95% of the TIF funds for the 25-year life of the bond. Indiana limits new TIF bonds to 25 years.

Carmel taxpayers would not be directly responsible for the costs associated with the developer-backed TIF financing if the council decides to approve it, Mestetsky said.

Some City Council members expressed concerns about the 95% to 5% split in the proposed TIF deal, while others wondered if there would be enough parking spaces available for tenants.

Carmel and Novo Development Group also partnered on the first two phases of the Proscenium complex.

Proscenium’s $85 million first phase was completed in 2021 on the northwest corner of South Rangeline Road and West Carmel Drive.

The project’s first elements—a 100,000-square-foot Agora at Proscenium office building and a 600-space subterranean parking garage—opened in summer 2020.

Its 196 luxury apartments (called Ver at Proscenium), 15,000-square-foot restaurant building and a 22-unit condominium building opened in 2021 to complete the first phase of development.

Proscenium also has one restaurant on site—101 Beer Kitchen—and a salon and spa, Lux Lab Hair + Body. Indiana’s first Wahlburgers eatery operated at Proscenium before it closed earlier this month. The 4,600-square-foot Proscenium tavern, which is expected to house an Italian steakhouse and a wine-coffee bar, received approval last year.

Construction is expected to be complete this year on Proscenium’s $18 million second phase at 1215 S. Rangeline Road.

The five-story Proscenium II will feature 48 rental units and seven penthouse condominiums, 15,000 square feet of ground-floor space for retail and office uses, and a 120-vehicle multilevel parking garage.