The ongoing development in downtown Indianapolis, featuring various major construction projects.
Indianapolis, August 14, 2025
The Indianapolis Department of Metropolitan Development is navigating a 4% budget cut while advancing key projects aimed at long-term economic growth. The $43 million shortfall, linked to changes in state property tax relief, alters initial budget plans yet major developments, including a $4 billion IU Health campus and new affordable housing projects, continue. The DMD is implementing efficiency measures and technology upgrades to support ongoing programs, while also responding to community needs and maintaining focus on revitalizing downtown Indianapolis.
Key planning and spending decisions from the Indianapolis Department of Metropolitan Development (DMD) are being laid out as the department faces a mandatory budget cut and continues to manage several large downtown and neighborhood projects. The department must cut its 2026 budget by 4% to address a roughly $43 million shortfall tied to state property tax relief, shrinking a 2025 budget of $96 million to about $90 million. That reduction includes an expected roughly $5 million drop in federal grant dollars.
The cuts force DMD to balance day-to-day programs and long-range projects. Officials plan to find savings through efficiency measures and technology upgrades, including a new online development portal for applications. Even with tighter resources and some uncertainty in lending markets and tariffs, DMD is pressing ahead with major projects it expects will bring long-term returns for the city through tax incentives and new economic activity.
Several large-scale developments remain underway or moving toward construction:
The former Marion County jail known as Jail I is set for demolition, announced in December 2024. Demolition costs are estimated at $4 million. The cleared site will host a new $78 million performance facility for the Indiana Fever, fully funded by Pacers Sports and Entertainment, with no city funding expected. The project is framed as a key piece of the South Downtown Connectivity Plan and will be divided into two parcels to leave space for future redevelopment around the performance center. The east parcel is expected to focus on housing, public space, infrastructure upgrades, and economic development.
Efforts continue to find a new path for Whistler Plaza after the original developer withdrew. Officials hope for a groundbreaking in the coming months on a residential building at the plaza site, but the plaza’s full opening has been pushed back to around 2028, which delays plans to reopen City Market to the public after its 2024 closure. The block that includes City Market is also seeking a new developer following a split with previous partners, with proposals expected by mid-August.
Local housing programs remain a priority despite the budget squeeze. DMD continues homeowner repair programs, master leasing efforts, and the Vacant to Vibrant landbank. A planned northwest affordable housing phase has drawn community concern about design and construction from an earlier phase. The Canal Village Phase Three project faces strict standards: funding will remain in trust until the developer meets requirements. That project will include a rent-to-own approach designed to give low- and moderate-income residents a clear route to ownership.
DMD plans to keep using tax incentives as a tool to spur private investment and produce long-term city revenue, even as the department looks to cut costs. The Fever performance facility sits within a proposed special tax district that could help finance a future Major League Soccer stadium, linking cultural and sports investments to broader development goals.
DMD leadership will present these plans and budget changes to a city-county council committee next week. The presentation is expected to outline how efficiency measures, technology upgrades like the new development portal, and targeted use of incentives will be balanced against reductions in grant funding and the required 4% budget cut for 2026.
Bottom line: The department aims to press forward with big projects and neighborhood programs while trimming spending, improving processes, and protecting community-focused investments. How those competing demands are balanced will shape downtown construction, neighborhood housing, and public-space plans in the coming years.
The department must cut the 2026 budget by about 4% to respond to a roughly $43 million shortfall tied to state property tax revenue changes. The 2025 budget of $96 million is expected to fall to about $90 million.
Major projects moving forward include the $4 billion IU Health campus, the Signia Hotel and related $1.7 billion Georgia Street investments, recent affordable housing starts, and planning for the Fever performance center on the old jail site.
The $78 million facility will be fully funded by Pacers Sports and Entertainment. City funds are not planned for that project.
Whistler Plaza redevelopment is seeking a new developer and may not fully open until around 2028. City Market remains closed to the public while plans for the historic block are reworked and new developer proposals are solicited.
Some projects, like Canal Village Phase Three, will have funding held in trust until the developer meets strict design, construction, and management standards. New units will include a rent-to-own option to support long-term stability for residents.
DMD plans to protect key neighborhood programs—homeowner repair, master leasing, and Vacant to Vibrant—while finding efficiencies elsewhere and improving technology to streamline processes.
| Project | Location | Estimated Cost | Funding / Status | Notes |
|---|---|---|---|---|
| IU Health campus | North edge of downtown | $4 billion | Private / Underway | Large medical and research campus |
| Signia Hotel & Georgia St investments | Georgia Street / Convention area | $1.7 billion (related investments) | Private / Underway | Supports convention center expansion |
| New affordable apartments | 22nd & Illinois; 29th & Central | Not specified | Public-private / Ground broken | Two projects recently started |
| Whistler Plaza redevelopment | Downtown block near City Market | Varies | Seeking developer | Opening pushed to ~2028; City Market impacted |
| Jail I demolition | Downtown | $4 million (demolition) | Public / Demolition planned | Site to host Fever facility and future parcels |
| Indiana Fever performance facility | Former jail site | $78 million | Privately funded by Pacers Sports and Entertainment | No city funding; part of South Downtown plan |
| Canal Village Phase Three | Northwest Indianapolis | Not specified | Funding held in trust | Must meet strict standards; includes rent-to-own model |
| DMD budget | Citywide | 2025: $96M → 2026: ~$90M | Public / Reduced | 4% cut to address $43M state tax relief gap |
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