Historically large mixed-use development in downtown South Bend nears early checkpoints

SOUTH BEND — The city is taking steps to allow developers to convert two parking lots south of Memorial Hospital into a mixed-use project that would be one of the largest in downtown South Bend's history.

The city envisions a multi-story development to replace sprawling parking spaces on the 300 and 400 blocks of North Main Street — the land between the hospital and the Burger King on LaSalle Avenue. The project would feature hundreds of new apartments, a hotel, office and retail space and about 900 enclosed parking spaces. Actions over the next few weeks could set developers up to finish much of the project within a few years.

The two blocks "would go from generally unimproved, surface parking lots that were once part of the urban core and saw virtually everything on them demolished, to multi-story dense development with structured parking," Caleb Bauer, who leads South Bend's Department of Community Investment, told The Tribune. "So we’ll still get the cars. They’ll just be parked in a more efficient use of space.”

First reported by The Tribune in October 2021, the project is designed to supplement the hospital's ongoing construction of a new 10-story patient tower that's projected to cost more than $230 million and create about 500 new jobs.

Memorial broke ground on the new 300,000-square-foot tower, which will add 50 beds to the hospital's intensive care unit, in October 2022. The hospital system expects construction to finish in summer 2026, a spokeswoman said in a statement.

Memorial Hospital owns most of the lots for its employees to park there. Bauer said the hospital plans to sell the lots to city government. The city would then sell them at a discounted rate to real estate investment firm Great Lakes Capital in exchange for $102 million in private investment in the mixed-use development.

Bauer said the city plans to contribute $24 million to the redevelopment effort, while the state of Indiana, through its Regional Economic Acceleration and Development Initiative, would contribute $11.8 million.

Bauer said South Bend's Redevelopment Commission will hear specific details of the plan at its Feb. 22 meeting, including private commitments for more than 240 apartment units and a 100-room hotel. He expects the commission to vote in March on a joint development agreement with Beacon Health System, which owns Memorial Hospital, and Great Lakes Capital.

South Bend's Board of Public Works took an early step Tuesday by approving $329,000 for the eventual demolition of the former South Bend Medical Foundation building, also owned by Memorial Hospital.

After the demolition, the lot will serve as parking for hospital employees during construction of the mixed-use development. Bauer said he expects that demolition to occur this year.

The entire development on the two blocks of Main Street wouldn't be finished until 2028, Bauer said, but construction of the northern block could be done by the end of 2026.

Michael Divita, a principal city planner, said the two blocks were primarily residential until the 1950s, when smaller-scale commercial uses began to take over. By the 1970s, the northern block was home to the multi-story Town Tower Motel.

The last of the commercial buildings disappeared around 2010, Divita said. Since 2015, the site has looked more or less like it does today. Burger King operates a store on the southern lot along LaSalle Avenue. The only other building is the former Northern Indiana Public Service Company site, which Memorial also owns.

Bauer said the city is putting significant money toward the project, in the form of a tax-increment financing bond, in order to boost the tax revenue created by those two blocks. Parking lots don't contribute much to city coffers.

"The intent is this is a project that, over time, will more than pay for itself in new tax revenues," Bauer said. "And those revenues are then going to be deployed on projects throughout the city."

Email South Bend Tribune city reporter Jordan Smith at JTsmith@gannett.com. Follow him on X: @jordantsmith09

This article originally appeared on South Bend Tribune: Apartments and hotel planned for downtown South Bend near hospital