A lease agreement between the state and the Indiana Historical Society could be in jeopardy under the latest state budget draft. Photo by Niki Kelly, Indiana Capital Chronicle.

By Casey Smith
Indiana Capital Chronicle

INDIANAPOLIS — Provisions in the state’s draft budget could leave the Indiana Historical Society in a bind, possibly without a building.

In Gov. Mike Braun’s proposed spending plan — and the House version recently approved — Republican budget writers moved to terminate the state’s contract with the nonprofit institution.

The historical society owns the downtown Indianapolis building where its headquarters, museum and archives are housed. It does, not however, own the land on which the building sits.

The contract in question — in tandem with a provision in state code — allows IHS to pay $1 per year to lease that land from the state, and in return, Indiana’s Department of Administration handles various operational maintenance costs.

The last state budget, approved in 2023, appropriated close to $1 million per year to maintain the building, its exterior and the surrounding site.

A legislative fiscal analysis estimated that repeal of the IHS lease would reduce state expenditures by roughly $1.16 million per year. According to the contract, in the event of a canceled lease, IHS can either purchase the land or sell its building to the state.

Braun’s office did not reply to a request for comment before publication. The Indiana Historical Society additionally declined to weigh in on the pending budget language.

House Democrats attempted, unsuccessfully, to add back in the contract language and return the line item to the budget. The minority caucasus’ master amendment would have earmarked $984,966 in the next two fiscal years, matching the taxpayer dollars allotted previously.

Indiana’s next budget is now in the hands of Senate Republicans. Both chambers have until the end of April to finalize the plan.

A Contract In Question

IHS is a private, not-for-profit membership organization that is not affiliated with any state government agencies.

Construction of its headquarters began in downtown Indianapolis in 1996 on the site of the prior Holy Trinity Greek Orthodox Church. The new building opened to the public in July 1999. Before that, the historical society was housed in a building across the street, alongside the Indiana State Library.

The 165,000-square-foot building was built on state-owned land and funded through an IHS bond issue. At the time, the building cost $35.7 million to construct.

A 2007 lease agreement between IHS and the state was intended to last until 2098.

The historical society is permitted to use the property to house its offices, collections, library, publishing facilities and visitor amenities, as well as for conducting programs and other related activities.

The contract lists the state’s specific upkeep obligations, like routine janitorial services and supplies; heat, air conditioning, ventilation and humidity control maintenance; water for drinking, lavatory and restroom purposes; sanitary sewerage and stormwater disposal; pest control and trash removal; fire alarm service and fire protection systems; and lawn and grounds care.

A second contract signed in April 2009 — meant to last through March 2039 — details an additional agreement around the parking lot located adjacent to the IHS building.

IDOA indicated contractual services provided to IHS currently add up to $1,183,102 per year, including for:

• Elevator preventive maintenance: $59,991
• Elevator permits: $850
• Window cleaning: $7,550
• Trash pickup: $50,000
• Utilities (current year estimate): $801,500
• Preventive maintenance contractor: $221,711
• Parts and supplies: $20,000
• Grounds and maintenance supplies: $6,500
• Snow pretreatment and removal: $15,000

A cancellation provision makes clear that “(i)f the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support continuation of this Lease, the Lease shall be canceled.”

It further states that IHS “shall have the sole and exclusive option to purchase” the land if the agreement is terminated. In such an instance, the state and IHS must each obtain an appraisal of the land before agreeing on a purchase price.

If IHS did go through with a purchase, it would still have to notify the state before selling the property to a third party, however. The nonprofit would then have to provide the state an opportunity to purchase the land back “at the same price” paid to the state, adjusted for inflation.

It’s not clear in the contract what would happen if a deal can’t be reached.

Recent tax documents filed by IHS calculate the building and connected assets to be worth roughly $33.6 million.

Slashing State Spending

Rep. Greg Porter, D-Indianapolis, addresses a crowd on Dec. 18, 2024 in Indianapolis. Photo by Whitney Downard, Indiana Capital Chronicle.

Rep. Greg Porter praised the IHS as Indiana’s “primary repository for our state’s rich historical record,” and amounted the proposed contract elimination to the Republican governor’s “divisive cuts.”

The state’s historical society, Porter continued, “has always highlighted and celebrated the diverse ethnic and racial history of our state.” He pointed to annual programming around Black History Month, and to a current special exhibit called “Resist,” which highlights the rise of the Ku Klux Klan in 1920s Indiana. IHS recently closed “Eva Kor from Auschwitz to Indiana,” an exhibit on the Holocaust and the life of Auschwitz survivor Eva Kor.

He added that the IHS will now have to come up with an additional $1 million each year, and potentially have to cut exhibits or raise the cost of admission or cut.

Republican budget writers in the House emphasized the need for spending cuts amid a lack of new revenue under current projections. Revenue growth is projected to be moderate in the first year, with far slimmer margins in the second year of the biennial budget.

Braun’s budget plan proposed spending cuts — large and small — across the board.