A lease agreement between the state and the Indiana Historical Society could be in jeopardy under the latest state budget draft. (Niki Kelly/Indiana Capital Chronicle)
Despite language in the proposed state budget that could put the Indiana Historical Society (IHS) headquarters in jeopardy, Gov. Mike Braun’s office now maintains the intention is not to force the nonprofit to give up its building.
The Indiana Capital Chronicle reported last week that provisions in the state’s draft spending plan could leave the historical society in a bind.
In Braun’s proposed spending plan — and the House-approved version — Republican budget writers penned language that appear to terminate the state’s contract with the Indianapolis-based institution.
Read more: State’s proposed budget could cost Indiana Historical Society its building
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 (IDOA) handles various operational maintenance costs.
In current form, the state budget would repeal that existing code in Indiana law. Another section cobbled into the budget pulls language directly from the cancellation clause of the IHS contract.
The 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.”
Exact wordage appears in the budget: “The director of the budget agency shall make a written determination that funds are not appropriated or otherwise available to support continuation of the performance of any contract or lease entered into under IC 4-13-12.1-8 (before its repeal).”
According to the contract, in the event of a canceled lease, IHS can either purchase the land or sell its building to the state.
A joint statement said “The Indiana Historical Society and the Braun Administration are cooperatively working toward an agreeable solution.”
Braun clarifies intentions
But Braun’s office said he does not intend to completely void the agreement, and emphasized that “this process was always intended to be collaborative.”
His team maintained the repeal would eliminate existing contract requirements and open the door for a new or renegotiated IHS contract. That could ultimately provide fewer maintenance services at the state’s expense.
Even so, there is no proposed language in budgets penned by either Braun or House Republicans to explicitly trigger contract renegotiation with IHS.
Next steps unclear
Indiana’s next budget is now in the hands of Senate Republicans. Both chambers have until the end of April to finalize the plan.
The House Republican caucus deferred questions about the IHS budget provisions to the governor’s office. Senate Republicans have yet to take up the two-year spending plan.
The 2007 lease agreement between IHS and the state was intended to last until 2098. 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.
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 $2.3 million over the biennium.
One section of the contract says that “upon the expiration or sooner termination of this lease, (IHS) shall surrender to (the state)” the land in question.
The cancellation provision, however, 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.
A separate provision in state law also says “after completion of construction and negotiation of a lease under section 8 of this chapter, the society shall convey title to the building to the state.” Notably, the next state budget does not propose a repeal of that language.
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Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.
