Financing transformational transit‑oriented development

Client background and challenge

Michigan City is a diverse community of approximately 32,000 residents in northwest Indiana on the south shore of Lake Michigan. Lake Michigan is a key part of the city’s identity and culture, anchored by Washington Park, a 118‑acre lakefront park featuring a marina, zoo, public beaches and the Old Lighthouse, built in 1858 and listed on the National Register of Historic Places. Just west of the city, Indiana Dunes National Park, which was designated as America’s 61st national park in 2019, further enhances the area’s regional draw as a lakefront destination.

Located just 55 miles east of Chicago, the city’s proximity and connectivity to the Chicago metropolitan area has long been one of its strategic strengths, complementing its lakefront assets and positioning the community as an accessible residential and economic alternative within the broader region.

The city has a longstanding industrial history, with many industrial and manufacturing jobs available to residents. While it continues to maintain a strong industrial base, the community has faced challenges related to deindustrialization and automation, similar to many midsized peer cities across the Midwest. As a result, the city’s population declined from a peak of more than 39,000 residents in 1970. In recent years, the city has focused on maintaining its industrial core while also reinventing itself, and those efforts were rewarded with the first population increase in 50 years at the 2020 Census.

A significant opportunity for reinvestment emerged around the South Shore Line, a commuter rail service connecting South Bend to downtown Chicago through the heart of downtown Michigan City. Operated by the Northern Indiana Commuter Transportation District, the line serves as a critical transportation link for residents commuting to jobs in Chicago and surrounding areas and provides an alternative to highway travel along Interstates 90 and 94.

Significant public investment through the South Shore Line Double Track initiative modernized and expanded service between Gary and Michigan City, improving reliability, increasing service frequency and reducing travel times. These improvements primed the region for transit‑oriented development (TOD) by encouraging residential and commercial development near station areas.

The city faced the challenge of leveraging this significant public infrastructure investment to catalyze private development while maintaining long‑term financial capacity and carefully managing risk. Despite its prime location at the southern end of the historic Franklin Street Arts District, the downtown 11th & Franklin Street station and surrounding properties were underutilized and in disrepair, requiring a coordinated redevelopment and financing strategy to unlock the site’s full potential.

Baker Tilly solution

Baker Tilly has served as Municipal Advisor to the city of Michigan City and its Redevelopment Commission (RDC) for several decades. The results achieved in this case may not be representative of the experience of other clients and there is no guarantee of future performance or success.

In its role as municipal advisor, Baker Tilly has actively advised the city and RDC on financial strategy, evaluated redevelopment capacity and guided decision‑making to support long‑term economic development goals.

Baker Tilly helped structure and optimize the RDC’s Northside, Southside, Northeast and Eastside Tax Increment Financing (TIF) areas and advised on numerous bond financings to fund major public infrastructure investments across the city. Through long‑term planning efforts, Baker Tilly also helped position the RDC to prioritize complementary initiatives, including a strong partnership with Michigan City Area Schools and a façade grant program to support reinvestment in the Franklin Street Arts District.

In 2019, Baker Tilly structured an open‑market bond financing to support the city’s portion of the South Shore Line Double Track project. This financing helped position the community to leverage subsequent infrastructure improvements and set the stage for redevelopment opportunities at the Station Block site.

Alongside improvements to the station platforms and parking facilities, the city began acquiring parcels comprising the full city block bounded by 11th, Franklin, 10th and Pine Streets. In 2021, the city issued a request for proposals seeking a major mixed‑use development to complement the upgraded station infrastructure. Baker Tilly assisted with proposal evaluation and guided the selection process, which ultimately resulted in the selection of Flaherty & Collins’ mixed‑use apartment project.

Over the following years, Baker Tilly advised the city through project negotiations and financing structuring.

Results achieved

Now fully underway, the Station Block project represents a significant public‑private investment estimated at more than $100 million and is viewed by the city as a cornerstone of its broader redevelopment strategy.

Branded as The Franklin at 11th Street Station, the project integrates modern transportation infrastructure with a 12‑story mixed‑use residential tower consisting of more than 200 apartment units, along with commercial and public amenities. The new station and parking garage are fully open and include modern passenger facilities and a fully restored historic station façade.

This combination of uses is intended to attract new residents, support local businesses and create a more vibrant, walkable downtown environment for both residents and commuters. Since the project was announced, the city has experienced increased investment interest and additional redevelopment activity across the community.

The Station Block project is expected to generate surplus revenue to the RDC beginning in 2040 through the remainder of its TIF lifespan and will return significant assessed value to the overlapping tax base once the allocation area expires following final bond maturity. Despite representing one of the largest single investments in the RDC’s history, the city continues to maintain healthy TIF coverage levels to support existing obligations while continuing to pursue additional redevelopment initiatives.

Transportation Development District

To further support large‑scale redevelopment and transit‑oriented development efforts, the city established a Transportation Development District (TDD) surrounding the station. TDDs are special‑purpose districts enabled by state legislation that allow local governments to designate a defined geographic area where additional revenue can be generated from incremental property taxes and income taxes.

TDDs are intended to help address funding gaps that traditional financing tools may not fully cover on their own, particularly for complex TOD projects that combine transportation infrastructure with private development. By capturing income tax increment in addition to property tax increment generated through tools such as TIF, TDDs create a self‑reinforcing funding mechanism tied directly to new development and population growth.

With investment in the downtown area already occurring, the city received its first TDD distribution in 2025. Once operational, the Station Block project and the additional residents it brings are expected to generate increased TDD revenues to support RDC uses. When used in coordination with TIF, the TDD provides additional flexibility and local control while allowing projected revenues to be aligned with long‑term infrastructure needs and financial obligations.

The future

Once complete, the Station Block project will bring residential TOD density not previously seen along the Indiana side of the South Shore Line’s Lakeshore corridor or the new West Lake/Monon corridor under development in Lake County.

More broadly, the project demonstrates how communities can leverage lakefront identity, regional connectivity and strategic transit investments, supported by layered financing tools, to attract transformational private development. From decades of strategic TIF planning to the RFP process, developer negotiations and bond financing, Baker Tilly worked closely with the city and its RDC to ensure the Station Block project advanced in a way that balanced growth with long‑term financial sustainability.

The city views the project not as the culmination of past efforts, but as the beginning of future investment, a vision that is already becoming a reality.

Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly Advisory Group, LP. Reference to registration does not imply any particular level of skill. Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm and provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. ©2026 Baker Tilly Municipal Advisors, LLC