Hudnut's policies were entrepreneurial, and he hoped to attract economic development by taking risks with raising taxes and issuing bonds. He opposed deficit spending and kept the city's bond rating at AAA. He aimed for job growth, a widened tax base, and law and order. The city spent large amounts on tax incentives, infrastructure improvements, and development projects to attract business to the downtown area.
Over the sixteen years of his term, more than 30 major building projects took place downtown, including renovations and expansions to Monument Circle, Indianapolis Union Station, Indiana University School of Medicine, and the Indiana Convention Center. Many office buildings were constructed, and companies such as Eli Lilly and American United Life committed to staying in Indianapolis.
Indianapolis is known as the Amateur Sports Capital of the World, due in part to Hudnut's efforts of marketing the city. While mayor, Indianapolis held the 1987 Pan American Games and the 1982 National Sports Festival. Hudnut formed the Indiana Sports Corporation, which directed sporting projects such as the Indianapolis Tennis Center, Major Taylor Velodrome, and the IUPUI Natatorium. In 1980 Hudnut formed a committee on building a new stadium to attract an NFL team. With the newly-built Hoosier Dome and other incentives, he secretly negotiated with then-Colts owner Robert Irsay to bring the Indianapolis Colts to Indianapolis from Baltimore.