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Carmel council wary of $100M Pedcor project

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Pedcor Cos.’ $100 million vision for an old industrial area in Carmel includes luxury housing and upscale offices with a splash of retail, a high-end development befitting its location between the palatial Palladium and tony Arts & Design District.

The developer is asking for permission to apply for a $25 million state tax credit to help fund the project. City Council members for now are holding the project at arm's length, concerned about the ramifications of the tax credit and the possibility that public money could end up supporting the speculative venture.

“At some point in time, the city has to take a stand,” said Councilor Eric Seidensticker, who chairs the Land Use, Annexation and Economic Development Committee that will weigh the tax-credit request. “Do we continue to help out developers, or do we say, ‘You know what? We’ve got everything in place—you take it from here.’”

Redevelopment of the so-called Midtown area, located between the Monon Trail and 3rd Avenue SW near a former grain elevator, is part of Mayor Jim Brainard’s grand plan to reinvent the suburban city.

It’s the same vision that drove development of the Center for the Performing Arts and Carmel City Center. In his Oct. 10 State of the City speech, Brainard said plans for Midtown were being fine-tuned.

Pedcor is seeking the state’s industrial recovery tax credit, intended to encourage redevelopment of aging properties—in this case the former Woods Wire building. But first, Carmel has to apply for industrial recovery zone designation.

City Council members balked at approving the seemingly routine resolution on Monday, saying they didn’t know enough about the project or the financial implications of the city’s support.

Among their concerns were the mayor’s comments during a February meeting with nearby residents that the project would include low-income housing, a use council members said would not attract employers or create jobs.

“I would love to see some high-tech business go in there,” said Luci Snyder, chairwoman of the council’s Finance Committee.

That would be fine by Pedcor CEO Bruce Cordingley, who revealed more details about the project Wednesday. He described the residential component of the Midtown project as “luxury” and said commercial development will focus on office space.

“I do not think affordable housing works from an economic perspective on that site,” he told IBJ on Wednesday, adding that Pedcor will seek input on the development from city officials and the broader community. “We welcome their involvement. It’s very important part of their community—of our community.”

If the industrial recovery tax credit goes through, it could cover as much as a quarter of project costs. Cordingley said the remainder of the funding has yet to be determined.

But Councilor Kevin “Woody” Rider, who sponsored the tax-credit resolution, told his colleagues Monday that he believed Pedcor would ask for tax-increment financing—a suggestion that raised the hackles of a group that six months ago agreed to take on $184 million in debt incurred by the Carmel Redevelopment Commission.

“For a year or two, I’d like to stop borrowing money, pay down our debt and see where the economy is going,” Snyder said.

She’d prefer the city make investments like the 10-year property tax abatement it gave insurer Baldwin & Lyons, which has pledged to spend as much as $30 million to buy and improve a 184,000-square-foot office building along Carmel’s Meridian Street office corridor, bringing 500 jobs with an average annual salary of $90,000.

“I would much rather do something like that for a real business, with real employees, where everyone runs out at lunch and spends money,” she said, “than spend taxpayers’ money on empty structures in hopes that something comes.”

Other Pedcor developments have posted early successes. IBJ has reported that the 3-year-old Indiana Design Center is at capacity, for example; the first 106 apartments in City Center are 90 percent leased, and phase two is scheduled to break ground soon.

The Midtown project will be “similar quality to those developments,” Cordingley said, “and something I’m sure everyone would be very proud of.”

Seidensticker said his committee will meet with Pedcor officials May 28 to discuss the developer’s plans before deciding how to proceed. Pedcor already owns most of the land in question.

“It’s a lot to think about and try to understand,” he said. “We need to evaluate the highest and best use of the property.”
 

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  • The Full Pcture
    I think what is overlooked on this topic is the overall finances of Carmel at this point and the required financial commitment that will be required of the city, direct and indirect. We have learned that these types of proposal are rarely, if ever, as straightforward as they appear during presentation. The infrastructure costs alone would require additional bonding. Currently, according to the Mayor's financial consultant, the only viable way for Carmel to borrow more money is to attach the Parkwood TIF funds which were just promised, in the bailout restructuring, to secure the debt payments on this same bailout. There is even more but i hope all get the picture. Carmel has become a complex financial picture and it is never as easy as it seems.
  • Too Much Tea
    I am having a hard time understanding Seidensticker’s reluctance to an Industrial Recovery Tax Credit. The City or State is not giving the developer funds but just a 25% credit on future taxes that don’t exist today. It encourages developers to minimize sprawl by not going to less expensive Greenfield sites. There are so many positives to redevelopment versus continued sprawl. I am willing to bet Councilor Seidensticker took every state and federal tax loophole he could for his small business. Why would he want to deny the same to a local developer who wants to keep his money in the community?
  • Handout?
    "Handout" implies that something is given for free or that is not needed. The purpose of the industrial recovery tax credit, as with any other tax credit, is to subsidize a project that would not otherwise be economically feasible. If the citizens want that land redeveloped, the city/state must work to provide the developer the incentive to do so; otherwise, you are stuck with a blighted area. To me it is a smart use of public monies.
  • Humm....
    I am all for Mayor Brainards vision and truely believe merging City Center with the Arts & Design District is a natural progression. What makes me really question the ethics of all this is that the tax credit is being put forth by Councilman Kevin Rider, part owner od Divvy Restaurant. Who is the other owner of that restaurant??? Well none other than Bruce Cordingley!!!
  • More Developer Welfare
    If this project makes economic sense, they should build it, if it does not they should not. Why do they need a handout in the form of a tax credit to develop a project in the City of Carmel next to another project that they own?
    • Don't do it!!!!
      I think Carmel needs to really SLOW DOWN on the agressiveness of the Mayor's "visionary master plan". I see so many 3 story town-homes all over the city already. Until I see those parking lots full of cars, evidence that anyone lives in them and am convinced that they have at least 80%+ occupancy, they should hold off on the "mulit-use" buzzword. The Palladium is, and will be, in the red for who knows how long - I never thought a venue that small(seat-wise) would be able to generate enough revenues to pay the performer(s), the employees, the mortgage, etc., let alone make a profit. Let time show what really is a good investment in the city or we will slowly lose our advantage of having favorable tax rates.

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