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Carmel moves toward $183 million refinancing

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The Carmel City Council is moving toward a $183 million debt refinancing that will free up cash for further downtown development, but not without conflict over a past move by the Carmel Redevelopment Commission.

The council finance committee heard details Thursday night about the Carmel Redevelopment Commission’s refinancing proposal, which would free up $8.8 million for future projects and keep the CRC from operating in the red. The CRC controls revenue from Carmel's tax-increment-financing districts for economic development.

The redevelopment commission has about $267 million in debt, and since providing a $5.5 million subsidy to the Center for the Performing Arts last fall for operations, it’s in danger of running out of TIF revenue to cover its payments.

So the CRC is looking to bundle several of its high-interest and variable-rate debt instruments into two bond issues, which would have the city’s backing. The debt includes installment-purchase contracts, loans, lines of credit and land-purchase contracts. Financial adviser Loren Matthes, principal at Indianapolis-based H.J. Umbaugh & Associates, likened the deal to paying off credit-card debt through a consolidation loan. The refinancing would cover about $183 million of CRC debt.

Council President Rick Sharp said the council will try to reach a decision in time to take advantage of current, low interest rates, but he and finance committee Chairwoman Luci Snyder balked at a part of the deal that would bill the city $500,000 a year for a $5.5 million heating and cooling project undertaken by the CRC

“The council’s being back-doored to pay for a capital improvement we were never consulted on,” Sharp said. “It’s a little difficult to swallow.”

Because of the refinancing, the redevelopment commission must cut its own operating expenses, from about $3 million this year to $1.1 million. State law prohibits using TIF revenue for operating expenses, so the CRC will have to cover its payroll and other bills with other sources. The CRC is proposing billing the city for expenses related to the energy center, which provides heating and cooling to the performing arts center and municipal buildings.

Redevelopment commission member Carolyn Anker said the CRC had made a mistake in not billing the city for its share of energy-related costs, but would like to catch up starting in 2015.

“That’s not one of the costs I will accept,” Snyder said. “I won’t do it.” The council was assured when the CRC decided to build the energy center and retrofit municipal buildings at a cost of $5.5 million that the project wouldn’t cost the city anything, she said.

If the council declines to make the energy-related payments, the redevelopment commission would have to cut its costs further, Snyder said. The Carmel Redevelopment Commission’s level of operations is unusual in Indiana, she said. The CRC’s six-employee payroll costs $462,505, documents submitted to the finance committee show.

The CRC also spends $197,500 on marketing and events, pays about $84,500 to rent offices in the Evan Lurie building in the Carmel Arts and Design District, and spends more than $220,000 on legal and accounting services.

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  • Reality
    The reality is that the Carmel Redevelopment Commission is insolvent for a myriad of reasons. Regardless of a magazine article that will not change the facts, Carmel has irresponsibly handled this situation or we wouldn't be facing this financial mess.
  • No Accident
    Its no accident that today Money Magazine named Carmel #1 in the county to live, work and play for cities under 100,000 in population. Every city in the nation has had challenges from the greatest recession since the greatest depression. It is actually the success of Carmel's redevelopment that has brought thousands of jobs and $100's of millions in private investment to its core that many estimate returns ten fold or more. The fact is the stage is now set for futher redevelopment and continued Public Private Partnerships that will contribute to contribute to Carmel having the lowest taxes of any City in Indiana.
  • Part of It
    Mr. Kimball is a member of the Carmel 4CDC that works with the insolvent Carmel Redevelopment Commission to obtain unsecured lines of credit for the CRC's operating expenses, provide "grants" to various businesses and to "launder" funds from the CRC to the Carmel Performing Arts Foundation since it is illegal for the CRC to provide operating expenses. The 4CDC is a part of the huge insolvency problem facing the citizens of Carmel.
  • If you say it often enough....
    The last time Bruce, a member of the 4CDC, made his COIT argument, the following response was posted: "• BRUCE leaves out facts RichJune 18, 2012 11:27 PM Bruce----I rebut your claim that Carmel "recieved over 12 million more in COIT dollars because of Mayor Brainards leadership" as it is complete folly. The actual fact of the matter is that Carmel receives the extra COIT money because it has FAR more debt than Fishers. The formula the state used to calculate COIT money takes into account debt a muni. has ammassed. The law has since been changed, but Carmel's HUGE amount of debt was grandfathered in and so they receive the extra COIT money. So your great "leadership" increased your massive debt load so the state would give you more COIT money to pay the "minimum payment on your city credit card" Congratulations." A reply was never given.
  • Lowest Taxes
    It seems to be never mentioned that Carmel has achieved the unthinkable in the last 16 of years of attracting $100's of millions of private investment in a number of the different areas the Redevelopment Commission has operated. It has taken decaying retail cores that once were abandoned by big box retailing and created a renewed sense of vibrancy that will ensure the cities sustainability far into the next millennium. It is seeing an unprecedented new housing booms in its Old Town core that that It is never mention mentioned but is fact that unlike Fishers who has nearly the same demographics Carmel received nearly $12 million more to its general fund last year in the way of COIT. This is directly related to the CRC. Property taxes are less than 1/2 of Carmel’s annual revenue and commercial property taxes are a large percentage of the total. Governor Daniels says "Carmel is a city that all knowledgeable Hoosiers should be proud of." Most importantly Carmel’s vision has resulted in the lowest city property taxes of any city in Central and Indiana and is now being copied in many ways by neighboring communities Carmel’s refinance will permit the completion of its City Center that unlike strip malls that have a life of a several decades is being built for the next century and longer.
  • CRC Financial Mess
    Umbaugh's Loren Mathes never put up all the numbers on revenue to back the 1.06 coverage of revenue to debt. The ratio did not make sense based on the $183M refinance payments and the remaining debt the CRC has. Umbaugh previously gave complete briefings even though I found errors in them in the past. I wonder why all the numbers were not put on the screen this time? Seems fishy to me.
  • ITS A BAILOUT - not a refinance
    A refinance is when the same group of people who took on the debt take the opportunity to secure a similar loan with a better rate. A bailout is when the risk pool is extended to an entity that had no oversight in the original spending. This is particularly the case here where the entire reason they have high interest rates to begin with is because they had to make shady deals with third parties that weren't quite bond sellers just so they could avoid checks and balances from the council and laws. The CRC put itself into this mess by going at it alone - let them dig themselves out of their own poorly planned hole. Bailing them out would be a shortsighted move that would allow the worst offenders to evade direct accountability for their crony dealings.
  • Keep Digging
    What a great story. Thank You K.M. I was at the meeting last night and this is just a sm. crack in the windshield - it will get bigger. More comments can be found at carmelchatter.com. I agree w/toia & dman. Hope IBJ keeps digging as E. said. People need to be informed and take notice.
  • How about letting the taxpayers vote on this????
    This is from an email on federal spending, but it made me think of this. Here's another way to look at the Debt Ceiling: Let's say, You come home from work and find there has been a sewer backup in your neighborhood....and your home has sewage all the way up to your ceilings. What do you think you should do ...... Raise the ceilings, or pump out the crap?
  • typical government
    Refinance to go further into debt. This is the problem with our government. Cities all across America are going bankrupt because of spending too much and not being able to pay the bonds. Just put it on the taxpayer mentality has to stop.
  • Fuzzy Math
    The article says the CRC budget is currently $3MM. $463k salaries + $198k marketing + $85k rent + $220k legal and acct = $966k. What is the $2MM spent on? Will the IBJ dig any further into the story, or will the Bank of Indianapolis' $10MM loan to the CRC prohibit it?

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