What is tipping point for development incentives?

May 30, 2013
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Downtown Carmel has been transformed over the last decade as the city and its partners invested hundreds of millions of dollars into a bevy of redevelopment projects.

Now some City Council members are saying enough is enough.

As IBJ reported this week, the panel’s land-use committee voted 3-1 to recommend the full council deny Carmel-based Pedcor Cos.’ request to apply for a state tax credit that would help fund a $100 million Midtown redevelopment.

Their rationale: The cash-strapped city simply can’t afford to support additional development.

Pedcor hasn’t asked for financial help with the office-and-residential project, but CEO Bruce Cordingley said the company likely would seek a tax-increment financing deal.

That was enough to turn off committee Chairman Eric Seidensticker, who said the city has spent plenty building a desirable community.

“At some point in time, if we have done our job right, developers should want to come in,” he said.

Westfield Mayor Andy Cook has a similar philosophy. Under his leadership, that city is investing $45 million to build the massive Grand Park Sports Complex and expects to sink another $20 million into a new civic plaza downtown.

Such amenities are community assets, Cook said, and the Westfield projects already are drawing developers—without the city offering any additional financial incentives.

So where is the tipping point? Can Carmel maintain redevelopment momentum without dangling TIF funds or tax breaks?

  • This isn't the 80's
    Why would Carmel be at a tipping point? TIF is from the additional taxes produced by the new project. It is usually double what the general fund would provide. The TIF can only be used for public parts of the projects like public parking garages or roads. The new Kent building will produce a surplus of TIF that is required to pay for the public parking garage. Large black top barking lots will never pay but a fraction of what a developed property. Density is the friend of redevelopment no matter where its being done Those that are fighting Carmels downtown redevelopment have no logical reason to oppose these projections other than politics or ignorance.
    • Nice Try, Bruce
      Carmel = Broke
    • Citizens think Carmel should focus on paying down debt
      At Carmel Chatter, we posed a question to our Twitter and Facebook users - "How should Carmel proceed: Start another redevelopment project or focus on paying down $200 million in debt?" Overwhelmingly, the response we've gotten has been that Carmel residents want to see the city work on paying down the existing debt that has accumulated. Only one person responded in favor of moving forward with redevelopment, saying that borrowing has never been cheaper.
    • Broke
      The answer is easy they are broke. The city owes over $1.3B. It has had to delay payment of principal on $119M until 2025 because they don't have the money. They have spent all the excess TIF if in fact they get any.
    • Too Much Debt
      As a member of the City Council, I will say that it's not just the TIF request but also the fact that the City would be asked to move utilities ( $8-9 Million ) and build a portion of a new road ( up to $11 Million. To do that, we would have to borrow more money and add to the 616,000,000 debt we already carry. That's not politics nor ignorance....that's prudent.
    • TIF time to end the Scam
      California where TIF's originated and thrived have bankrupted the state and are now in the process of being ended. TIF's merely allow politico's to have a slush fund with which to reward their favored few to the detriment of schools, libraries and parks.
    • Red Herring
      The TIF discussion is interesting; however, it's straying from the topic at hand, which is whether the developer should be allowed to apply for tax credits from the state to potentially lure an investor. Isn't private investment what everybody could be after here?
      • Fiscally Sound
        Accetturo, as usual you don't tell the whole truth. Your total debt which I suspect you have actually added future interest too is an exaggeration. I suspect you are also adding in the city's utility debt. Carmel's water and other public utility rates are the lowest in Central Indiana Would you care to pay off that debt and dramatically increase those rates to the Carmel Citizen? As to the redevelopment bonds there are two types. The taxable has a much high rate of slightly over 3 % than the non taxable ones of 1.8 %. I have been told the city is in position to pay P&I on both sets of bonds but it makes sense to pay off the taxable bonds with the higher interest rates first. The non taxable will the be paid off rapidly afterward. The city is hardly broke. I don't know about you but after property taxes dropped on most homeowners and commercial during the recession values are rapidly increasing again. While there is no doubt the city has to make choices, the fact is the city still has lowest property taxes in area. This permits it to build infrastructure to accomadate its rapid growth and provide a high quality of life that citizen have elected the mayor to do now for 5 terms. That John, is called good management Lucy, don't we build utilities for greenfield development? Dont we spend millions on new roads to all new subdivisions? I believe $100 million has been spent or allocated to up grade the roads in Councilor Sharps district. The fact is with existing police and fires stations 10's of millions won't have to be spent. The fact is demand for walkable mixed use (office and residential ) is in high demand and is a catalyst for high paying jobs and companies that follow those employees. Its time to bury the 80's and join the rest of the world.
        • Private Investment . . . Really???
          How have terms become so twisted and distorted. Private investment occurs without public funding either through tax credits or TIF funds. Politicos choosing winners and losers by to whom they grant tax credits and TIF funds is not private investment but public projects involving crony captialism - or private developer welfare.
        • High Demand for Space
          If there is such a high demand for walkable mixed use then why, again, does the government need to assist?
        • What if there is no profits?
          I read a while back where Shapiro's (who I believe was funded by TIF in the very beginning of the Carmel mushroom cloud?) had not been able to pay rent for months. Who pays that property tax? Is the Palladium in the black all of a sudden? Who's paying for its taxes? Carmel needs to slow down and savor what they've accomplished and shrink the debt. Financing is starting to go up. Then what?
        • Lots of Big Wigs Here
          Luci & Mo slummin' it in the blogosphere? Looks like someone sent out a memo demanding support from the foot soldiers. Mo, how much does your attorney husband bill for legal work on Carmel developments each year? How much did his firm give Brainard's campaign?
        • Being Anonymous
          Esta (whoever you are)you are entitled to your own opinions but not your own facts.If you read what I posted, you should have realized that I spoke against the Pedcor project for reasons of costs other than TIF.....and I voted against it in committee.

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