The Carmel Redevelopment Commission is helping the city of Carmel out with its budget to the tune of $5.4 million, significantly more than officials had originally thought.
The Carmel City Council approved a plan Dec. 14 to meet its debt obligations and pay its bills for the remaining few days of the year. The agreement between the council and the Carmel Redevelopment Commission gave the CRC authority to use $5.4 million in its reserve funds to make payments on four bonds for the city.
But Council President Rick Sharp said he was under the impression that the city only needed to borrow $2.9 million from the CRC reserve funds and wasn’t told the actual amount until after the vote.
The resolution the council passed does not specify the amount the city needed.
CRC Executive Director Corrie Meyer said $5.4 million in bond payments were made for the city Dec. 15.
Cindy Sheeks, finance manager in the Clerk-Treasurer’s Office confirmed that amount.
“I was a bit astounded,” Sharp said. “Nobody had told us it was that much.”
Sheeks said the payments left the CRC with about $776,000 left in reserves.
The city’s general fund balance is now estimated to end 2015 with $3 million, although it is contingent on the final payroll cycle.
“It seems to me, regardless of the political rhetoric, we were severely short of money to finish the year,” Sharp said.
Under the agreement, the city has 60 days to reimburse the CRC, but there are no penalties outlined should the city not meet that deadline.
The northern suburb’s revenue for the year is millions of dollars short—partly due to Carmel Utilities’ failure to pay $1.2 million in fees for shared services—which prompted the city to look for other ways to pay claims, debt service and payroll for December.
The deal required council approval because the CRC is allowed to use the reserve fund only for its own bond payments, according to Sharp.
Meyer said the commission had no intention of spending the reserve funds on other expenses before the end of the year. The CRC would have ended the year with $7.8 million between reserves and a surplus in the operating budget.
Earlier this month, a proposal introduced by Mayor Jim Brainard to reappropriate $5.38 million the Indiana Department of Local Government Finance had previously cut from the budget failed. The move would have dropped the city’s general fund, which serves as its checking account, to nearly nothing.
Sharp, along with council members Luci Snyder and Eric Seidensticker, voted against the proposal Dec. 7 and criticized it as unwise financial planning. They argued that they warned of the potential shortfall earlier in the year, but that Brainard denied the potential for problems.
Some officials were also worried that shortfalls would lead the city to dip into its rainy day fund, which financial advisers recommend to keep at 10 percent to 20 percent of a municipality’s general fund.
Carmel’s rainy day fund has a balance of $8.5 million—about 10 percent of its operating expenses. Tapping the fund potentially could harm the city’s credit rating.
After the reappropriation ordinance failed, Brainard, who was in Germany during the meeting, issued a statement urging the clerk-treasurer to pay bills as if the ordinance were approved. Brainard said he would have the new council retroactively approve the spending in January.
Sharp lost in the mayoral primary election to Brainard; Snyder and Seidensticker also lost their council seats.
The City Council approved the Dec. 14 funding proposal 6-0. Council member Carol Schleif was absent.