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Carmel considering another $242M in debt

January 5, 2016

The Carmel City Council is considering taking on up to $242.5 million in new debt.

A flurry of ordinances were introduced at the more than 5-hour council meeting Monday night, with multiple bonds requested to fund road and sewer infrastructure improvements, redevelopment efforts and land acquisition.

Thirteen of the bonds—at $2 million each—would total $26 million and fund 13 different road projects, with all but one involving a new roundabout. Those are the only new bonds proposed that would impact the property tax rate for residents.

Mayor Jim Brainard said taxes would increase between $22 and $26 annually for most residents with home values between $200,000 and $300,000.

Homes valued higher than $345,000 would see no increase due to property tax caps. The median home value is more than $290,000 in Carmel.

The projects include new roundabouts at the following intersections: 96th Street and Delegates Row, 96th Street and Gray Road, 96th Street and Hazel Dell Parkway, 136th and Carey Road, Carey Road and Hawthorne Drive, Carmel Drive and City Center Drive, Guilford Road and Carmel Drive, Guilford Road and City Center Drive, Pennsylvania Street and City Center Drive, 116th Street and Rangeline Road, Rangeline Road and Executive Drive and 106th Street and Towne Road.

Construction of Monon Boulevard from Second to Main streets would also be included in the list.

“All these projects are meant to make the city more competitive,” Brainard said.

Brainard said city engineers estimate all of these projects should have budgets of less than $2 million and built room in the bond proposal for contingencies.

“We don’t necessarily have to issue $26 million in bonds,” said Barnes & Thornburg attorney Bruce Donaldson. “We’ll hone that down and try to cut it as much as we can.”

All of the projects were included in Brainard’s announcement in December to spend $217 million during the next three years on a long list of infrastructure upgrades.

Several stormwater and drainage improvements also mentioned in last month’s news release were included in a separate $44.5 million bond proposal introduced Monday night.

Council member Kevin Rider said he’s worried about the amount requested in that bond, saying it relies on future city growth to repay it, which is no guarantee.

“I’ve had a little bit of heartburn about this for awhile,” Rider said.

The bond would cover stormwater improvements at four locations, drainage improvements in 11 subdivisions, various storm sewer replacements, small structure and culvert projects and small structure placements. The debt would be paid for with revenue from storm water fees, Donaldson said.

Another $160 million bond discussed Monday would fund an additional 12 road projects that are expected to receive federal financial assistance and would require a local contribution match.

Brainard said because the city has paid off a previous bond used to fund the Hazel Dell Parkway construction, it now has the ability to issue the debt without raising taxes. The bond documents also promise to use a special benefits tax, if necessary, to pay for the debt.

Rider said he had previously spoken with the mayor about cutting $30 million from the proposal, so he’s hesitant to approve it at the current level.

“My logic in asking for that dollar amount wasn’t just a whim off the top of my head,” Rider said, suggesting the city trim the bond amount now and re-evaluate whether it can take on more debt months down the road.

Those projects were not included on the $217 million list of projects released in December.

Finally, a $12 million bond ordinance before the council would help pay for the construction or renovation of sidewalks or paths, hotels, plazas, streetscape or “other local public improvements or other infrastructure projects” within several redevelopment districts. It could also be used to acquire land for right of way purposes or pay for utility relocation.

Brainard said the vague language was intended.

“We want to give the redevelopment commission and the staff the greatest amount of flexibility,” Brainard said.

The bond would be backed by tax increment financing district revenue.

In all, 16 bond proposals introduced Monday night were sent to the finance committee, now chaired by council member Sue Finkam, for further review.

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