Keystone Realty Group’s $30 million The Olivia on Main apartment project cleared a major final hurdle Monday, when Carmel City Council unanimously agreed to issue $3.8 million in low-interest bonds to help prepare the five-acre site for construction.
The developer plans to pay off the bonds—which Keystone is both buying and backing—with its share of the extra property taxes the project is expected to produce over the next 25 years.
To win the council’s support, Keystone agreed to capture just 75 percent of the so-called incremental revenue; the remainder will go to the Carmel Redevelopment Commission, which is paying off $486 million of its own debt.
The cash-strapped CRC expects to collect about $104,000 a year once the apartment-and-retail building at Old Meridian and Main streets hits the tax rolls in 2016, but there’s a more immediate advantage, too.
Keystone agreed to use a portion of the bond proceeds to pay for almost $900,000 in site work the CRC promised to take care of when it sold the problematic property to the developer in 2011.
The city is taking care of sidewalks (another CRC obligation) as part of its overhaul of West Main Street, which will become a key connection between U.S. 31 and downtown Carmel.
Keystone’s plans call for a five-story building with 204 luxury apartments and up to 30,000 square feet of ground-floor retail. Parking will be under the building and in surface lots.
The site has its challenges, including a high water table (within 12 inches of the surface in some paces) and a 10-foot-plus change in elevation from one end of the property to the other.
The developer tried for years to sell the property before deciding late last year to move forward with the project, Keystone founder Ersal Ozdemir told the council finance committee last week.
But the CRC couldn’t accommodate the company’s intended timeline, since it had not included the site-prep expenses in its 2014 budget. Ozdemir opted to forgive the panel’s promises in order to get started this year.
As-is, the property generates about $23,000 in property taxes each year, Councilor Kevin “Woody” Rider said during the committee meeting. Approving the bond allows the city to benefit from a “much denser project than we ever would have gotten” without it, he said.
Finance committee Chairwoman Luci Snyder acknowledged that the site is blighted—“it has been untouched for 40 years,” she said—and given its inherent problems is likely to stay that way without the TIF financing.
The fact the Keystone is letting the CRC “off the hook” for its pricey promises (which Snyder described much more colorfully) persuaded her to support the bond issue.
“We got as good of a deal as we’re going to get,” she said.