Developer seeks $20M bond to finish Carmel City Center

Suburban sensibilities be darned: Density is not a dirty word when it comes to Carmel City Center.

But it can be an expensive one.

Developer Pedcor Cos. is planning another 10 mixed-use buildings for the last 11 acres of the 88-acre site—as long as the city agrees to pay for the parking garage that makes such massing possible.

Carmel City Council on Monday heard the official pitch for up to $20 million in property-tax-backed bonds, which along with $80 million to $100 million in private investment would be used to finish City Center construction over the next five years.

As IBJ reported last month, Pedcor has offered an unusual array of financial guarantees to secure the bonds, which the developer wants the city to issue (and back with a possible special-benefits tax) to secure the lowest-possible interest rate.

If the devil’s in the details, council members must be feeling the heat. Before her presentation, Carmel Redevelopment Commission boss Corrie Meyer handed out 400-page books that included copies of the development agreements that are still being finalized.

Reporters who made it to the end of the 2-1/2-hour meeting received the summary sheets for each deal, developed for the council at its request given the difficulty of wading through development legalese.

Bond proceeds would be used to fund the garage ($11 million-$13 million) along with other public infrastructure including an extension of Veterans Way ($500,000-$600,000), other streets and walks ($1.5 million-$2 million), and an outdoor gathering area dubbed the Spanish Steps ($500,000-$600,000).

The debt would be repaid with the extra property taxes generated by the development, which is expected to add an estimated $71 million in assessed value.

Pedcor is proposing to share the so-called increment with the CRC, using 90 percent of the additional revenue for the project. The CRC would get the remainder—about $2.5 million over the 25-year life of the bond, Meyer said.

Any amount is more than the commission expected. Long-term financial projections prepared by CPA firm Umbaugh earlier this year did not include any revenue from future City Center development, since past deals allowed developers to keep all of the new taxes.

And the CRC isn’t giving away the farm to finish City Center, according to the summaries of the draft agreements. The only “commitment” it’s making that has a price tag: streetscape improvements “if additional funds are available and not prior to 2016.”

The council’s finance committee will vet the bond proposal and make a recommendation to the full panel prior to a vote. The panel meets Nov. 20, but it’s not clear yet if the City Center measure will be on that agenda.