The Carmel Redevelopment Commission's plan to purchase a shopping center near Carmel City Center for a redevelopment project narrowly passed the city council this week after a councilor raised concerns over whether the city would be overpaying for the property.
Earlier this month, the city announced it had reached an agreement with the owners of the Monon Square shopping center to purchase the 8.7-acre property at 620 S. Rangeline Road for $15 million. The city said $15 million is in line with other offers the owners had received for the roughly 75,000-square-foot shopping center.
Carmel plans to partner with a private developer to redevelop the site into a mixed-use project similar to those at Carmel City Center.
In a 4-3 vote to approve the purchase, Councilors Laura Campbell, Kevin Rider and Tony Green voted against it.
Some councilors said the CRC would be paying too much for the land. The average of two appraisals was $11.5 million. Other councilors wanted more details about the deal.
The purchase will be funded by a $25 million bond issued last year. The ordinance governing the bond gives the city council the opportunity to have final approval on redevelopment commission expenditures that are $50,000 or more.
On Monday, some city councilors said they believed they would have more time to discuss the agreement before having to cast a vote, and they wanted more details about how a public-private partnership to redevelop the property would work.
Others asked why the city is paying $3.5 million more than the appraised value.
Campbell said she’s bothered by the lack of details the council was given about the purchase and why the city is paying $15 million when the appraisal came in lower.
“I just feel the city is overpaying for this property,” she said.
Mayor Jim Brainard said the city and the CRC agreed on the $15 million purchase price after negotiating with the family that owns it. He said the family had offers equal to $15 million and some in excess of $15 million, but they preferred to sell to the city.
The property is owned by the Lawhead family, which manages it through Mohawk Management. The Lawheads also own the Soho Cafe and Gallery, a coffee shop and cafe in the Monon Square center. Other tenants in the center include Union Brewing Co. and Jamaican Reggae Grill.
Calling on his experience as a real estate attorney, Brainard said appraisals aren't always a perfect representation of a property's value.
“One of the things that is a flaw in the system everywhere is that when the prices go up quickly, the appraisers are not quick to pick up on that,” he said. “There’s a period of delay built in the system.”
Council President Kevin Rider said the council should have had the opportunity to provide more input on the purchase. He called for more communication between the city and various departments in the future.
“I don’t disagree with the concept,” he said. “I love public-private partnerships. I hate the way this process is happening tonight.”
“We’re spending $15 million, we should have more input than what we’re having,” he added.
Councilor Jeff Worrell, who has been on the CRC for nearly 15 years and voted in favor of the purchase, said there are many cases historically when the city purchased property for a price that seemed high at the time. Those purchased were necessary to develop area around the Monon Trail and Main Street, he said.
“That’s forgotten, [but] it got us to the next step,” he said. “It created a lifestyle and quality of life that really is not found in too many places.”
Brainard said he believes the purchase price is fair.
“I would love to negotiate a better price for the property, but I don’t think it’s an unreasonable price given the cost of land in the area,” he said. “I’ll be glad to take the credit or the arrows for the price, but I think it was a fair price.”