The Carmel City Council is considering a $4.5 million installment-purchase contract to pay for a 200-space parking garage for a mixed use development.
Developer Chuck Lazzara is working on the project on the field across from Bub’s Burgers at Main Street and the Monon Trail. The $20 million mixed-used development, called Monon and Main, is planned to include a steakhouse, rooftop dining, an office building and seven town homes.
The City Council voted on Dec. 19 to allow the Carmel Redevelopment Commission to purchase a $1.6 million parcel of land at the Monon Trail and Main Street to build a multi-floor parking structure. CRC Director Corrie Meyer said the city is paying $1.6 million to Lazzara for the land because that money will be needed for Lazzara to complete his project, begin construction on the garage and construct a public plaza.
Meyer said the land was transferred back to Lazzara to help reset the tax increment financing. This would set the property taxes at zero so the maximum tax increment could be raised in order to be used to pay off the parking garage.
Officials decided to use an installment-purchase contract instead of a bond because it’s a small project and it can maximize the amount of the funds available. Meyer said this saves on issuance costs associated with a bond. She estimates more than $100,000 in savings.
“It’s not a bond, and it’s not a loan,” she said. “We use the funds to purchase a completed garage by the developer.”
Lazzara would construct the garage, which will cost between $3.5 million and $4.5 million, and the City of Carmel would make payments, with interest, to pay for the garage, which would become a city asset.
Previously, Meyer said it was likely that tax increment financing wouldn’t be enough to cover the entire cost of the project, but she said at the March 6 City Council meeting that the CRC taking another look at that option. She said there will be levels of developer guarantees in case TIF isn’t sufficient. The project would be supported by the possibility of a special benefits tax, which she said is unlikely but would be used to reduce the interest rate. She said that Lazzara would be responsible for maintaining the garage.
The Finance Committee will discuss this matter at 5:30 p.m. March 14.