The Carmel City Council is considering issuing nearly $39 million in bonds to build parking garages, a roundabout and make other improvements in support of several developments around town.
The bonds would be held by developers, who would be fully responsible for repaying them, according to Carmel Redevelopment Director Henry Mestetsky.
“This is not a taxpayer risk. This is only a developer risk,” said Mestetsky, who presented the projects to the council at the Nov. 18 meeting.
The city is in the process of designating the project sites as tax increment financing areas, meaning developers would use a portion of additional property tax revenues generated by improvements to the site to pay back the bonds. If revenues aren’t as high as projected, the developer must cover the difference.
The council approved resolutions associated with each project to create the TIF districts and sent ordinances outlining the issuance of bonds to the Finance, Utilities and Rules Committee, which has not announced a meeting date.
The following is an overview of the projects and bonds:
Carmel-based Old Town Companies is proposing a 4-acre mixed-use development just north of the Proscenium, currently under construction on the northwest corner of Range Line Road and Carmel Drive. The development, known as the South Rangeline Project, would include four-story apartment buildings, office space, ground floor retail and a 443-space parking garage, with 386 of those spots underground.
Carmel is considering issuing $12.5 million in bonds for a parking garage and other infrastructure improvements. Mestetsky said the site, which is currently home to Old Town’s headquarters, generates $39,481 annually in taxes for the city, but once complete it will generate $96,500 in taxes during the life of the TIF district. Old Town would receive 90 percent of TIF revenues to repay the bond issued by the city.
Old Town Companies co-founder Justin Moffitt said he is speaking with several possible tenants about relocating corporate headquarters to the development.
City Councilor Ron Carter cast the lone vote against the proposal after saying he is concerned about the predominance of multi-family housing.
Moffitt said the project will only work financially if the units are for rent. He said the apartments would be high-end and expects them to average 2,000 square feet per unit, double the market average.
“It’s much easier to accomplish (this type of development) when you have a good mix of office users who are there during the day and for-rent users that don’t have reserved spots who are parking in those same spots in the evening,” he said. “There’s plenty of room for city employees to park in that same garage throughout the day as well.”
The Franciscan Health Orthopedic Center of Excellence is planned on 18 acres on the southeast corner of Illinois and 111th streets, and the $16.5 million in bonds proposed to be issued by the city for this project would finance a 684-space parking garage and sky bridge.
Meridian Development Services, a sister company of Methodist Sports Medicine, owns the land and is developing the project with Franciscan as the tenant. Methodist Sports Medicine CEO Marty Rosenberg said the project originally included surface parking on six acres, but the $14 million parking garage will allow that space – currently home to the Meridian Suburban neighborhood – to be used for future development instead.
Meridian Development Services has purchased 30 of the 31 homes in the neighborhood. Redevelopment is expected to begin in a year to 18 months to allow time for the remaining residents to move elsewhere.
Mestetsky said the property currently generates $393 annually in taxes, but that will jump to nearly $1.5 million once the project is complete, with the city receiving $370,710 in taxes per year during the 25-year life of the TIF district.
Because construction cannot occur above a pipeline that runs through the site, a skybridge will connect the garage to the hospital.
“There is not, in my opinion, a more perfect use of this space,” Mestetsky said, adding that he would have expected a one-story strip center to be built on the site if TIF were not used for its redevelopment.
Another development proposed by Old Town, North End is planned to include apartments, townhomes, condos, single-family homes and retail and commercial office space on 27 acres along the north side of Smokey Row Road between U.S. 31 and the Monon Trail.
Carmel is considering issuing a $6.2 million bond to pay for a new roundabout on the west side of the development, improvements to Rohrer Road (which would be renamed in this area) and a parking structure. Old Town is planning to move its headquarters to the west side of the site.
Mestetsky said the site currently generates $31,101 in taxes annually for the city, and that it would generate an expected $895,150 once complete, with $447,575 going to the city each year through the life of the TIF district.
CITY CENTER PHASE 2
The city is considering issuing a $3.6 million bond to pay for several improvements at City Center, which is already within a TIF district.
Upgrades include new public restrooms along the Monon Trail across from Carter Green, a stairway to connect the ground level with City Center retailers and restaurants, skywalks between the Playfair Holland building and a parking garage and the Windsor and Wren buildings, and a covered walkway.
Developer Pedcor would be responsible for paying off the bond. This arrangement is different than a bond approved in 2014 to fund improvements at City Center, which is backed by a special benefits tax on Carmel residents as a last resort. The city set up several safeguards to prevent the tax from going into effect, including reserve accounts and developer guarantees.
The new bond would be paid off through tax revenues that exceed original projections in the City Center TIF area. Because many of the buildings were built larger than originally proposed, they are generating more tax revenue than projected, Mestetsky said.