Looking at Carmel’s financial past and future

CIty Beat by Adam Aasen

City Beat Blog By Adam Aasen send comments to adam@youarecurrent.com

The Current in Carmel did a special investigation into the questions surrounding Carmel’s financial outlook, specifically the talk of a Special Benefits Tax.

It’s a complex issue and asking one question and lead to three more and soon you find yourself “going down the rabbit hole” like Alice in Wonderland.

We leave it up to the readers to separate “facts” from the “political spin.” Some have suggested that we trim down the information in order to eliminate distractions. But we trust our readers are smart enough to read what has been presented and form their own opinions.

As a result, we’re presenting all of the facts and information we have been given in our search for answers in our Special Benefits Tax story.

Let’s start off first by presenting Mayor Jim Brainard’s answers to questions posed by Current in Carmel, much of which are accusations leveled by the mayor’s toughest critics.


ISSUE #1: Some critics claim that the Umbaugh report includes development into its revenue projections when the projects aren’t even close to being started.
I talked to the mayor and Mike Hollibaugh and I have it is my understanding that some projects have been delayed or haven’t seen any progress yet we have TIF projections based on this. These projects include an expansion of 126th Street and an Illinois Street Expansion. Some of the buildings were approved as long ago as 1998.
I have attached specifics on this on a separate document.

My questions:

 Is this accurate and am I understanding the report correctly?

[gview file=”https://youarecurrent.com/wp-content/uploads/2014/11/Future_Developments_5-29-14.pdf”]

Mayor’s Response: The table is accurate and will be reviewed and updated again in early 2015.

Can you confirm or clarify the attached document that states the project status?

Mayor’s Response: The ‘project status’ in the table reflects a variety of development forecast status. Sometimes, the project noted is a specific building approved with an identified target date for construction – usually this means it will ‘start in the spring’, or ‘start before winter’. Sometimes the projection is based on the specific zoning or project approval for the site. This type of projection is based on a site plan showing future building(s), but without a time certain for beginning construction. The last type of projection is development forecast. This is applied to vacant sites without an approved building or development scheme. The Department uses historic development trends; zoning; the comprehensive plan; and other relevant studies to make reasonable development forecasts on vacant ground.

If a project is included in tax increment financing (TIF) projections but hasn’t been started, how does that affect projections?

Mayor’s Response: The projections are intended to assist with decision making on public finance questions. Umbaugh and DOCS discuss the projections twice annualy, or, as needed, to review and update the parcel data/assumptions used in the projections, striving for the most reasonable land use projections.


The revenue estimates in the Umbaugh reports are based primarily on current TIF income and other revenues, and also include anticipated developments to occur between now and 2026. The current TIF value, based on new buildings already built in the TIF area since 1998, exceeds $1 billion. The new TIF value has grown from $0 to an annual $1 billion in 15 years.  $1 billion TIF value generates approximately $17.5 million annual TIF tax revenue.

 There are a number of major new developments that are currently (or soon to be) under construction including the Highpointe retirement facility, the Anderson Birkla development, the Nash building, the Bridges, Atapco apartments, etc. (You can refer to the schedules in Umbaugh’s report pages 19 – 24.)

Mayor Brainard

Carmel Mayor Jim Brainard

The estimates also include a certain amount of Future Development anticipated to be developed over the next 12 years, and this is based on development information provided by the Carmel Department of Community Services (DOCS).  This approach has proved to be much more accurate than simply applying a growth percentage based on historical growth (or assuming no growth). 

 It would be unrealistic for a TIF estimate for the City of Carmel to assume no new commercial growth over the next 20 years. Still, we are careful in our projections. The estimated future development assessed value of $188 million ($18 million new value per year which generates $300,000 of new taxes per year 2017 – 2026), represents 18% of the total estimated TIF value, less than 2 percent being added each year for 10 years, and no new growth is estimated in the last 10 years from 2027 – 2037.

2% annual growth in Carmel over 10 years is a fairly conservative assumption when compared with actual growth in Carmel since 1998.


ISSUE # 2: Some critics claim that past promises haven’t been kept when it comes to the redevelopment of Carmel under Brainard, which makes these critics skeptical of future promises regarding new developments such as municipally-backed bonds for a new parking garage.

Some promises they mention:

City Center parking garage was supposed to have 2,000 parking spaces when it currently has nowhere near that. A recent count showed less than 400 (please help me confirm that).

Mayor’s Response: The reference to 2,000 parking spaces was never solely to an underground garage. It included all of the proposed and existing parking on all of the then owned Pedcor properties as well as the properties around them. At that time Pedcor owned Parcel 7C (which is where the James Building is located (Tarkington Civic Theatre, Studio Theatre and office space). As a result if you include parking spaces in the current CCC garage, on top of the garage (i.e. the plazas), on and off-street parking around Parcels 5 and 7, the 7C garage, and the parking to the south of Parcel 5 (i.e. behind Shapiro’s north to the bank building) and the police/fire department parking to the north of the fire station plus the 300 spaces at Pedcor Square I believe that you come up with more than 2,000 once the current plans for the new Parcel 5 garage plus surrounding parking are implemented.

It was said that the developers would take all the risk for the City Center parking garage but the CRC bought the garage from Pedcor in 2011, which makes it responsible for that debt now.

Mayor’s Response: See complete details below.

For years, the public was told that a hotel would be built for the City Center but it hasn’t happened yet.

Mayor’s Response: Answered below.

The original price tag for the Center for the Performing Arts was $80 million but increased to $175 million

The city only has one remaining lawsuit that's unresolved in regard to the Palladium's construction. (Submitted photo)

The Palladium

Mayor’s Response: The cost was always $80 million plus $40-$60 million raised in private funds. The final cost of Palladium was $130 million and additional theater building was $12.5 million.

It was originally stated that the Center for the Performing Arts would operate at a $300K loss annually but now receives subsidies of $2 million a year
It was originally stated that the Center for the Performing Arts would raise an endowment of around $20 million to $40 million to support its costs.

Mayor’s Response: The recession impacted fund raising. The original goals are still in place. 

It was originally stated that Carmel hoped to sell naming rights for The Palladium for $25 million

Mayor’s Response: We are still working with individuals and organizations to secure naming rights.

Some amenities for the Carmel City Center – such as an amphitheater and Chandelier court – were proposed as part of the plans.

Mayor’s Response: The Amphitheater is built (just west of the Monon Trail) and Chandelier Ct. is still part of the plans, but won’t be constructed until the Baldwin Chambers building is built.

Other questions:
Why the CRC pay $22.5 million for the City Center parking garage when it was later valued at $13.8 million?

carmel city center

Carmel City Center

Mayor’s Response:  The CRC was obligated under the CCC project agreement in effect at the time to purchase the completed parking garage from Pedcor. In fact, city ownership of the garage was a requirement of the Council as a condition of approving the bonds.
What people don’t seem to understand is that, although complicated, the financial transaction regarding this garage was a huge benefit to the city that amounted to nearly $24 million.
Below is the full and transparent explanation …
The deal involving the CRC purchase of the garage keeps focusing on the $13.8 million appraisal for the garage. The acquisition of the garage was just a part of the transaction.
This transaction happened when the CRC obtained the $17 million loan from BMO Harris. Immediately before the closing on that loan Pedcor owned $22 million in TIF bonds ($16.5 million involving the CCC, $4 million involving the IDC and $1.5 million involving Pedcor Square #4 and #5).
Pedcor also owned the CCC garage and had the right to require the CRC to fund and/or pay us about $10 million ($5 million for a bridge over the Monon to go between the future hotel and the Palladium, about $3 million in funding of the gallery in the hotel and about $2 million in fees to be paid to Pedcor).
We transferred our $22 million in TIF bonds, title to the garage (appraised for $13.8 million) and our right to require the CRC to make the $10 million in payments described above (a total of $22 million + $13.8 million + $10 million = $45.8 million) for $16.5 Million in cash and $5.5 million ($16.5 million + $5.5 million = $22 million) in subordinate installment contracts (we surrendered about $1.1 million of these subordinate installment contracts in connection with the Shapiro purchase) which is a profit of $23.8 million ($45.8 million – $22 million = $23.8 million).
An alternative way of looking at this is that the garage and release of the $10 million in obligations of the CRC were effectively what was given the CRC as a profit to refinance the $22 million in TIF bonds that Pedcor owned. After the closing of the Harris loan the CRC and the City then paid off the $17 million Harris loan as a part of the $185 million City bond issue. Pedcor continued to own the $5.5 million in subordinate installment contracts). From the time of the closing on the Harris loan (about 3 years ago) until now the CRC has received $1.3 million in payments from the three Pedcor related TIF districts (CCC, IDC and Pedcor Square described above) in excess of the payments initially to Harris and after the Harris loan payoff the allocable part of the payments on the $185 million refinancing.
This was a win/win deal for all parties as anticipated and as it has worked out. It is possible that the three Pedcor related TIF districts will not generate enough income in the future to cover the $17 million part of the $185 million City financing but I think that is unlikely. If there was a shortfall then the CRC would need to pay it out of the revenues from its larger TIF district.

Isn’t the city now essentially “on the hook” for the debt for City Center parking garage?

Mayor’s Response: The property taxes from the new buildings pays the debt associated with the parking garage, not residential taxpayers.

How many spaces are there in the City Center garage and how many are for the public?


Bruce Cordingley, president of Pedcor, explains the Carmel City Center

Mayor’s Response:  Here is the break out to date:
135 – 24 hr. public parking spaces in the garage
20 – public parking spaces except for business hours
111 – 24 hr. residential restricted parking spots.
In addition, there are also 50 public parking spaces on top (plaza) of the phase 1 northwest end of the parking garage as well as 35 parking spots on the plaza level and 48 public street spots. Remember that the parking facilities under the current City Center Plaza area are only a part of what will be the complete development with much additional parking coming online as other buildings are added.

What’s the status of the hotel?
Mayor’s Response: The hotel is still part of the plan to be built in a later phase.

I’ve been told the Chandelier Court is in fact there. Can you explain its location to me?

Mayor’s Response: The public spaces are the responsibility of the City of Carmel and Chandelier Court would be one of those. Chandelier Court is just south of the space previously occupied by Mangia. The plan includes a large outdoor Chandelier to hang above the space, giving it some ambiance. Obviously, the buildings on the other sides of the plaza need to be in place in order to install the overhead lighting fixture because it is suspended from the buildings.


Loren Matthes

Loren Matthes, of Umbaugh & Associates, an accounting firm that was working closely with the city of Carmel. Some critics have questioned Umbaugh’s projections, but Matthes has been passionate in defending the firm.

ISSUE #3: Critics claim that the projections in Umbaugh’s May 29 report are overly optimistic because they don’t account for adjustments in the market for property tax appeals. Critics also claim that the paying back the bonds is very dependent on using reserves and other CRC revenue, which they claim isn’t as dependable.

Some questions:
Do the TIF projections account for developer splits, such as 75-25 TIF splits?

Mayor’s Response: Yes

Do we expect property tax appeals to continue?

Mayor’s Response: Yes, that is also taken into consideration, however, appeals are made by building owners when there are vacancies such as during the recent recession. We do not anticipate as many vacancies and appeals going forward.

How dependable is the “other revenue” for the CRC that’s derived from energy payments, 4CDC grants and rent payments from Civic?
Mayor’s Response: Very dependable


ISSUE #4: Critics claim the Special Benefits Tax could be a reality in the future.

Some questions:
What would have to happen to see the Special Benefits Tax go into effect?

Mayor’s Response: The odds of a shortfall in ability to pay debt are not high. But, if that were to occur, the Parkwood TIF is accumulating at a rate of about $2 million per year, growing to $34 million and is specifically set aside to cover any shortfall. The city also has other sources of revenue to make up for a shortfall, such as COIT and the Rainy Day Fund. The City Council would have to make the decision on whether or not to draw money from these sources or enact a new tax. The mayor has indicated he will not agree to a new tax if the Rainy Day and other funds hold positive balances.

What would happen to interest rates if it wasn’t used as a credit enhancer?

Mayor’s Response: That is hard to say since the market fluctuates so much. However, without that assurance, interest rates would definitely be higher and therefore increase the costs of any project.

How much could it conceivably be for taxpayers (both percentage and dollar amount please)?

Mayor’s Response: Taxpayers in Carmel already enjoy the 9th lowest tax rates in the state and there are certainly no plans to change that. However, for If there was an unexpected shortfall of say, a half million dollars, the resulting City tax rate would be roughly $12 a year for the average Carmel home, or about $1 a month, an increase of less than a 1/2 percent.


For a sense of balance, I’m also providing some e-mail correspondence with Mike Shaver, consultant for Clerk-Treasurer Diana Cordray and president of Wabash Scientific. Shaver has been passionate about the issue of transparency and helped Cordray in releasing this report (below) asking for an audit to assess the risk of a Special Benefits Tax.

[gview file=”https://youarecurrent.com/wp-content/uploads/2014/11/Clerk-Treas.-docs.pdf”]

Shaver has made the following claims — edited for  clarity and understanding — about Brainard and transparency:

“The parking spaces that I counted amounted to 375 in the structure, itself. it does not count surface parking … as we discussed, there is a difference between the “promises” and the reality, and yet the taxpayers are asked to underwrite even more.”

Mayor Jim Brainard sent me two charts about Carmel’s debt versus revenue and I asked Mike Shaver what he thought about the charts (shown below) and he sent the following:

[gview file=”https://youarecurrent.com/wp-content/uploads/2014/11/2014-11-05-debt-tax-rate-comparison.pdf”] [gview file=”https://youarecurrent.com/wp-content/uploads/2014/11/Ratio-of-debt-to-AV-comparison.pdf”]

I am only prepared to discuss the issue of CRC debt, even though i find that there are people who desperately want NOT to discuss CRC debt. in cases where people want to avoid discussing a topic, they often introduce other topics which do not answer the question but distract people’s attention.

“As far as my opinion, as you requested, i have reviewed the documents only briefly, but here are some thoughts:

Mike Shaver

Mike Shaver, president of Wabash Scientific and consultant/advisor to Clerk-Treasurer Diana Cordray, has been passionate about the topic of transparency when it comes to city finances

All of these graphs appear to address something other than the CRC Debt issues and therefore distract from a genuine discussion of the CRC debt issue. the question on the table to be addressed was/is the CRC and how the CRC is to pay its debt obligations. city tax rates compared to other communities are not relevant to the CRC debt question and really have no place in that discussion.
the only manner by which the comparative tax rates of other communities becomes relevant is under the circumstance that the mayor is anticipating increasing taxes. when a tax increase is proposed, it would be valid to compare the increased tax rate vs. other cities.
therefore, in the absence of the context of your discussion, the follow-up question is whether the Mayor brings these points forward because he is planning to increase taxes?
I’m not sure the point of comparing the “total revenue” vs, “total debt”. the CRC debt is the issue. as such, it again appears that the Mayor is trying to change the subject, unless you guys were discussing total debt.
In my view, the only connection between crc debt and total revenue would occur if the CRC was proposing to use city funds to repay its debt. we refer to that as a ‘back door tax increase.’
In fact, this is happening, as you know. CRC costs/obligations are being pushed over to the city budget, which thereby reduces the amounts left for providing city services. Also, those municipal revenues come largely from residential taxes, which the Mayor has steadfastly alleged NOT to use. the example of this transfer of costs to the city budget that you used before was the example of sophia square garage maintenance costs being taken from the street department budget, thus resulting in reduced street maintenance services.”


Finally, I want to provide you with a bunch of documents for any curious people out there who want to see the sources for themselves.

Here’s a fact sheet created by the Carmel Redevelopment Commission about TIF:

[gview file=”https://youarecurrent.com/wp-content/uploads/2014/11/SKMBT_C45214112113220.pdf”]

Here’s a PowerPoint presentation from Umbaugh and Associates about CRC finances and TIF:

[gview file=”https://youarecurrent.com/wp-content/uploads/2014/11/May-29-Umbaugh-report.pdf”]

Here’s the complete May 29 document that Umbaugh released with the city’s TIF projections (this is a very long document):

[gview file=”https://youarecurrent.com/wp-content/uploads/2014/11/Carmel_RDC_Final_SPR_TIF_Report_052914.pdf”]

Some charts to help your understanding:

revenues versus obligations

Debt versus Reserves

rervenues versus debt raw numbers


These charts should help you understand: What is tax increment financing (TIF)?



what is tif


tif explained


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