The Indiana State Board of Accounts has recently released its audit of the City of Carmel and it found some issues regarding the funds of the Carmel Redevelopment Commission.
Two major criticisms in the report, which covers the city’s 2013 budget, are as follows:
- Auditors claim that the Clerk-Treasurer’s Office did not follow proper financial bookkeeping for the city’s tax increment finance districts. By not establishing a subsidiary ledger for each fund, it makes it appear that all of the money is “co-mingled.”
- City buildings such as City Hall, the fire headquarters and police station have been “underpaying” the amount agreed to by contract to help pay off the debt associated with building the city’s energy center.
TIF DISTRICT FUNDS
What did they say?
The SBOA puts much of the blame for the accounting problem with the Clerk-Treasurer’s Office and claims that the Carmel Redevelopment Commission maintained a subsidiary ledger for each individual allocation area. “A separate accounting of amounts derived from other revenue sources was also not maintained,” the report states.
Who is responsible?
Clerk-Treasurer Diana Cordray disputes this accusation and said she only submits the information as sent by the CRC and that if it is going to be separated then her office needs more information to be sent over by the CRC. Corrie Meyer, director of the CRC, said they have sent an excel spreadsheet that explains all of the TIF district breakdowns. City officials also said that often SBOA auditors will be satisfied with a system of accounting for years and then decide one year that it shouldn’t be done that way.
Why is this important?
TIF districts are set up to capture property tax increases in an area and then use that money to fund redevelopment. In Carmel, many of the TIF dollars are used to pay off bonds used to construct the Carmel Center for the Performing Arts. Other TIF sources are tied to projects such as parking garages. Some experts argue that TIF revenue has to be reinvested in the district where it originated from, the only exceptions being projects that affect the entire region such as The Palladium. That is the Clerk-Treasurer’s Office is concerned about co-mingling funds because it makes it hard to tell if money is being spent for its intended purpose.
ENERGY CENTER
What did they say?
SBOA auditors found that agreements entered into on Nov. 1, 2010 haven’t been followed. Except for The Palladium, several buildings were paying less money than was agreed to into the contract when the Energy Center was built. In total, SBOA found $654,799 was underpaid or under-billed in 2013. The previous year showed identical numbers.
Who is responsible?
Everyone has a different answer but somehow it was agreed by the CRC or the City Council years ago that the lesser amount would be fine instead of the amounts in the contract. Carmel Mayor Jim Brainard said the CRC has had no problem making its payments on the energy center debt, but there is a shortfall and they usually find the money through other revenue sources. Brainard emphasized that these are all departments of the city and in essence one city department is paying another city department. To fix this problem, the contract would have to be amended to reflect the lower amounts or the entities would begin paying the larger amount specified in the contract.
Why is this important?
The energy center is a facility that provides cooled and heated air to several buildings. It’s meant to not only improve acoustics in The Palladium but also to provide energy cost savings. The city sold the energy center and then immediately bought it back as a way to finance the deal and provide capital to help finish construction on The Palladium. There’s around $16 million in debt associated with the energy center. Instead of paying an “energy bill,” it was decided that each building would help pay off this debt.
