The Carmel City Council unanimously passed up to $20 million in bonds to build two parking garages for the proposed Midtown development after hearing a presentation about several protections in place to avoid putting taxpayers on the hook if the original funding plan doesn’t work out.
Corrie Meyer, director of the Carmel Redevelopment Commission, said the tax increment finance district should produce $16 million in revenue in 25 years, and $13 million of that will be used for construction of a 308-space and 580-space parking garage. Any money that is left over after construction will be used to help build a public plaza just off the Monon Trail. The $100-million-plus Midtown development is being led by Carmel-based Old Town Development and will be located along the Monon Trail between the Carmel Arts & Design District and the Carmel City Center.
“This area is intended to fill the gap and create a more vibrant downtown,” Meyer said.
The bond will be sold at an expected interest rate of around 4.5 percent. It will be backed by a special benefits tax, which means that if the bond can’t be repaid through TIF funds then a new tax will go into effect.
Meyer explained there are several layers of protection that would be used before any new tax would be created:
- There’s a guarantee by the developer to complete the projects on time, which means the necessary tax revenue should be generated. If not complete, Old Town would make up the difference.
- Each of the parcel components in each building would contribute a payment in addition to taxes, also known as PIATT, to cover debt.
- Another Old Town project, Green House Cottages, isn’t located in Midtown but would contribute TIF money and PIATT to cover debt.
- Major tenants such as Allied Solutions can be asked to pay fees to help cover debt.
- If the other protections aren’t sufficient, the developer itself would guarantee to make up any difference.
- If the developer is unable to pay or goes out of business, there’s a reserve account that can be used.
- If those other protections aren’t sufficient, the city and the CRC could use other reserve accounts.
- If all of those protections fail, then the special benefits tax would go into effect.