The Carmel City Council voted 7-0 Monday night to start a process in which $195,000,000 million in City debt will be refinanced.
The long-awaited decision comes on the heels of the Council’s virtual assumption of the Carmel Redevelopment Commission’s power following an early October vote. At that time, Council president Rick Sharp asserted that the decision was one that had to be made, due to years of reckless spending by the CRC.
On January 1, 2013, the full responsibilities of the CRC will pass to the Carmel Redevelopment Authority.
Monday’s vote sets in motion wheels which will gather bonds and loans together, to be sold at a lower rate. The plan hinges on Carmel’s credit rating, which was deemed to still be at the highest level by Standard & Poor in the spring, and potentially, tax dollars. Before Monday’s decision, it was a near certainty that homeowners would shoulder some of the debt burden in a special benefits tax – that now remains to be seen.
The $195,000,000 figure represents only about two-thirds of the total tab rung up – and as of yet, unpaid – by the CRC. The total amount is roughly $300,000,000, with the last $100,000,000 ineligible for refinancing at this time. Most of the debt was incurred in the redevelopment of downtown Carmel, as well as in projects like the Palladium. That endeavor alone came in nearly $26 million over budget.
Crucial to the refinance is $1.8 million per year that now will be funneled into what Sharp recently called a revenue deposit agreement, that will come from a tax increment financing bond due to be paid to completion soon. That yearly $1.8 million then will be held in reserve as a buffer for taxpayers, against potential dropping future TIF revenues.
For additional details and developments, read the November 27 edition of Current in Carmel.