The Carmel Redevelopment Commission will use money from a supplementary reserve account to pay $4.8 million in debt early to save nearly $2 million in future interest costs.
In 2016, the CRC will pay $2.3 million and save approximately $900,000 in interest, according to CRC Director Corrie Meyer. The remaining balance will be paid off by 2018 and will save another $1 million. The CRC is obligated to pay off these loans by 2034, Meyer said.
The debt is an installment purchase agreement through Village Financial, LLC and primarily finances construction of the parking garage at the Carmel City Center.
The debt prepayments will be made using the CRC’s supplemental reserve account. Currently, there’s $4.8 million in the account, Meyer said, and an upcoming deposit will bring the account to $5.6 million. She said another half million will be deposited by the end of the year, bringing the total to approximately $6 million.
Meyer said even after taking out $2.3 million this year, the CRC will still have plenty of funds to make its other debt payments without depleting the reserve account.
The Village Financial loans made headlines in 2014 when then Clerk-Treasurer Diana Cordray questioned the CRC about how the deal was set up and when payments were due. City officials claim that because of a miscommunication, interest was accruing, but payments weren’t being made. Later that year, the CRC saw one of the Village Financial loans, a $1 million balance, paid off by Pedcor when that company bought the building that formerly housed Shapiro’s Deli.
Meyer said it’s a complicated deal and one the city and the CRC will be glad to have off its books soon.
“It’s a great deal for the city because it helps us reduce our only variable rate debt obligation,” Meyer said.