City leaders say they’re not concerned about a delay in constructing some of the buildings planned for City Center, even as bond payments are coming due on an $18 million parking garage planned to be paid for – in part – from tax revenue from the nonexistent buildings.
City Center is a public private partnership between the City of Carmel and developer Pedcor. The entire $100 million second phase of the project was originally expected to be complete by the end of 2019, but several buildings are yet to break ground.
Carmel Mayor Jim Brainard said he’s not concerned about the delay.
“Construction always takes longer than people like it to,” he said. “Pedcor puts a lot of effort and time into the architecture and planning, and it’s hard to control construction schedules.”
The Veterans Way garage was designed to support City Center’s second phase and be funded primarily through tax increment financing, which captures the increase in tax revenue in a designated area generated by new development and devotes it to paying off the project. With several buildings in the TIF area still not built and therefore not generating additional tax revenue, some members of the public have raised concerns about how the $18 million in bonds will be repaid. A first payment of more than $470,000 is due this year.
Mike Shaver, who formerly worked as a consultant for the city’s previous clerk-treasurer, has questioned city leaders about progress on the development during the public comment portion of two recent city council meetings. He said he’s worried about what changes to the original project could mean for Carmel taxpayers.
The bonds are backed by a special benefits tax, a tax on Carmel residents that could kick in if the other methods of paying off the bonds fail. City leaders don’t expect the tax to ever go into effect, however, because bond funds are committed to come from several other sources before resorting to the special benefits tax.
Safeguards include commitments from individual building and landowners to make additional tax payments if TIF funds fall short of projections and Pedcor committing to cover all bond payments not funded through TIF.
“(Pedcor) agreed to start making the bond payments whether the buildings were up or not,” Brainard said. “They’re obligated to make those payments regardless of whether the buildings are on schedule or not.”
At the April 15 city council meeting, Carmel Redevelopment Commission Director Henry Mestetsky rejected Shaver’s implications that the city is attempting to conceal documents or financial problems with the development. He said the delay is a good thing if it ensures the project is done right.
“Development is not easy, and development of beautiful buildings like this is not easy,” he said. “If Pedcor wants to take an extra year to develop a specific building that looks like this, all they have to do is make an extra payment and they can do that.”
Brainard said he is pleased with the city’s partnership with Pedcor to develop City Center.
“There’s a lot of give and take in these deals, and they’re getting a lot of benefits from the city,” Brainard said. “We’re getting a lot of benefits in the low urban density, tax revenue and quality of buildings.”
Pedcor Vice President Melissa Averitt said the company has applied for permits for the Holland and Playfair buildings and that construction should begin soon. All buildings are expected to be complete or under construction by early 2020.
“Pedcor remains committed to building beautiful architectural structures in downtown Carmel,” she stated in an email.