. . . That debt is principally the debt of the Carmel Redevelopment Commission, and it was to be repaid by tax increment,” said Carmel City Councilman Rick Sharp. “But, they recently revealed in a report that the tax increment is not sufficient to repay the debt that they have accumulated. And, over the course of the life of the bond payments, they come up $43 million short. That is a significant number.” . . .
“Those bond holders are guaranteed to receive their payments, no matter what, because we’ve quietly backed (their payments) through Carmel taxpayers,” [former council member John Acceturo] said. “If there’s not the money to pay these bonds, there will be a special benefits tax levied against all property owners here in Carmel. I would label that threat ‘high risk.'”
“That debt is principally the debt of the Carmel Redevelopment Commission, and it was to be repaid by tax increment,” said Carmel City Councilman Rick Sharp. “But, they recently revealed in a report that the tax increment is not sufficient to repay the debt that they have accumulated. And, over the course of the life of the bond payments, they come up $43 million short. That is a significant number.”
“You should look at debt as a percentage of your revenue, not as overall debt,” Brainard said. “Somebody may have job that pays $40,000 a year. If they have $10,000 in debt, that’s 25 percent of their income. But, if they make $1 million a year and have that same amount of debt, it’s really not very much. So, the right question to ask is: what percentage of our city’s revenue goes toward debt payments? And, we’re right where we should be.”
Here's how Carmel's per capita debt compares to other Indiana communities:
Carmel ($11,809.36)
Evansville ($8,744.82)
Fort Wayne ($3,296.41)
South Bend $2,337.93)
Indianapolis ($1.010)I would note that Indianapolis' total debt of $828 million does not include debt held by other coterminous municipal governments like the Capital Improvement Board, Health & Hospital Corporation and so on.
11 comments:
Acceturo relentlessly warned Carmelites that Brainard was saddling their city with unreasonable debt. John Acceturo was belittled and smeared for telling the truth; Mr. Acceturo no longer resides in Carmel. Previously asleep at the wheel Carmel Council members such as long-term councilor Luci Snyder now waken and moan about the CRC and their mayor's many deceptions. Snyder, whose background is real estate (the irony!), wants to again be re-elected. Carmel seems to have so much new unused new residential and commercial real estate in its faux downtown area that perhaps Snyder can use her vast real estate skills (sarcasm intended) to help fill those structures and maybe reduce Carmel property owners' tax burden.
In theory, you build up a place while it's still growing, in population, but primarily in AV, because as AV grows, debt service on a fixed debt gets easier to pay. It's much harder to build in a place that's already built out, like Indy, because you're essentially replacing structures with one AV with, hopefully, another structure that has a higher AV. It's not an unreasonable theory, assuming you can maintain a pretty accurate picture of what your growth is going to be in the future.
Most of us incur a debt greater than our income. A Home Mortgage is typical. The debt is not an issue as long as you can make the monthly mortgage payments from your income.
If the value of your home increases, you could always sell it and cover the unpaid Mortgage. The CRC cannot be sold as who would want to buy it.
The tax payers in Carmel are left with a bill, plus all the maintenance costs.
Do we know the Indy "off the balance sheet" debt? I would bet that it is 3 to 5 trillion.
Why did the Council agree to guarantee the CRC debt & which members voted for the guarantee?
DLGF website shows Carmel's Net Assessed Value has declined by $200 M since 2006. Go check it out.
I don't doubt that, John, but can you help our readers understand how that could happen given all the new development and new housing stock that has been added in Carmel over that period of time?
Gary: Large commercial properties are appealing their assessment because recent sales of commercial buildings has trended down. So they are winning appeals and getting their taxes lowered. Also, look at the Hilbert Estate. It was built at around $40M, was listed at $24M, and sold for $3M. That is a big loss in assessed value. Every time a residential property sells for less than assessed value all properties in the subdivision have their assess value lowered based on trending. The commercial property price drops are also affecting TIF revenue big time. That is why they can't make their payments and have to refinance with backing by a Special Benefits Tax to lower payments. However, even that isn't enough to make up shortfalls they are experiencing.
Thanks for sharing, John. That makes sense.
In Indianapolis, we never realize the benefit of the tax increment from our downtown TIF because it lives on permanently, never providing the tax benefit realized from the incremental growth to other taxing districts. Instead, it becomes a permanent slush fund to be used to reward political contributors with taxpayer money for their development projects.
Asherwood in Carmel is reputed to have been built at a cost of about $50 Million. The estate is now listed at $25 Million. Using the former Hilbert property as a reference point... Asherwood's 100 +/- acres plus the improvements and the golf course and the tennis court and the pool would be lucky to pull in $5 Million.... nothing exceeds like excess!
And Westfield is headed down this very same road with its $20million - no $52million indoor soccer field. Jim Brainard and Andy Cook - two peas in a pod.
Never mind the couple million to put the "grand statues" at US31 and SR32 interchange, whatever they're handing out to the hotel developer to build a Cambria Suites, and the shell game similar to what Indianapolis did by "selling" the waterworks to Citizens Utilities - sure "no increased taxes" but you should see what we pay for water up here!!!
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