The city of Carmel will consider using its good credit standing to assume ownership and then refinance $195 million in debt incurred by the Carmel Redevelopment Commission, a move that will not only save money in interest payments, but could result in some extra funding to finish one of its major projects.
Carmel City Council members will hear the proposal for the first time Monday night.
The move is the result of an April agreement in which the City Council asserted control over future spending by the Redevelopment Commission, a source of concern by some in Carmel and by others at the Statehouse, where attempts to write that measure of control into state law failed.
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The Redevelopment Commission has racked up about $249 million in total debt, but some of those bonds have "prepayment penalties" and were withheld from the current deal.
The original bonds financed the construction of The Palladium, the Center for the Performing Arts and Carmel City Center, all elements of a plan to breathe life into what was once a dying downtown.
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"Keeping the same yearly payment, we would also get between $10 million and $17 million of additional cash to finish the City Center," Brainard said. "The 195 million is the most we can do without penalty. If we get additional revenue, there may be more in the future.
"For instance, if a hotel is built, the property taxes from the hotel may be used to make payments on a new loan for infrastructure needed by the hotel."
Those kinds of decisions, however, are likely to need approval by the City Council, which in essence has a veto power over major projects that could lead to city debt.
Until April, the Redevelopment Commission had operated outside the jurisdiction of the council, issuing its own debt for major projects. Over the past few years, the commission incurred about $140 million in debt and is using nearly all of its revenue generated through tax-increment financing to pay its bills.
