Mayor Jim Brainard and the Carmel Redevelopment Commission crossed into a gray area last year when they funneled tax money through a private foundation, according to several fiscal and public policy scholars.
State law doesn't allow the commission to use tax increment financing -- its main source of revenue -- for either its own operating expenses or those of a nonprofit group. But that's what the commission did in November by using a third agency and a loan as a go-between.
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The Carmel City Council has asked its attorney to investigate. State Sen. Luke Kenley, R-Noblesville, thinks the State Board of Accounts -- the agency charged with auditing local governments -- should intervene. State auditors have no enforcement authority but can tell the commission it's acting improperly.
Brainard has made broad use of the redevelopment commission to finance projects throughout Carmel, including City Center, the Arts & Design District and the Center for the Performing Arts.
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The commission voted on Nov. 1 to give grant agreements to the Carmel City Center Community Development Corp., a foundation created to fund redevelopment near Carmel's downtown. That foundation then used the grant agreements as collateral to obtain fivelines of credit from banks totaling $15 million.
The grant agreements obligate the redevelopment commission to retire those lines of credit using tax increment financing money, which is not supposed to be used to fund nonprofits or commission operations.
Those lines of credit, however, funded $5.5 million in expenses for the Center for the Performing Arts. The commission used the rest to cover its own operations and other costs. The commission and foundation work hand in hand. They have the same legal adviser, and they are led by political allies of the mayor.
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State auditors in the past have advised the redevelopment commission when it has acted improperly, including when it granted the Center for the Performing Arts $550,000 directly in 2009. Since then, Brainard has passed such funds through the community development corporation.
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