Friday, July 18, 2014

IBJ Reports Carmel Panel Faces TIF Shortfall But Can Pay Debts

From the Indianapolis Business Journal:

New financial projections suggest the Carmel Redevelopment Commission will have enough annual revenue to pay its debts for the next 15 years before dipping into reserves.

But property taxes from the city’s two-dozen TIF districts could fall more than $1 million short as soon as next year—something City Council member Rick Sharp says is cause for alarm.

Municipal-finance adviser H.J. Umbaugh & Associates estimates the CRC will collect about $18 million in so-called tax increment in 2015, applying all of it to debt payments that total $19.1 million. The difference—plus about $630,000 that’s being called a “surplus”—is expected to come from other, much smaller income streams.

According to the analysis, prepared at the commission’s request, total revenue should exceed debt obligations by at least six figures every year until 2029, when the redevelopment areas begin to expire and tax revenue drops by $10 million a year.

By then, the CRC should have more than $27 million in a “special reserve” fund the Carmel City Council mandated in 2012, when it refinanced $184 million in redevelopment debt. More than $1.9 million a year is expected to flow into the account from an existing TIF district that is about to retire its debt.

CRC President Bill Hammer said the report shows the commission is capable of meeting its obligations, avoiding a citywide special-benefits tax that would kick in if it missed a payment. The extra property tax was offered as a belts-and-suspenders fallback to get a better bond rating in 2012, he said.

“We never really intended to use that as the first source of payment,” he said. “And we think that given the projections of today, it will never happen.”