Mayor Brainard Creates Carmel Bond Bank Without Council Authority

Now that the City of Carmel has become a second class city, Mayor Jim Brainard has assumed he's a dictator of sorts who doesn't require council approval for anything. The IBJ's Lindsey Erdody tells us that Brainard just created a local public improvement bond bank and named its board without first seeking council approval to create it or fund it.

Indiana law allows second class cities to establish local public improvement bond banks by resolution approved by the council. A local bond bank is a body politic and separate from the city in its corporate capacity under Indiana law, but Mayor Brainard presumes he has unilateral authority to create separate municipal authorities just because he's mayor of a second class city.

Brainard has already appointed the local bond bank's five board members, which he is entitled to do under state law once the council has approved the creation of the corporate body. None of the five members he appointed are knowledgeable in public finance. They include: Jeff Carter, a retired deputy commissioner of the Indiana Department of Labor; Jarvis Jointer, director of business development for Shrewsberry & Associates; John Schuyler, a retired consultant; Anna Stout, a real estate agent for F.C. Tucker; and Patrick Thomas, an attorney for Neighborhood Christian Legal Clinic.

Brainard told the IBJ it wasn't necessary for the board members to have any knowledge of public finance. "I looked for a mix of people," Brainard said. "I was pleased with this group because we got some younger people involved that had not served in an official position before." He said the board will rely on financial advisers when making decisions, so members didn’t need financial expertise. "You’re not looking for people with particular expertise in bonds," Brainard said. "You’re looking for people who will have the best interests of the community at heart."

Brainard isn't worried about creating a separate staff and budget for the bond bank, even though state law clearly makes it a separate municipal authority. Instead, he is having Carmel's new Clerk-Treasurer, Christina Pauley, serve as its executive director. Pauley said her staff will assume responsibilities for the bond bank on a volunteer basis. A former executive director of Indianapolis' bond bank, Gregory Clark, questioned the legality and manner in which Brainard has gone about creating a bond bank. "You gotta make sure you’re doing things right. When done right, it can be extremely beneficial to local government," said Gregory Clark, former executive director of the Indianapolis Bond Bank. "[But] there’s so many things that could go wrong."

The newly-created bond bank is already working on its first bond issue, which will include a mix of funding for roundabouts, road projects, redevelopment infrastructure, and storm water and sewer improvements. Clark questioned the mixing of different projects in a single bond issue. "General obligation debt typically can’t be mixed with redevelopment debt or storm water or utility debt because payments are backed by different revenue sources." "I don’t think that can fall under one transaction,” Clark said, clarifying that he did not know all the details of Carmel’s bonds. "I don’t know how they could have done that."