Wednesday, July 16, 2014

Report: Carmel TIF Revenues Could Fall Tens Of Millions Of Dollars Short In Repaying Debt

A special study commissioned to determine whether Carmel's TIF district revenues will be sufficient to cover long-term indebtedness incurred by the Carmel Redevelopment Commission is expected to be unveiled at tonight's Commission meeting which will reveal that revenues will fall as much as tens of millions of dollars short over the next 23 years. When the Carmel City Council agreed to refinance the CRC's nearly $200 million debt last year, it could put the city's property owners on the hook to repay any shortfalls through a special benefits tax that kicks in automatically if the CRC's revenue stream falls short. From the Indianapolis Star:
City councilors who had reviewed a draft TIF report said they could not release the document, because they were told that the projections were preliminary and the document was not to be distributed. 
However, Councilor Rick Sharp said that unless the projections have changed drastically between May and today, TIF revenues will fall short of what is needed. 
 "They are in a negative position in almost every year of the remaining years to pay off the bonds," Sharp said. "And the shortfall in TIF revenue to debt service will run eight figures."
As long as Mayor Jim Brainard's campaign contributors keep getting wealthier from the sweetheart city-backed deals, that's all that really counts. Right?

UPDATE: It looks like TIF revenues alone will come up about $43 million over the life of the CRC's current debt. The report indicated that there will be sufficient revenues, however, to cover the shortfall as long as the supplemental reserve fund established by the council as part of the debt refinancing continues to be properly funded in anticipation of the shortfall, along with additional revenue sources earmarked to help service the debt. The CRC members tried to give the impression the report indicated that the revenues would be available to avoid the need for imposing the special benefits tax; however, that's contingent upon the vigilance of the council in protecting the supplemental reserve fund from being poached by Mayor Brainard or his successors for use on other projects. Apparently, Brainard has already made one such attempt to divert funds since the CRC bailout was approved but was blocked by the council.


Anonymous said...

"City councilors who had reviewed a draft TIF report said they could not release the document, because they were told that the projections were preliminary and the document was not to be distributed"

This is bogus and someone needs to challenge Brainard on this practice. Every report, be it a development plan (Midtown) or the vaulted, much touted H.J. Umbaugh and Associates TIF projects or a C.L. Coonrod magical mystery 10 yr. financial plan are always marked in such a fashion - thus the public are not allowed to see the documents. We, the taxpayers are always being told the JB is such a whiz as mayor, but we are never given anything to substantiate his claim ....... I guess we just have to trust him ...... that's worked out so well in the past. (You didn't ask the right question. The definition of "is" is.)

It interesting that this "preliminary" / "draft" rational only works in Carmel. It's just another example of Brainard's "I'm going to do what I want ..... now stop me!" (and the City Council never does)

LamLawIndy said...

Question: I thought the bonds for the redevelopment District were revenue bonds as opposed to general obligation bonds. Was I incorrect?

Gary R. Welsh said...

They became general obligation bonds once the city bailed out the CRC and refinanced them to achieve the lowest possible interest rate.

Hernan Dough said...

Fascism / statism, is entirely reliant on fraud.

Anonymous said...

I thought TIF funding was originally intended for underdeveloped and impoverished areas??? How would a oasis for the wealthy and elitist city like Carmel be eligible for such financing?

Gary R. Welsh said...

The law got changed a number of years ago to allow TIF districts to be established anywhere regardless of economic need. They are now primarily used as an excuse for subsidizing projects in the most upscale areas that are typically undertaken by large campaign contributors of the politicians. Many local governments were pushed to the edge of bankruptcy in California, which is why the state legislature there repealed the TIF law. California was the first state in the country to enact a TIF law.