Carmel looking to refinance $152 million in bonds
By Pete Smith
When the idea of refinancing about $152 million in bonds that originated about a decade ago was floated before the city council at its meeting on March 17, it was met with skepticism.
Several council members questioned the need for the refinancing and were wary of extending obligations or pushing out principal payments.
But after a team of consultants and bond underwriters made a presentation to six of the seven councilors during the Finance, Administration and Rules Committee meeting March 20, it appears likely that the councilors will call for a special city council meeting to quickly approve the refinancing in the hopes of saving about $3 million to $3.3 million in present value if the savings are taken upfront.
The reason for the rush is market uncertainty and a desire to quickly take advantage of a window of opportunity to maximize savings.
“The council is concerned that principal payment isn’t deferred and savings are net of expenses,” said committee chairwoman Luci Snyder.
But she emphasized that whatever form the refinanced bonds take will be done so that the city’s savings are maximized.
And the particulars of the deal are likely to be hashed out in public during a special council meeting.
At stake is whether the savings will come in the form of lump sum payouts this year or whether the savings will appear as annual payments spread out over the life of the new bonds.
Councilors will also determine where the savings are deposited – whether it be the city’s rainy day fund, its general fund or used to support decreasing TIF revenue in the years to come.
City bond consultant Loren Matthes of Umbaugh and Associates said, “We’re doing this because it will reduce interest costs and save the city $3-$4 million.”
Matthes also noted during the committee meeting that projected TIF revenue from the Barrington of Carmel development will not be collected in the future and that a recent Indiana Department of Local Government Finance clarification of the TIF statute means that the city will eat about $1.5 million in losses from residential assessed valuation in TIF districts and record none of the corresponding gains – both things that will reduce TIF projections.
There was also some confusion about the percentage of the Bridges development at 116th Street and Spring Mill Road that fell within a TIF district and how much of its tax money would be captured. The Hamilton County Auditors office said that they are required to flag an entire property parcel for belonging to a TIF district and it’s possible that could be creating some confusion.