Expect action soon on Midtown development
Almost exactly one year ago, Justin Moffett of Old Town Design Group announced that he was going to be leading transformation of Carmel’s Midtown area.
The area between the Carmel Arts & Design District and the Carmel City Center along the Monon Trail had been a target for redevelopment for years and part of the city of Carmel’s master plan. Moffett bought up land and made his announcement, but little did he know how fast things would move.
Now several government officials tell me off the record that they are concerned about the project’s timeline. I’ve talked to people in City Hall, members of the Carmel City Council and members of the Carmel Plan Commission and the sense I’m getting is that things are moving fast.
Even Moffett himself told me quite candidly that things are moving faster than he would normally be comfortable with. That’s because his company has never attempted a project this big and it is new ground for them.
Part of the reason things are moving so fast is that Moffett landed a major tenant for one of his buildings. Merchants Bank wants to move its corporate headquarters to Carmel’s Midtown and wants to move in by spring 2017. That means the building needs to be started in January.
In order to accommodate the influx of employees for the Merchants Bank building, a parking garage must be built. In order to build the parking garage, businesses along Range Line Road – including the Laundromat, Amanda’s City Chic Consignment and Miller Auto care – need to be demolished, possibly this fall. Before Miller Auto Care can be demolished, a new free-standing building needs to be constructed across from Cancun Mexican Restaurant. Building plans for Miller Auto Care and Merchants Bank have already made their way to the Carmel Plan Commission.
“It’s exciting to get it started,” Moffett told Current. “Those are moving forward because we have solid dates with our tenants so we need to finish the buildings in time.”
But there’s another piece to the parking garage that needs to be considered and that’s financing. Moffett has said in the past that he wants to use tax increment financing to repay bonds to build the 1,000-plus space parking structure. He said he needs it to be that big to accommodate employees and other users. The parking is necessary to getting Merchants Bank to relocate to Carmel.
Tax increment financing – also called TIF for short commonly – is a way to capture increases in property taxes and use that money to fund improvement projects. The original base property tax still goes where it always does but when construction/redevelopment causes property values to go up then that extra money in reinvested in the area from which it came, ideally.
Often using TIF funds to spur redevelopment isn’t that controversial, but the real debate comes from the projects that are being used for. If there’s a bond tied to a TIF district, members of the Carmel City Council want to know who is responsible for paying off that bond and what happens if TIF projections don’t meet the threshold to pay off debt payments. Are the Carmel taxpayers on the hook? These are the questions that the City Council asked when they approved 4-3 to use TIF money to help build another parking garage for the Carmel City Center to support the second phase of its development. The Carmel Redevelopment Commission, anticipating some pushback from fiscal hawks on the council during an election year, built in several layers of protections for the bond payments, including guarantees from the developer Pedcor. For some councilors, like Council President Rick Sharp, the guarantees didn’t feel secure enough because the debt was backed up the possibility of a “special benefits tax” that would charge Carmel taxpayers to help pay off debt if there was a shortfall. While it might seem like an impossibility considering so many guarantees in place, Sharp felt uncomfortable putting the taxpayers “on the hook.” He said he asked if it was such a remote possibility, then why have it at all?
The City Center Phase Two parking garage TIF package sat in committee for a few months, longer than some at CRC told me they would have liked. Will we see a similarly extended timeline for this garage proposal?
Moffett told me on several occasions that he would seek to use TIF to help finance the parking structure and that it would likely be a TIF split with part of the TIF money going to the city and the rest going to the project. The rest of the details weren’t finalized but Moffett said he believed the deal would likely need to be in place before any shovels hit the ground. If demolition might begin in the fall, that means very soon.
Some at the city told me that they have concerns about the fact that they haven’t seen enough from Old Town Design Group about any TIF financing yet. The tone I have gotten is a sense of urgency and expediency but not yet a sense of panic.
The reason they don’t seem to panic yet is because past dealings with Old Town Design Group have usually gone quite smoothly. Moffett has a reputation of being very cooperative with the city when it comes to planning his developments and there aren’t many major surprises in the end result.
I’m not suggesting there is reason to panic or that things will be rushed. My conclusion, after talking to several officials, is that we will see lots of activity with regard to the Midtown plan very soon, probably before the end of the year when the new council takes office.