Over the last two years, the Indiana Senate passed legislation twice to curb redevelopment commissions’ ability to borrow money without legislative approval; however, Speaker Brian Bosma ensured that the bills died in a House committee. Recently, the Carmel City Council passed an ordinance that requires their approval of all new redevelopment commission debt. However, is it too late?
According to their January 2012 financial report, the Carmel Redevelopment Commission owes around $275 million, of which about $160 million was established without Council approval. Since the commission is using $10 million in borrowed funds to make certain debt payments and pay operating expenses this year, according to their report, it appears that they are in financial trouble. Redevelopment Commission debt is supposed to be paid with tax incentive financing, but there is not enough TIF money to pay all the debt the Redevelopment Commission has amassed.
In the next few weeks, the Carmel City Council will consider action to refinance that debt by supporting cheaper financing on the back of residential taxpayers. The Council will also consider absorbing the day-to-day operating cost of the Commission and its staff in the 2013 city budget.
According to the Mayor’s campaign promises, no residential taxpayer money was used to fund Carmel redevelopment. Has he changed his mind? All of this comes at a bad time since we have had no street repaving over the last three years, the Mayor’s budget for 2013 asks for an increase of about $10 million, and the Palladium operation needs millions to make up for losses.
If the Redevelopment Commission can’t save itself, will the City Council be able to do without a future tax increase? That remains uncertain. Even the richest community in Indiana has spending limits. It’s too bad the Commissioners of the Redevelopment Commission didn’t understand that. Let’s hope that the Carmel City Council begins to understand as our city faces financial woes caused by government overspending.