Ordinance to be introduced to deal with CRC finances
By Adam Aasen
The Carmel City Council will propose an ordinance at its next meeting July 7 that would direct some Carmel Redevelopment Commission revenue into a specific account so it’s easier to track.
Tax increment financing revenue – or TIF as it is often called – will be put in a special “revenue deposit fund” so city councilors can easily see if there’s enough money to pay the bills, instead of trying to track down information from other people.
The ordinance also establishes a sequence of actions that should be undertaken if there’s not enough money in the account to pay for obligations.
“The reason for the fund is so we have one place to put the money so that they all can be accounted for appropriately,” City Council President Eric Seidensticker said. “We always establish a special fund for these big projects because we need to be able to track the money going in and out of one account.”
Tax increment financing is a way to receive money for future gains in property taxes. This money is used to subsidize current public improvements – such as the Carmel Center for the Performing Arts – which are projected to create the conditions for these property tax gains.
When TIF revenue is lower than projected, then it can be difficult to pay off bonds that were used to construct such projects.
Clerk-Treasurer Diana Corday, CRC Director Corrie Meyer and some city councilors met recently to discuss TIF revenues and clear up any confusion about TIF revenue. As a result, both sides decided to draft this ordinance to avoid any future miscommunication.
“This ordinance doesn’t ‘affect’ the CRC in a new way,” Meyer said. “It is a public statement clarifying how the CRC will manage the Revenue Deposit Agreement.”
Once all of the TIF money is in the right place, the ordinance would specify what would happen if there wasn’t enough money to meet the CRC’s financial commitments, likely debt payments.
Seidensticker created a flow chart that shows that if there’s not enough TIF money, then CRC would use its “other revenue” which could mean money from a sale of property. If there’s not enough money there, then the City Council would then look at city funds that aren’t already committed, such as the “rainy day” reserve fund or budget surpluses from certain departments.
If all of those contingencies don’t work, then the city would institute a “special benefits tax,” which would be added to everyone’s property tax bill. Since the tax wouldn’t be collected until the next billable year, the city would borrow money in the meantime.
Seidensticker said the council is still trying to figure out what the city would do if a “special benefits tax” was instituted and there ended up being excess funds available.
It’s not clear if the ordinance actually affects which bills are paid first or whether it just allows government officials to see where the money is going, but Seidensticker said it’s important to track everything properly to avoid any financial issues such as the 2012 CRC debt refinancing by the city council, which led to the council’s new oversight role.
“Because of the council effectively having to bail out the redevelopment commission, we wanted to make sure the money first went to paying off the obligations,” he said. “Nobody wants to be increasing the taxes of the public because we weren’t able to pay our bills.”
Mayor Jim Brainard has said numerous times that he objects to the term “bailout” and he feels the CRC has been nothing but transparent. And even those city councilors who have been the most critical of the CRC in the past have heaped praise on new director Meyer for her willingness to share information.
City Councilor Luci Snyder emphasized that this ordinance was a joint effort between the CRC.
“We all want to work together to make sure everything is done the right way,” she said.