Carmel, Ind.'s massive spending spree will continue after the City Council voted to approve $96 million in two bond packages to pay for a boutique hotel, roadwork, pathways and other infrastructure.
A $71 million bond package will fund a boutique hotel, an expansion of the Monon Greenway through City Center, six new roundabouts, two multi-use paths and about a dozen other infrastructure projects. The council, though, axed $5 million intended to purchase and install an antique carousel from a Canadian amusement park in the city's emerging downtown.
A $25 million bond package will fund land purchases that the Carmel Redevelopment Commission is considering for future projects, including the site of the PNC branch at Main Street and Range Line Road. The mayor has wanted to redevelop that land for years into a multistory building with housing, retail and restaurants. The council will be able to review any land purchases valued at $50,000 or more.
Each bond package passed 5-2. Council members Tony Green and Laura Campbell voted against the bonds, saying they were opposed to the city's plan to fund and own the hotel.
"We are jumping in with two feet into ownership," Green said. "We are jumping into the market. As a matter of policy, that is generally not the way government should be operating."
Beyond providing financing for the hotel, Campbell said she's concerned the city will be competing with other hotels in the market to attract customers and hire employees, even though it would be the city's only 4-star hotel.
"'I do have issues with Carmel competing with others in the area, even though this hotel is different," she said. "That's something I really struggle with."
While the bonds include $15 million to fund the upscale Marriott-brand Autograph Collection Hotel at City Center, the hotel isn't a done deal. That money will only be spent if the council approves a development deal for the hotel.
The city and Pedcor, the Carmel-based company behind the City Center development, are discussing a deal to form a public-private entity to own the hotel. That entity would take out an additional $25 million loan to pay the remainder of the hotel's $40 million price tag. The city anticipates hotel revenues will cover the loan payments with enough money left for a surplus.
Councilmen Ron Carter and Bruce Kimball made a last-minute, but ultimately unsuccessful effort to fund the carousel. They think it would have helped boost economic development and tourism while providing an amenity for Carmel residents.
"I do not believe that anyone can say outright that voting for this bond is irresponsible," Carter said.
The other five council members, though, said they heard overwhelming opposition to the carousel.
Thousands of residents signed an online petition and dozens packed city meetings to urge the council to vote against the funding for the hotel and the carousel, the first organized resistance Mayor Jim Brainard has faced since beginning his sixth term in 2016.
During the past two years, he has undertaken a $257 million spending spree on infrastructure, up to $353 million after Monday's vote to approve the bonds, plus funding tens of millions more in public-private partnerships to redevelop the city's downtown.
Four residents spoke against the carousel or the hotel Monday, though each took care to praise city leaders for Carmel's overall direction. In fact, no one asked the council to vote against the remainder of the spending proposed in the bonds.
Carmel resident Tim Hannon, a local doctor who started a petition, said in the future he hoped Carmel would involve residents earlier in the process. He urged the city to find private funding for the carousel.
Brainard said the city's agreement to purchase the antique carousel from Centreville Island amusement park in Toronto is now null and void. However, he said he hopes to find alternative funding to reach a new agreement to purchase the carousel.
The $71 million bond package will be backed by income taxes and the $25 million bond package will be backed by business property taxes collected by the Redevelopment Commission through tax-increment financing districts. Each bond package will be paid back over 20 years.
The reality, though, is Carmel can raise property taxes on everyone if not enough revenue is available to pay back the bonds. Both bonds would be backed by the city to ensure there are no shortfalls and to get a better interest rate.
Brainard provided the City Council with documents that show the city estimates it will have enough cash to pay back the debt without having to increase residential property taxes. He said the city's estimates include an additional $25 million to build a police headquarters in 2018.
Carmel now has $876 million in principle payments for debt, rising to $1.2 billion when including interest, according to the council. Most of that debt is being paid by business taxes collected through tax-increment financing districts. Four percent is currently being paid by residential property taxes.