After months of debate, Carmel, Ind. last week refinanced $186 million of debt for a concert hall and theater. The city's total interest cost was 3.24% on the mix of taxable and tax-exempt bonds, with net present value savings of $55 million.
Standard & Poor's rated the bonds AA-plus. The Carmel Redevelopment Authority issued the debt. The city expects to pay debt service with revenue from the local tax increment financing district, but a pledge of the city's property taxes also backs the bonds.
The state-of-the-art performing art center, a pet project of Mayor Jim Brainard, has long been controversial. After issuing $80 million of debt to finance the original structures, the redevelopment agency in 2008 floated another $45 million of so-called installment purchase contracts that allowed it to float the debt without the council's approval.
The state attorney general later weighed in on the fight, and ruled that redevelopment commissions can issue some types of debt without the approval of the city's legislative body. As the commission prepared to come to market this year, the city council said it would block the sale unless it won greater authority over any future borrowing, according to local reports.
"It is very rare that we have the opportunity to build a project at what has turned out to be some of the lowest construction costs in a lifetime and then refinance our redevelopment projects at interest rates that are some of the lowest of a lifetime. This is truly a win-win for Carmel," Bill Hammer, Carmel Redevelopment Commission President, said in a statement.
Oppenheimer was the senior manager. William Blair & Company and Mesirow Financial were also on the team. Barnes & Thornburg was bond counsel and H.J. Umbaugh & Associates was financial advisor. The redevelopment authority may return to market to refund additional debt in 2013, said Umbagh's Loren Matthes.