State property tax cap limit of 1% has been circumvented
1) The State of Indiana has capped the private real estate property tax rate at 1%, with increased rates on commercial real property. However, there are other “Ad Valorum” taxes that can be levied against real property. One such tax is the “Special Benefits Tax.” All Carmel real properties were made subject to this new tax as a result of a refinance of Carmel Redevelopment Commission debt through bond debt agreements identified as series 2012A and 2101B. The SBT hasn’t been levied, but seems certain due to structural deficiencies in CRC financial policy.
Levy of new property tax is now the option of bond trustees
2) The Official Statement of series 2012A and 2012B provides that the bond trustee require the Commission to levy the SBT should the Debt Service Reserve Fund fall below the level required. It is not clear, but it appears the Commission may, at its option, levy the SBT. The OS states that the Commission is not required to make payments from the Tax Increment Revenue received by the Commission.
Higher new tax rates are out of property owner’s control
3) Higher new taxes have been contracted as an option of the 2012A and 2012B bond trustee, and perhaps a new taxing authority asserted by the Carmel Redevelopment Commission. Voters have no say in the matter.
Bond principle is not being repaid on major bond debt
4) Principal payments don’t begin until 02/01/2025 on bond 2012A (principal $115,900,000).This is troubling because it looks like a reflection of marginal repayment capacity of the Carmel Redevelopment Commission. Bond payments will balloon by an average of $8.5MM annually starting in 2025. The 2014 Tax Increment Financing Revenue claimed by the CRC is $17,532,007. TIF receipts will need to increase by about 50% to cover just this one bond. If revenues don’t increase at this rate, Carmel property owners are on the hook for the debt.
Current bond debt will not be repaid for over 20 years
5) Current bond debt will require debt service until 2037. The present TIF districts will have largely expired in that time, necessarily decreasing tax revenues. Having to replace TIF tax base as old districts expire, limits the potential for net new revenues. Binding future generations with debt limits their freedom to choose how they will invest. Our children should not be forced to inherit debt for the worn out “vision” of others.