I saw the last bond was backed by a “Special Benefits Tax. Does that mean my taxes are going up as a result?
On the contrary, the City of Carmel has never raised local taxes in order to cover a bond issue. In fact, whenever bonds are issued for various projects – including for a variety of things such as road work, utility work and other public improvements – the use of an SBT (which stands for Special Benefits Tax) is done primarily to save the City money by allowing us to get a much better interest rate, due to the increase in the potential revenues to pay the bond off in the event other revenues fail.
“Every bond issue is different, so it’s not easy to offer a simple answer but you need to know that some of our bonds used for redevelopment are backed by the developer.”
Every bond issue is different, so it’s not easy to offer a simple answer, but you need to know that some of our bonds used for redevelopment are backed by the developer; others are shared by the City and the developer.
Still others are reinforced with separate agreements such as lease-rental revenues,energy center revenues and at times, “PIATTS”, which stands for “Payments In Addition To Taxes” which can be a side agreement calling for a developer to make additional payments in the event the property tax assessment would fall instead of rise (which rarely happens in Carmel, where property values continue to rise every year).
While these are complex financial tools that are not easy to understand, they are structured in such a way as to minimize the risk to both businesses and residents. If all else would fail by some catastrophic circumstance, the City Council also has at its disposal the ability to use Rainy Day Funds or to cut the city budget in a prudent way that avoids having to raise taxes.
Authored by Laura Campbell, Ron Carter, Sue Finkam, Anthony Green, Bruce Kimball, Kevin Rider and Jeff Worrell