HomeMy WebLinkAboutD-2172-14 Establish Revenue Deposit Fund /previously Carmel Redevelopment Fund #902 Sponsor(s): Councilor(s) Schleif, Sharp
Seidensticker and Snyder
ORDINANCE D-2172-14
AS AMENDED
AN ORDINANCEOF THE COMMON COUNCIL OF THE CITY OF CARMEL,
INDIANA,ESTABLISHING A REVENUE DEPOSIT FUND
WHEREAS, a Revenue Deposit Agreement, dated as of November 20, 2012 (the
"Agreement"), which includes Exhibits A, B, C and D, was entered into between the CITY OF
CARMEL, INDIANA (the"City"), a political subdivision duly created and validly existing
under the laws of the State of Indiana, and the CITY OF CARMEL REDEVELOPMENT
COMMISSION(the"Commission"); and
WHEREAS, the CITY and the COMMISSION entered into a First Amendment to the
Revenue Deposit Agreement dated December 5, 2013,relating to the agreed upon application of
various tax increment revenues of the COMMISSION to the payment of COMMISSION
obligations; and
WHEREAS, a Second Amendment to the Revenue Deposit Agreement was adopted
May 29, 2014 by the CITY and the COMMISSION which established amendments to Exhibit D
and the addition of Exhibit E of the original agreement; and
NOW, THEREFORE,BE IT ORDAINED by the Common Council of the City of
Carmel, Indiana, as follows:
Section I: There was established a Fund(#902—Carmel Redevelopment Fund)which shall be
renamed The Revenue Deposit Fund to be utilized for deposit of(a) TIF Revenues, (b) other
CRC Revenues, and(c) Supplemental Reserve Fund Deposits, each as required by the
Agreement; and
Section II: Council hereby adopts Exhibit A(Revenue Deposit Agreement Flowchart), as a
visual representation of the process outlined in the Agreement. Exhibit B (Summary of Applied
Public Policy Related to 2012 and 2014 Bond Refinancing, including the Revenue Deposit
Agreement (RDA) (as twice amended) and Provisions Related to Implementation of the Special
Benefits Tax Carmel Redevelopment Commission is a narrative describing the intent of the
process outlined in the Agreement.
Section III: All prior Ordinances or parts thereof inconsistent with any provision of this
Ordinance are hereby repealed.
Section IV: This Ordinance shall be in full force and effect from and after its passage and
signing by the Mayor.
ADOPTED by the Common Council of the City of Carmel, Indiana this oZ 1`S day of
2014, by a vote of ~( ayes and 0 nays.
VERSION A-7/17/14;FINANCE,ADMINISTRATION AND RULES COMMITTEE
COMMON COUNCIL FOR THE CITY OF CARMEL(=-1----e .-.
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Presiding O i er Kevin D. Rider
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W. Eric Seidensticke , Pres(Q. ;•
Pro Tempore Carol Schleif
Ro Id Carter Richard L. arp
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, Sup” am 0 uci . yder
ATTEST:
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Diana L. Cordray, ' C, Clerk--.''easurer
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Presented by me to the ayor of the City of Carmel, Indiana this 2 e9 day of
2014 at 9 3'/ A .M.
hee/rA&)11, ,/ 'Ai%
Diana L. Cordray, IAMC, Clerk-Tr; rer
14
Approved by me, Mayor of the City of Carmel, Indiana, this oz'1 day of
2014 at 10:00 A.M.
L -
J.+ es Brainard,Mayor
ATTEST:
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Diana L. Cordray, IAMC, Clerk-Treasurer
Prepared by: Diana L.Cordray
Clerk-Treasurer
City of Carmel,Indiana
•
•
Revenue Deposit Agreement Flowchart
Collect/Evaluate TIF Revenue and
SBT(if previously levied)
Use 100%of Net TIF+100%of"Other
Deduct Developer Pass-Through TIF CRC Revenues"+100%of CRC SRF+
Necessary amount of"Other Revenues ►Activity CompletD
of City"(as approved by Council)to
Pay Obligations(Trustee)
Net Sufficient to No I, Use 100%of Net TIF Collected, Yes
cover Obligations? ADD"Other CRC Revenues" Use 100%of Net TIF+100%of"Other
CRC Revenues"+100%of CRC SRF+
Net Sufficient to No "Other Revenues of City"(as approved
Yes cover Obligations? by Council),ADD Necessary Draw on
Pay Obligations(Trustee) Net Sufficient to No Bond Reserve Fund Surety Bond to Pay
cover Obligations.? Obligations(Trustee)
Yes Use 100%of Net TIF+100%of"Other
CRC Revenues"+100%of CRC SRF, Issue SBT in amount Necessary to
Yes Excess after paying Use 100%of Net TIF Collected+ ADD"Other Revenues of City"(as cover Draw on Surety Bond payback
Obligations(Trustee)? Necessary amount of"Other CRC approved by Council)
Revenues"to pay Obligations(Trustee)
1
No Activity Complete
Activity Complete Activity Complete
V
Use 100%of Net TIF+100%of"Other
CRC Revenues';ADD CRC SRF
Is Excess due to No
Previously Levied Deposit Excess to CRC Allocation Fund
SBT?
Net Sufficient to No
Yes Activity Complete cover Obligations? Flowchart Definitions
Deposit Excess to Supplemental TIF Revenues-those revenues derived from the allocation areas identified in Exhibit A to the Revenue Deposit
P pp Agreement.
Reserve Fund(as this is an excess due Yes Developer Pass-Through TIF-The amount of TIF Revenues required to be set aside to pay developer bonds
•
to the issuance of a SBT the Taxpayer is for the allocation areas identified as having developer pass-throughs in Exhibit A of the Revenue Deposit
insulated from this being used for other Use necessary amount of CRC SRF to Agreement.
than the repayment of Revenue Deposit pay Obligations(Trustee) Other CRC Revenues-Includes Energy Consumption Payments,4CDC Grand Funds,and Civic Payments.
Agreement funding.) Other Revenues of the City-COIT revenues,rainy day funds,or any other generally available City revenues
or funds.
CRC SRF-Supplemental Reserve Fund created under the Revenue Deposit Agreement for additional coverage
Activlty Complet� in the event of insufficient Revenues/Funds to cover obligations.The SRF is to be funded over time:(1)
Activity Complet) from Parkwood TIF revenues once the 2006 Parkwood bonds are paid off,and(2)from general TIF
Revenues(if any)remaining after payment of all CRC obligations,up to an amount equal to annual
savings earned on the PAC refunding bonds. After the PAC savings amount is deposited into the SRF,
any remaining TIF revenues go back to the CRC Allocation Fund.
Exhibit A
Summary of Applied Public Policy Related to 2012 & 2014 Bond Re-Financing,
including the Revenue Deposit Agreement (RDA) (as twice amended) &
Provisions Related to Implementation of the Special Benefits Tax
Carmel Redevelopment Commission
Statement of Purpose
This document represents an attempt to quantify the public policy process and intent with regard
to the 2012 &2014 Bond Re-financings of CRC/TIF-based debt. The Clerk-Treasurer(Cl-Tr),
in her role as Treasurer of the CRC, is attempting to initiate the procedures necessary to comply
with stated public policies in the public interest of debt management and public fiscal
transparency. The City Council has requested that the Cl-Tr provide a written statement of
public policy to assure that the intent of the Council is fulfilled with respect to the Revenue
Deposit Agreement, as twice amended(RDA).
The City Council, as well as the Clerk-Treasurer, seeks clarity with respect to the public policies
which will be established to protect Carmel taxpayers from the implementation of the Special
Benefits Tax which was provided in the 2012 &2014 Bonds in pursuit of lower interest expenses
for these debts. Despite the fact that SBT provisions were included in these Bonds, it is the
stated intent of the City Council and others to implement measures to protect taxpayers from the
increased taxes that would result from the SBT, if TIF and other CRC revenues fall short of the
required debt amortization payments.
Draft Conclusions of Public Fiscal Policy Related to
Implementation of the Terms of the Revenue Deposit Agreement &
Regarding the Special Benefits Tax
The RDA, as twice amended, is to be implemented as a single document, with provisions
contained in the original document and all amendments to be taken in sum,rather than in any
sequence. The operational effect of taking all RDA provisions in sum is that the debt
amortization and the funding of the Supplemental Reserve Fund(SRF) (which is intended to
serve as protection against the need for the SBT) are to be undertaken as a unified set of actions.
The Council may choose, as part of the municipal budget process to make adjustments to these
fiscal actions as the Council determines that circumstances require.
Funding the Supplemental,Reserve Fund (SRF)
As provided in the RDA, the Cl-Tr is required to fund the SRF after it has been determined that
Developer Pass-Through and CRC Debt Amortization Obligations have been fulfilled. The
Revenue Deposit Agreement(RDA)provides that Parkwood TIF revenues (after the 2006
Parkwood TIF bonds have been defeased) and remaining TIF revenues (up to an amount equal to
1
Exhibit B
•
the annual savings on the PAC refunding bonds) are to be committed to a Supplemental Reserve
Fund(SRF).
The Second Amendment to the RDA specifically provides that an amount of excess TIF
revenues (if any) equal to the"savings"resulting from the 2014 PAC Bond Re-Financing is to be
set aside in the SRF administered by the Cl-Tr which can only be drawn by Council action.
Primary CRC Commitment of TIF Revenue
TIF Revenue is to be the first source of CRC debt amortization and funding of the SRF, as well
as payments to developers, which has been referred to as "Developer Pass-Through." There are
two primary levels of TIF revenue commitment which are to be respected in the distribution of
TIF Revenues: Developer Pass-Through and CRC Debt Amortization.
Developer Pass-Through
Developer Pass-Through is considered to be a primary TIF debt commitment which was
made specifically to developers, allowing the developers to capture TIF revenue from a
specific development. Developer Pass-Through allows individual developers to re-
capture TIF revenue from their developments. This primary TIF commitment has no
claim against TIF revenue from other developments.
The following represents a draft list of ED Areas previously noted as being subject to
Developer Pass-Through. (Over time, there have been nomenclature changes that should
be addressed to assure that specific actions are implemented correctly, therefore the
following draft list may require changes as the process moves forward.)
• Meridian & Main (Spine Group)
• 116th Street Centre
• (2013 Developer Pass-Through TIF was noted as $3,220,156.99)
• (2014 Developer Pass-Through TIF was noted as $3.0 million)
CRC Debt Amortization
This primary commitment of TIF revenues for CRC debt amortization generally
represents what has been referred to as the CRC's bonded indebtedness. The Cl-Tr uses
the amortization schedules included in those debt instruments to determine the debt
amortization payments on an annual (and semi-annual)basis. Over time, the CRC and
the City have consolidated and integrated TIF Areas to fund projects which serve
multiple ED Areas. As such, the Cl-Tr pools the TIF revenue available (net of Developer
Pass-Through) and makes amortization payments for this CRC indebtedness in
accordance with the amortization schedules.
For purposes of Fiscal Policy, the debt amortization schedules allow for future fiscal
planning for each fiscal year, as well as multi-year projections of TIF revenue
2
Exhibit B
commitment. Inasmuch as amortization payments are made from an established
amortization schedule,the Council can consider specific amounts for each budget year.
Policy If TIF Revenue Exceeds the Amount of Primary CRC Obligations
The RDA provides that any TIF revenue which exceeds the amount required to satisfy Developer
Pass-Through, CRC Debt Amortization and required SRF deposits be deposited in the Allocation
Fund to be used for the CRC's budgeted expenses. (The impact of secondary CRC obligations
on TIF revenues has not yet been quantified.)
Policy if TIF Revenue Is Insufficient to Meet Primary CRC Obligations
If the Cl-Tr and Council determine that TIF revenue is not sufficient to cover the primary
obligations, the bond documents indicate that Other CRC Revenue can be captured and directed
to fulfillment of CRC Obligations.
Order of Commitment of CRC Funds Necessary to Fulfill Obligations
In the event that TIF revenues are insufficient to fulfill the CRC's primary and secondary
obligations, the Council will generally look to `other' CRC funds, especially with regard to
fulfillment of debt amortization obligations.
The following categories of funds will be scrutinized for use in fulfillment of CRC obligations if
TIF is insufficient to fulfill CRC obligations:
• Other CRC Revenues (and revenues available to the CRC);
• Supplemental Reserve Fund
• Other revenues available to the City
o Including COIT and other funds
• Special Benefits Tax
Other CRC Revenue
`Other' CRC Revenues is intended as a general term representing revenues available to
the CRC though some function or activity. `Other' revenues can include a number of
items which might change from year to year for multiple reasons. The Cl-Tr and Council
consider that `other' CRC revenue potentially represents any revenue, cash, or other
proceeds of any kind (including real estate transactions)which are available to the CRC.
The Council's intent is that any deficiency in TIF revenue to cover primary obligations
can result in re-direction of`other' CRC revenues to fulfill CRC debts and/or
commitments, at the sole discretion of the Council.
For purposes of documentation, the Bond documents clearly state that the bond payments
are to be made from SBT collections,with the additional provision that the"the
Commission has reserved the right and reasonably expects, but is not required, to pay the
Lease Rentals from the CRC Revenues, which includes TIF Revenues and other legally
available revenues of the Commission." (emphasis added) These provisions are re-
stated in multiple locations in the 2012 and 2014 bond Official Statements. Footnotes in
3
Exhibit B
OS tables itemize the `Total CRC revenues' which comprised the `Total,' as follows:
• 2012 OS (Footnote 1) "includes"
o Tax Increment,
o Keystone Corporation payments,
o Village on the Green (VOG) rent and
o Energy payments.
• 2014 OS (Footnote 1)"includes"
o General Tax Increment,
o Village on the Green (VOG)tenant rent,
o Civic Payments,
o Energy Consumption Payments,
o Merchants Square Excess Bond proceeds,
o Civic Reserve Revenue and
o Energy Reserve revenue."
The CRC also tracks `other' revenues and provides that information in the Budget
reviewed by the Council. `Other' revenues of the CRC are to be made available for
fulfillment of CRC obligations, at the direction of Council.
Supplemental Reserve Fund (SRF)
The SRF is to be drawn in the event that Total CRC Revenues are not sufficient to meet
CRC debt obligations, at the discretion of the Council. The Council and CRC executed
the RDA with provisions for funding the SRF in the Second Amendment to the RDA
(2014). The Second Amendment includes a schedule of calculated `savings' resulting
from reduced amortization obligations resulting from the 2014 Re-Fi Bond. (The
schedule of savings is incorporated herein by reference.)
These savings are also shown in the OS for the 2014 Bond, on page B-10, showing
savings in debt amortization(as described in the OS) as follows:
• first year savings of$1,119,207.18 (2014-15);
• 2015-16 savings of$402,043.74;
• 2016-17 savings of$402,043.74;
• 2017-18 savings of$97,043.74
• With irregular amounts ranging from approximately$90,000 to approximately$100,000
per year for years 2018 through 2033.
The RDA and the Bond OS documents provide that"Total"revenues of the CRC are to
be committed to repayment of the 2012 and 2014 Bonds (which are further backed by the
SBT).
Other 'City' Revenues
In the event that TIF revenues, `other' CRC revenues, and the Supplemental Reserve
Fund (SRF)balances are all insufficient to cover the CRC debt amortization obligations,
4
Exhibit B
the City Council may consider dedication of City revenues to fulfill CRC obligations and
avert the need for levying the Special Benefits Tax.
This fiscal action is at the sole discretion of the City Council.
Special Benefits Tax
The SBT is specifically cited as the source of repayment for the 2012 and 2014 Bonds, in
approximately the same language, as follows:
"The Lease Rentals shall be payable from Special Benefits Tax Revenues to be derived
from a special benefits tax to be levied and collected by the Commission on all taxable
property... provided, however, the Commission has reserved the right and reasonably
expects, but is not required, to pay the Lease Rentals from the CRC Revenues, which
includes the TIF Revenues and other legally available revenues of the Commission. "
The SBT has obvious consequences with regard to the property taxes of citizens. The OS
for 2012 and 2014 specifically estimate the impact of implementation of the SBT on the
property tax rates of the City(2012 OS,p. B-14 and 2014 OS,p. B-12).
The City Council is therefore obligated to implement the SBT in the event that TIF AND
other revenues available to the CRC and the City(at the discretion of the Council) do not
meet the bond amortization obligations. The OS for the Bonds also contains provisions
for the timing and other factors affecting the implementation of the SBT.
The SBT is considered to be a"last resort"which was placed into the debt provisions as a
means of reducing the interest rate on CRC debt. The Council seeks to assure the
taxpayers that the SBT remains a last resort, after exhausting all other fiscal options.
Debt Service Reserve Fund (DSR)
In the interest of full disclosure,both the 2012 and 2014 Bonds contain provisions for a
Debt Service Reserve (DSR)Fund. The DSR is a provision maintained by the Bond
Trustee in the event that bond payments are not made. Implementation of the DSR has
substantial financial consequences on multiple, simultaneous levels. As such, the DSR
should not be considered as an alternative for meeting CRC debt service obligations.
5
Exhibit B