2006-Gramercy Economic Devel. Plan City of Carmel
Hamilton County, Indiana
Final Draft
Gramercy
Development Plan
July 11, 2006
W1 ga z0D Ockr ill fins.
Michael R. Shaver, President
3799 Steeplechase Drive
Carmel, IN 46032
(voice) 317/872 -9529
(fax) 317/872 -9885
(e -mail) wabsci @aol.com
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Gramercy Economic Development P Draft (0 60711) 2
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Map #2: Proposed Configuration of Gramercy PUD /ED Area
3 Gramercy Economic Development Plan: Draft (060711)
Redevelopment /Economic Development Proposal
The Gramercy project is proposed for the redevelopment of the Mohawk Hills apaiUnent
complex located on the west side of Keystone Avenue, south of 126 Street and north of
Carmel Drive. The existing Mohawk Hills complex includes multi family housing, as
well as a small golf course. Specific redevelopment plans for the entire site are not yet
complete but the proposal was approved by the Carmel Plan Commission on June 20,
2006, indicating that the Plan Commission has found that the Gramercy proposal
conforms with the Carmel Comprehensive Plan.
The Gramercy redevelopment proposal includes a mixture of commercial and high
density residential development. While the specific mix and other details of the new
development are not yet final, the Carmel Redevelopment Commission (CRC) is seeking
to initiate the process of designating an Economic Development Area (ED Area) on a
parallel track with certain approvals by the Plan Commission and City Council. The
CRC, however, may, at its sole discretion, choose at any time to withdraw the project
from the ED Area designation process.
While the Gramercy proposal might technically be considered a `redevelopment'
proposal, due to the fact that an existing development is being demolished and the site is
being `redeveloped,' the proposed Gramercy project does not advocate eminent domain
activity on the part of the CRC. Since the project does not advocate eminent domain, it
has been determined that the most suitable TIF -based designation is that of an Economic
Development Area, rather than a redevelopment area.
Statement Regarding Mohawk Hills
The Mohawk Hills multi family housing complex was considered to be on the "cutting
edge" when it was first developed. One of the few multi family complexes with its own
dedicated golf course, the development offered an upscale lifestyle opportunity with
generous and well- appointed living space, located along a major transportation artery
connecting the development with major employment centers in Indianapolis.
As is the case with every multi family development, Mohawk Hills has reached an
economic "tipping point." As has been demonstrated in every major city, multi family
housing reaches an age where the owners must either reinvest significant sums of money
to restore the development/complex to market viability, or `downscale' the development
to reach a more affordable market demographic. The cost of restoring an older
development to `cutting edge' status often requires re- design of units to add square
footage, major improvements to internal infrastructure (to include such things as high-
speed telecommunications), increased security, and adding other amenities. In cases such
as Mohawk Hills, the cost of restoring the complex to its previous "cutting edge" status
would be substantial, and may not be economically feasible without significant changes
to the character of the development.
Gramercy Economic Development Plan: Draft (060711) 4
As an alternative, owners often decide to invest less money into a property and squeeze
the budgets to wring more short -term profit from the development. These alternatives
generally form a downward economic /demographic trend which can lead in the direction
of urban blight. This phenomenon is altogether common throughout the nation, although
it must be made clear that this ED Plan does not intend to suggest that such an outcome
would be manifest here.
This ED Plan does not allege that Mohawk Hills is blighted, or that it will necessarily
become blighted. At the same time, it is clear that the complex no longer competes at the
top of the economic scale as it once did. The age of the complex is such that major
reinvestment is becoming more necessary each year. The golf course is well- maintained,
but is not generally competitive with other golf opportunities in the immediate vicinity,
making it harder to justify the use of the land as a golf course. Competitive pressure from
the Carmel real estate market has placed a premium on certain types of land, compelling
development to become more intense and more carefully planned. All of these factors
combine to indicate that Mohawk Hills is approaching a point where there is a sound
public policy reason to encourage major reinvestment in this particular case. With
significant new investment, the developer suggests that Mohawk Hills could become a
vastly different type of development than it is at this moment. The Gramercy proposal
initiates this alternative, and the CRC is prepared to explore the potential benefits of the
redevelopment proposal by examining the potential for designating the Gramercy
Economic Development Area.
The developer /owner of Mohawk Hills has reviewed the development and has
determined that Mohawk Hills has reached this economic "tipping point." Rather than
allow the development to trend downward in its economic viability, however, the
Gramercy proposal seeks to increase the developmental intensity of the site by re -using
land currently dedicated to the golf course, and to redevelop the site into a mixed -use
PUD, blending commercial and high- density residential development.
Gramercy Project Description
The developer has set forth a phased redevelopment approach to the Gramercy project.
The project's proposed developmental mix is shown in Appendix A of this ED Plan. As
shown in Appendix A, the developer expects taxable property to be constructed on the
site beginning in March, 2008, and continuing through March, 2019.
The Gramercy project proposes to demolish 564 existing apartment units (Mohawk Hills)
and as shown in Appendix A, to replace those apartment units with approximately 2,268
high- density residential units, broken down as follows:
726 rental /apartment units;
862 condominiums /flats;
635 townhomes;
45 "live /work" spaces;
78,950 s.f. of retail development;
40,000 s. f. of office development;
120,000 s. f. of hotel development; and
a parking garage.
Gramercy Economic Development Plan: Draft (060711) 5
The developer estimates that the proposed development will have a "build -out value of
$300 to $500 million, and is expected to take eight to twelve years to complete."
Graphics of the Gramercy project (see Maps #1 #2, above) are those also reviewed and
approved by the Plan Commission.
If additional detail regarding the development is desired, the reader can consult the
documents submitted to and approved by the Carmel Plan Commission. The Plan
Commission documentation has been used by the CRC as a basis for reviewing the
project and developing this ED Plan, with the assumption that commitments made to the
Plan Commission are subsequently also considered commitments made to the CRC.
Maps Supporting the Economic Development Plan
The ED Plan contains two maps showing the proposed ED Area and the proposed
Gramercy development, identified as Map #1 and Map #2, with labels. These maps were
provided by the developer and, to assure conformity with the Plan Commission
documents, were included in the public submittals to the Plan Commission. The CRC
uses the same documents as those considered by the Plan Commission in order to assure
conformity of the ED Plan and other CRC actions with the overall plan of development
of the community, at large (as required by statute).
Purpose of the ED Area Designation
The purpose of the ED Area designation is to enable the developer to recoup a portion of
the cost of redevelopment through the use of Tax Increment Financing (TIF). The CRC
and the City of Carmel have discretion over which projects might be approved for TIF
expenditure, as well as controlling how much funding those projects might receive.
The Mohawk Hills /Gramercy area has not previously been designated as an ED or
Redevelopment (RD) Area, and as such, no previous commitments or projections have
been made with regard to the property /parcels described below.
Description of the Proposed Economic Development Area
The proposed Gramercy Economic Development Area is described as follows for
purposes of designation by the Hamilton County Auditor:
Beginning at the point of intersection of the west right of way line of US431 (a.k.a.
Keystone Avenue), with the south right of way line of 126 Street in Carmel, IN;
Then proceeding southward along the west right of way line of US431 (a.k.a. Keystone
Avenue), which also forms the eastern boundary of parcel 16- 10- 31- 00 -00- 003.000, to
the southeast corner of parcel 16- 10- 31- 00 -00- 003.000,
The turning westward along the southern boundary of parcels numbered 16-10-31-00-00-
003.000, 16- 10- 31- 00 -00- 002.000, and 16- 10- 31- 00 -00- 002.001, to the southwest corner
of parcel 16- 10- 31- 00 -00- 002.001,
Then turning northward along the western boundary of parcels numbered 16- 10- 31 -00-
00- 002.001, 16- 10- 31- 00 -00- 002.000 and 16- 10- 31- 00 -00- 001.000 to the point of
intersection with the southern right of way line of 126 Street,
Gramercy Economic Development Plan: Draft (060711) 6
Then turning eastward along the southern right of way line of 126 Street to the point of
beginning.
The above description containing four parcels, according to the online records of the
Hamilton County Auditor, including parcels numbered:
16- 10- 31- 00 -00- 001.000
16- 10- 31- 00 -00- 002.000
16- 10- 31- 00 -00- 002.001
16- 10- 31- 00 -00- 003.000
TAX ALLOCATION AREAS TO BE DECLARED SEPARATELY
The CRC, reserves the right to designate Tax Allocation Areas for the project in
accordance with the criteria of the City and the CRC, and as such, specific Tax
Allocation Areas may be declared separately on the basis of the sequence of
development of the final project, as ultimately approved by the Plan Commission,
City Council and CRC.
Statutory Findings of Fact: Gramercy
In accordance with IC36- 7- 14 -41, the Carmel Redevelopment Commission (CRC) offers
the following findings of fact:
1. The plan for the Economic Development Area: promotes significant opportunities for the
gainful employment of its citizens; attracts major new business enterprise to the unit (of
government); retains or expands a significant business enterprise existing in the unit, or;
meets other purposes of redevelopment and economic development.
2. The plan for the Economic Development Area cannot be achieved by regulatory
processes, or by the ordinary operation of private enterprise because of: lack of public
improvements, existence of improvements or conditions that lower the value of land
below that of nearby land; multiple ownership of land; or other similar conditions.
3. The public health and welfare will be benefited by the plan for the economic development
of the area.
4. The accomplishment of the plan for the Economic Development Area will be a public
utility and benefit as measured by: the attraction or retention of permanent jobs; an
increase in the property tax base; improvement to the diversity of the economic base; or
other similar benefits.
5. The plan for the Economic Development area conforms to other development and
redevelopment plans of the unit.
Finding of Fact #1 a: `the plan promotes opportunities for employment...'
The current land uses of the four parcels within the proposed ED Area include multi-
family housing and a small golf course. The Gramercy redevelopment proposal includes
adding commercial land uses to the site, as well as changing the configuration and mix of
housing types.
Gramercy Economic Development Plan: Draft (060711) 7
The conversion of these four parcels to a multi -use redevelopment, including commercial
parcels will generate new employment opportunities for citizens of Carmel and of nearby
communities. Previous studies have noted that north -bound traffic on US31 and US431
has grown at rates greater than south -bound traffic. This phenomenon is largely due to a
northward shift in employment patterns, making Carmel an employment center in its own
right (and reducing economic dependency on Indianapolis as the primary employment
center). As the Carmel employment center grows, it becomes more feasible for citizens
of northern Hamilton County to commute to jobs in Carmel, such as those which might
be created at Gramercy.
The average commute time for Hamilton County workers is approximately 20 -25 minutes
(depending upon community), according to census information. In order to encourage
the economic growth of jobs in Hamilton County, it will be necessary to develop and
redevelop existing sites in Carmel and other parts of Hamilton County. The Gramercy
proposal potentially represents one of those opportunities, creating jobs in the
commercial portions of the proposed development, as well as jobs in the multi family
housing portion of the proposed development.
In addition, Gramercy represents a significant opportunity to create and sustain
construction jobs necessary to demolish the existing development and build the proposed
development. While demographers sometimes refer to construction jobs as "temporary"
it should be noted that the construction jobs at Gramercy are expected to remain on -site
for up to 12 years, according to the proposed project schedule.
Finally, the proposed project also represents the opportunity for the creation of jobs in
property management and maintenance on a permanent basis, as well as the potential for
long -term attraction and retention of professional jobs located in any office buildings
which might be developed at Gramercy. Gramercy's location along a major
transportation corridor provides an ideal location for professional office development,
which is very compatible with land uses to the south that are already fully developed.
It should be clear from the above discussion that the proposed Gramercy development
has the potential to create /retain permanent professional and other commercial jobs at
several levels, as well as long -term construction jobs, thus meeting the statutory
requirements of this finding of fact.
Finding of Fact #1b: `...attracts a major business enterprise...'
The proposed Gramercy project is designed to assist in sustaining economic growth in
Carmel. It is important to understand that economic growth occurs in many forms and
has many attributes which the real estate market must accommodate. Growing
businesses must constantly expand their operations in a number of ways, including new
office and /or retail space. In some cases, these growing businesses can be expanded at
their existing locations, and in other cases, the existing location cannot accommodate the
needs of certain growing businesses.
Gramercy Economic Development Plan: Draft (060711) 8
In other cases, businesses grow in economic impact through new technology and
increased productivity. Again, these growing businesses find that their existing location
may not be able to meet the need for such things as broadband infrastructure, or other
high -speed telecommunications facilities, which help to make the existing work force
more productive. These increases in productivity enable companies to improve and adapt
their products to remain competitive in the marketplace. The creation/development of
new commercial space, with enhanced infrastructure, enhances the capacity of a city to
capture and retain these types of businesses, both from inside of Carmel and from places
like Indianapolis.
In other cases, new businesses are spun off from existing businesses for an assortment of
reasons, including profitability, specialization, and market share. Overall, the dynamics
of the local economy eventually manifest themselves into the real estate market, but in
each case, as these growing and spin -off businesses become established, and as their
operating needs evolve, the development of new, `cutting edge' commercial space
enhances the capacity of a city to capture and retain those businesses and the jobs that
accompany them. In fact, many of the businesses in Carmel have relocated there from
Indianapolis, or have relocated to Carmel as a result of business spin -offs or other
entrepreneurial action.
It is appropriate to add a further note regarding the location of Gramercy. The US431
corridor carries huge amounts of traffic and is, in fact, programmed for major
improvements in the next 10 years. This large volume of traffic makes the corridor
suitable for increased commercial development which can enjoy and optimize the high
visibility character of the site. This attribute, we believe, enhances the capacity of the
proposed Gramercy development to capture major new business enterprises by offering
them space with the finest amenities, the easiest access, and the highest visibility.
Based on the promise of creating/developing new commercial space in a location ideally
suited to commercial development, the CRC has determined that the Gramercy proposal
will, in fact, increase the capacity of the City to attract one or more major new business
enterprises to the City, thereby meeting the requirements of this statutory finding.
Finding of Fact #1c: `...retains or expands business enterprise existing in the
unit...'
As noted in the explanation above, the Gramercy redevelopment proposal indicates that
the existing Mohawk Hills site can be redeveloped to compete in the modern
marketplace. The combination of commercial, retail and residential space is to be
configured specifically to meet the sophisticated demands of the 21 century professional
and intellectual workforce, including cutting -edge broadband access, live -work
accommodations and other high quality amenities being sought by professionals of all
ages. The Carmel Plan Commission is currently considering the Gramercy development
in order to assure that it conforms to the overall plan of development of the community.
There is no question that Carmel is a city of high -end economic growth. Carmel
residents have a higher than normal likelihood of becoming entrepreneurs, themselves, or
Gramercy Economic Development Plan: Draft (060711) 9
investing in entrepreneurial enterprises. The economic cycle is not stagnant. This
constant, cyclical economic stimulus manifests itself in the real estate market by
demanding new office, retail and other commercial spaces, configured specifically for the
purpose of meeting the needs of growth companies, as well as entrepreneurs. While
some of these needs are generic, many of those needs are very idiosyncratic, requiring
special configuration in order to optimize operational efficiencies. As new space is
configured to accommodate more sophisticated requirements, older space is vacated for
remodeling and updating. During this interim, existing landlords determine how and
whether the older space requires major reinvestment, especially with regard to such
things as high -speed telecommunications and broadband infrastructure, which not only
increases corporate efficiency, but improves product and service quality.
The proposed Gramercy project fits this paradigm. Although Mohawk Hills is currently a
multi family housing complex, the redevelopment proposal is expected to provide a range
of commercial and retail land use types which would accommodate growing businesses
and entrepreneurs in the Carmel area. By providing new space, configured specifically to
meet the highly- refined needs of these growing businesses as well as new entrepreneurs,
existing commercial space in Carmel can be reconfigured and updated to offer newer
technology, high -speed telecommunications, and other operating efficiencies so that the
existing space can return to a competitive market position.
The Gramercy redevelopment proposal offers Carmel the opportunity to redevelop an
existing space to remain competitive in the business real estate marketplace. The
combination of commercial, retail and residential redevelopment is expected to enable
more Carmel entrepreneurs to manifest their ideas into the marketplace, as well as
enabling Carmel to retain existing growth businesses that might otherwise have left
Carmel because existing space could not meet their highly specialized and sophisticated
needs. Equally importantly, the introduction of new commercial and retail space will
enable and encourage the owners of existing retail /commercial space to reinvest in their
property, making those existing developments less susceptible to long term decay and
urban blight, which benefits the entire community.
For these reasons, the CRC has concluded that the creation of the Gramercy ED Area will
help Carmel to retain growing businesses, allowing them to expand within Carmel, while
increasing technological efficiencies which will enable Carmel businesses to compete
effectively in the global marketplace. These activities have the effect of retaining and
expanding existing business enterprise in the City of Carmel. As such, the CRC
concludes that this statutory finding of fact is satisfied.
Finding of Fact #9d: `...meets other purposes of redevelopment and economic
development...'
This statutory finding of fact is important to the Gramercy redevelopment proposal in
several ways. First, this finding of fact specifically connects "redevelopment and
economic development," addressing both opportunities within the same proposal.
Gramercy is both an economic development project and a redevelopment project, at the
same time, and this section of the statute addresses this connection.
Gramercy Economic Development Plan: Draft (060711) 10
The Gramercy proposal will redevelop an existing multi family housing complex, which
is approaching its `tipping point' in terms of the need for significant reinvestment. If the
old Mohawk Hills apartment complex does not receive significant new investment, the
demographics of the development could easily change. Such a demographic change will
likely be gradual and occur over time, but is likely, given similar lessons of history, to
lead to economic decline and urban blight for the area. A proposal such as the Gramercy
proposal fundamentally provides assurance that the new investment will curtail any
economic decline, and restore the site as a high quality development. As such, the
Gramercy project meets the `other purposes of redevelopment and economic
development' clause in the statute.
In other communities, multi family housing complexes are too often allowed to
deteriorate, receiving insufficient new investment, becoming a blight on the community,
and negatively affecting the personal wealth and value of the neighborhood. The real
estate industry is virtually predicated on the assertion that location is the paramount
consideration. Consequently, locations which are close to blighted property are also
likely to be adversely affected by such deterioration and lack of new investment.
It is an irony that individual residents may oppose a proposal to redevelop a property,
simply (and sometimes unreasonably) demanding that nothing be allowed to change.
Such opposition often proves later to be counter productive to the economic interests of
those same residents. Consider the example of the Monon Trail, where the proposal to
redevelop the property was greeted with heated individual rhetoric from people living
along the Monon Trail, vigorously opposing the conversion of the old railroad into a
bike /pedestrian path. Many of those individuals complained that their property value
would be adversely affected by the pathway project. Now, a decade after those
acrimonious exchanges, when a property adjacent to the Monon Trail is set for sale, the
owner virtually always notes that the property is "on the Monon, often with a premium
attached to the price, indicating that both the owner and the general market acknowledge
that the Monon Trail was a benefit to the property, despite the original rhetoric. The
point of this discussion is to note that redevelopment projects often accomplish "other
purposes of redevelopment and economic development," including obviation of blighting
influences on the surrounding neighborhood, the restoration of market viability and
enhancement of the property value (and tax base) of the general area, even though such
arguments are often discounted by neighbors.
Redevelopment proposals like Gramercy meet these `other purposes' of redevelopment
and economic development in several ways, as explained above. The act of
implementing significant reinvestment reduces the potential for future blight. Clearly, at
some point (if not now), Mohawk Hills will require significant reinvestment, and the
result of that reinvestment will change the existing development, and will reduce the
potential for urban blight at this location, while simultaneously preserving property
values in the surrounding area. Therefore, the Gramercy proposal meets these `other
purposes' by assuring the reinvestment that is required to make the site function
Gramercy Economic Development Plan: Draft (060711) 11
competitively in the local economy, thus meeting the requirements of this statutory
finding.
Finding of Fact #2a: The plan for the Economic Development Area cannot be
achieved by regulatory processes....'
The Gramercy proposal cannot be achieved by the regulatory processes. Redevelopment
of real estate in the current legal framework of Indiana statutes is an expensive and
prolonged task under the best of circumstances. In this case, the enforcement of
regulations and local ordinances would not succeed in generating the magnitude of new
development and redevelopment that Gramercy offers.
It should be understood that the potential relief afforded by the regulatory processes to
accomplish economic development goals is largely terminated by the approval of the
original development by a plan commission and /or city council. At such time as the
Mohawk Hills complex was originally approved, the opportunity for changing that
development through regulatory processes was ended. Once the approval is rendered,
regulation can no longer significantly affect the nature or character of the development.
By definition, this means that the plan for development (changing the configuration of
Mohawk Hills) cannot be achieved through the regulatory processes. Once Mohawk
Hills became an apartment complex, the regulatory processes are powerless to
fundamentally change that use without the express consent of the owner.
The regulatory processes are also not useful in forcing reinvestment in an existing
development, unless and until that existing development becomes egregious in violating
local ordinances. Certainly, a city can enforce minimum health and safety codes through
the regulatory processes. The problem is that, by the time that these codes are violated
and the regulatory processes are prosecuted, the existing development has generally
become a significant problem for the community. In a community with the high quality
of life that exists in Carmel, there is substantially greater advantage to the community to
develop viable partnerships with developers to achieve change than to attempt to use the
legal /regulatory system to force change.
It is the position of the CRC that the plan for the proposed Gramercy Economic
Development Area cannot be achieved by the regulatory processes. Despite the fact that
the entire development has not yet been fully approved, the CRC has reasonably
determined that the partnership between the CRC and the Gramercy developer can
achieve far more in terms of economic development and redevelopment benefit than can
be achieved through any regulatory processes, especially regulatory processes that are
adversarial in nature. For these reasons, the CRC finds that this statutory finding of fact
is satisfied.
Finding of Fact #2b: The plan for the Economic Development Area cannot be
achieved by... the ordinary operation of private enterprise because of lack of
public improvements....'
The public improvements which were installed to support the Mohawk Hills development
will not be suitable to optimizing the economic development and redevelopment impact
Gramercy Economic Development Plan: Draft (060711) 12
of the Gramercy proposal. Therefore, in order to support the plan for the proposed
Economic Development Area, it will be necessary for the CRC to assist in providing new
public improvements which appropriately support the Gramercy project.
The `ordinary operation of private enterprise' is a somewhat ambiguous term that must be
defined in a manner appropriate to its applicable context. What might be `ordinary' for
Carmel might not be `ordinary' for Indianapolis or Noblesville.
For Carmel and the CRC, the `ordinary operation of private enterprise' has been
determined to mean those activities that would reasonably be expected to continue if a
development were to simply change ownership. In this case, the `ordinary operation of
private enterprise' determination would be applied to Mohawk Hills /Gramercy to mean
that Mohawk Hills would continue to operate as an apartment complex, with a small golf
course. If the Gramercy development were to simply propose to remodel the existing
apartments, the CRC would not be likely to be interested in supporting the owner with the
designation of an Economic Development Area, or the expenditure of TIF revenues.
In fact, it is the position of the CRC that the Gramercy proposal substantially exceeds the
`normal operation of private enterprise,' by proposing an entirely new mix of residential
and commercial uses, as well as millions of dollars of new construction. In this case, the
Gramercy development cannot be accomplished by the ordinary operation of private
enterprise, regardless of the issue of public improvements.
The Gramercy proposal contains virtually all new public improvements, including streets,
sewers, water lines, and other infrastructure. These new infrastructure systems would not
be economically feasible while the developer is also responsible for acquisition of the
existing development, the cost of demolition, and the lost revenues caused by revenue
years lost during construction. Due to these considerations, the CRC finds that the
Gramercy Economic Development Plan proposal cannot be achieved through the normal
operation of private enterprise due to a lack of public improvements which are configured
in a manner that optimally supports the proposed new development.
Finding of Fact #2c: The plan for the Economic Development Area cannot be
achieved because of ...existence of improvements or conditions that lower the
value of land below that of nearby land....'
It is also worth noting that the fundamental principle of TIF is that the resulting/proposed
development has a higher value than the existing development. If the new development
does not achieve higher property values than the existing development, there will be no
tax increment to finance. Consequently, by this measure, any project which successfully
generates TIF (or at least a developer's guarantee based on reasonable TIF assumptions)
meets this statutory finding of fact. In other words, if a proposed development generates
tax increment revenues, then that development has a higher value of land (and
improvements) than the existing development. When conditions exist that demonstrate
that existing improvements have a lower value than could be achieved if the new
development proposal were implemented, this finding of fact is arguably fulfilled.
Gramercy Economic Development Plan: Draft (060711) 13
The existing Mohawk Hills development is approaching an age where substantial new
investment has traditionally been required in order for the development to remain
economically viable. While the existing development is not dilapidated or blighted, the
existing owner acknowledges that the quality of nearby development generates an
economic opportunity which would substantially improve the value of the existing site, as
well as having a positive economic impact on nearby properties.
When Mohawk Hills was first developed, it was very rare for an apartment community to
offer golf as an amenity, and the presence of this golf amenity gave Mohawk Hills
prestige. Over the years, new apai tinent developments offered larger living units with
more and better appliances, while new golf courses were built nearby with more
challenging designs. Since there are other golf course alternatives nearby, the Mohawk
Hills golf course is not attractive to many golfers. The impact of this lack of market
competitiveness is that there are other uses of the golf course land that are more
economically productive and profitable than the current use. The sum of these competing
market forces is that the current configuration of Mohawk Hills is now considered to
have under utilized land in the golf course.
The golf course is an "improvement" on the real estate, and the configuration of the land
(and buildings on the land) is a "condition" of the property. By committing such a large
proportion of the site to an under performing golf course, the CRC acknowledges that the
value of the Mohawk Hills development, in its current condition, is lower than that of a
comparable amount of nearby land that is more optimally developed.
In its most simple form, by removing the existing apartments, and developing the golf
course into more intense (and more carefully planned) land uses, a new development mix
can be achieved which exploits more of the full potential value of the site. This is
essentially what Gramercy provides to the CRC. The current configuration of the site
creates a value that is less than that of the mixed use commercial area immediately to the
south. Therefore, the CRC finds that conditions exist within the Mohawk Hills site which
could be addressed such that the value of the land /development is dramatically improved,
and in this finding determines that this portion of the statute is fulfilled.
Finding of Fact #2d: The plan for the Economic Development Area cannot be
achieved because of...other similar conditions.'
The plan for the economic development of the proposed Gramercy Economic
Development Area cannot be achieved unless the CRC designates the Gramercy ED
Area, and then approves the Tax Allocation Area necessary to support a TIF commitment
by the CRC. The precise terms of this TIF commitment have not yet been finalized, in
the same fashion as the final Gramercy development proposal has not yet been finalized
and approved. As stated previously, the CRC reserves the right to terminate discussions
of this ED Area designation and or the Tax Allocation Area designation at any time, at
the sole discretion of the CRC.
However, having stated these caveats, the CRC recognizes that the Gramercy proposal
represents substantially more economic development than is present with the Mohawk
Gramercy Economic Development Plan: Draft (060711) 14
Hills apaitment complex, in terms of potential commercial and professional jobs located
on the site, potential long -term construction jobs present on the site, investment in new
real estate development on the site, and generating greater urban developmental intensity
than is currently present (by redeveloping the golf course).
The CRC was invited to this partnership by the Gramercy developer. Based on the
review of the project by the CRC, the CRC has determined that the benefits of achieving
a greater developmental intensity through demolition of the existing development and
construction of a new, mixed -use development are significant enough to justify the
investment of CRC resources in this partnership. The CRC asserts that these
considerations represent "other similar conditions," as cited in statute, and thereby meets
the terms of this statutory finding.
Finding of Fact #3: The public health and welfare will be benefited by the plan
for the economic development of the area.'
The CRC has determined that the Gramercy proposal will benefit the public health and
welfare in several ways. First, the public welfare will be benefited by the provision of
new employment opportunities in the commercial and retail spaces to be developed as
part of Gramercy.
Second, the public welfare will be benefited by the act of investing in the redevelopment
of an existing site, as opposed to the development of undeveloped cornfields which
contribute to urban sprawl.
Third, the public health is benefited by the fact that redevelopment of existing areas
reduces the pollution caused by increased automobile travel which accompanies sprawl.
Fourth, the public welfare is benefited by reinvestment and redevelopment prior to the
existence of egregious levels of urban blight which would require more resources and
more dramatic action to reclaim the neighborhoods. This concept also extends benefits to
other, adjacent property, which will not be subjected to blighting economic factors caused
by a long -term economic decline at Mohawk Hills, because Gramercy was implemented.
Fifth, the public welfare is benefited by expanding existing commercial areas to meet
local needs, rather than creating new, suburban and ex -urban shopping areas. When
commercial investment is contained in an existing area especially an existing
commercial area along a major transportation artery the community's developmental
character is preserved, which is a significant benefit to public welfare.
Finding of Fact #4a: The accomplishment of the plan for the Economic
Development Area will be a public utility and benefit as measured by... the
attraction or retention of permanent jobs...."
This Finding of Fact is similar in character to the requirements of Findings #la through
#1c, and as such, all relevant arguments for those previous findings are hereby
incorporated in Finding of Fact #4a. Findings of Fact #la through #1c relates to
opportunities for gainful employment and attractions /retention of business. Finding of
Gramercy Economic Development Plan: Draft (060711) 15
Fact #4 relates to the "public utility" of attracting/retaining permanent jobs. We find this
distinction to be small and possibly insignificant to the general public, whom this ED
Plan is generally intended to inform.
As stated in several prior instances, the Gramercy development proposal suggests that a
mixed use development with a substantial contribution of commercial /retail uses, as well
as residential uses, will attract /retain jobs in Carmel that might otherwise be lost.
Growing companies often cannot grow without changing locations. The presence of
Gramercy will provide growing businesses with an alternative remaining in Carmel.
In addition, the competitive presence of Gramercy also has other `public utility' to the
community. The existence of competing commercial space generally prevents landlords
from disproportionate increases in rents. Owners of old buildings must make
improvements in order to remain competitive in the market. Businesses needing certain
amenities for optimal production have a higher likelihood of achieving these amenities
due to the presence of a multitude of alternatives. Redevelopment of existing property
near other commercial and residential development provides a developmental transition
which is close to existing employees.
Carmel's local economy is expanding. It is therefore proper to meet the needs of an
expanding economy by expanding the opportunity to locate those business and
employment opportunities in the same community from which they originated. New
entrepreneurs are emerging from the ranks of young professionals, and many of those
professionals already live in Carmel. Thus, the fact that Gramercy will offer competing
space for office and retail development affords these people an opportunity to express
their entrepreneurial spirit without a 45- minute drive to Indianapolis. As late as 1985,
entrepreneurs living in Carmel were often required to travel to Indianapolis for their
business needs. Through projects like Gramercy, this is no longer the case.
The CRC finds that the terms of this statutory finding are met through the new business
and employment opportunities which the Gramercy project intends to facilitate.
Finding of Fact #4b: The accomplishment of the plan for the Economic
Development Area will be a public utility and benefit as measured by...an
increase in the property tax base....'
The CRC finds that the Gramercy ED Area proposal will contribute to the property tax
base of the City by increasing the intensity of development at the Mohawk Hills complex,
and reconfiguration of the development mix to respond to changes caused by growth in
the local economy. As stated previously, when Mohawk Hills was originally developed,
it met the demands of a high -end market demographic. Over time, Mohawk Hills has not
been able to maintain that demographic, due to increased competition from new
developments, as well as the increasing need for major new investment.
The Gramercy proposal will redevelop the golf course property (as well as the existing
apaitment complex) into a carefully planned, mixed use development. The proposal to
redevelop the golf course alone, would increase the property tax base of the community.
Gramercy Economic Development Plan: Draft (060711) 16
According to documents submitted by the developer, and reviewed by CRC and Plan
Commission professionals and members, the proposal to redevelop the entire site,
including removal of the old apartments, will generate a long -term increase in Carmel's
property tax base, which is likely to last more than a decade.
One final note is appropriate. In addition to the fundamental increases in the property tax
base which are directly caused by the new development, the Gramercy redevelopment
proposal also negates the potential for blighting influences to spread, reducing the value
of nearby neighborhoods. Such an outcome is a projected secondary benefit to the
Gramercy project, which indirectly meets the requirements of this finding of fact.
Finding of Fact #4c: The accomplishment of the plan for the Economic
Development Area will be a public utility and benefit as measured by...improving
the diversity of the economic base...'
This finding also closely emulates various previous findings of fact and the arguments
supporting those findings. The statutory language `improving the diversity of the
economic base' is interpreted by the CRC to refer to the need for many employment
opportunities and a broad range of business interests within the community, in order to
support the local economy, even when one or more business sectors are cyclically
depressed. The CRC finds that the Gramercy ED proposal meets this finding of fact.
Indiana's statewide economy has suffered heavily since 2000. Indiana is acknowledged
nationally as a "rust belt" state, which is `too heavily dependent on the automotive
industry.' Cities like Anderson, Muncie and Marion, which have failed to diversify their
local economies, have suffered heavily when their core industries have contracted.
Carmel therefore greets proposals such as Gramercy as an opportunity to diversify the
local economy by increasing the opportunity to capture high paying, high- education,
high intellectual capital jobs, and to foster a supportive environment for small business.
Carmel has never been a manufacturing- dependent community. In fact, since 1980
Carmel has been successful in attracting corporate headquarters, professional firms, and
companies specializing in intellectual capital investment. In many cases, Carmel out
competes Indianapolis for those jobs. Consequently, even when Carmel's most famous
corporate citizen, Conseco, fell on hard times, the diversity of the local economy was
such that the economic ripples, while significant, did not have a substantial impact on the
community at large.
The Gramercy project is expected to enable the local economy to diversify by providing
new opportunities to capture or retain jobs through market competition and sophisticated
infrastructure to improve productivity. Gramercy, and projects like it, are expected to
allow Carmel to continue its reputation as a community which attracts and retains
successful executives, entrepreneurs and business people of all types. With projects like
Gramercy, Carmel and the CRC expect the city to continue to grow in significance as an
employment center separate from Indianapolis.
Gramercy Economic Development Plan: Draft (060711) 17
The developer and H. J. Umbaugh have also indicated that the proposed project will
generate an increase in COIT revenues to the County and the City (see "Economic
Development Strategy: COIT Enhancement," below). The Gramercy proposal includes
2,268 housing units, which represents an increase of 1,704 units over the existing number
of units at Mohawk Hills. In addition, it is projected that the occupants of the Gramercy
housing units will have higher household incomes than are currently present. While there
continue to be questions regarding the amount and timing of COIT distributions at the
State level, both of these factors (an increased number of housing units and a higher
projected household income) would logically result in increased COIT revenues to the
County and City. H. J. Umbaugh projects that the Gramercy project could increase COIT
revenues to the County by $2.2M per year and to the City by approximately $0.5M per
year.
Finding of Fact #4d: The accomplishment of the plan for the Economic
Development Area will be a public utility and benefit as measured by...other
similar benefits.
The CRC finds that the proposed Gramercy ED Area has several benefits to the
community, other than those cited specifically in statute.
First, the Gramercy proposal expands the commercial (retail and office) space availability
for the community, as a whole, thereby increasing the competitive aspects of the market.
When competition increases, local businesses get a better deal, have more control of their
operating costs, and have the opportunity to be more profitable overall. Competition also
assures that existing space must remain competitive with new space, in terms of rents and
amenities.
Second, the CRC finds that the location of the proposed Gramercy project is ideal. The
project is located adjacent to the city's largest concentration of commercial /retail space
(between Carmel Drive and 116 Street). The Gramercy proposal allows Carmel's
commercial /retail development to expand at an existing location, rather than creating new
locations, scattered around the community. This type of redevelopment ultimately
reduces urban sprawl.
Third, the proposed Gramercy project is located on a major state highway. This
potentially reduces the City's cost of thoroughfare expansion resulting from increased
commercial activity.
Fourth, the presence of Gramercy potentially enables Carmel to capture a larger share of
commercial trade within its own corporate boundaries. For example, the entire Keystone
at the Crossing commercial center is largely supported by Carmel residents, even though
it is located in Indianapolis. The CRC believes that the presence of Gramercy will enable
Carmel to capture an incrementally larger share of its own household expenditures, as
well as job creation, thereby secondarily enabling Carmel markets to respond directly to
the demands of Carmel residents, rather than `blending' Carmel demands with those of
Indianapolis and addressing the aggregate demand.
Gramercy Economic Development Plan: Draft (060711) 18
Fifth, the growth in new business in Carmel expands the local economy. As alluded to
previously, Carmel is the residential home of a high proportion of executives, managers
and business leaders. The ranks of executives, managers and business leaders also
happen to be a prime source of entrepreneurs, who in turn create new businesses. By
expanding the offering and availability of commercial space, those businesses old
businesses, growing businesses and new businesses can expand and grow in Carmel,
rather than being forced to find space elsewhere, with the business leaders locating their
businesses closer to home, with less commuting time and less pollution.
All of these factors are considered to be viable "other" reasons for the CRC to support the
proposed Gramercy ED Plan.
Finding of Fact #5: The plan for the Economic Development Area conforms to
other development and redevelopment plans of the unit....'
The CRC took its initial action on this ED Plan and the proposal to designate the
Gramercy ED Area after the Carmel Plan Commission approved the Gramercy project on
June 20, 2006. By deferring action on the ED Area designation until after the Plan
Commission approval, the CRC can assure the public that the project conforms to the
overall plan of development of the city.
Clearly, the Carmel Plan Commission's role is to review development proposals, suggest/
negotiate modifications appropriate to the best interests of the community, and ultimately
approve only those proposals which conform to the development and redevelopment
plans of the community. In fact, it is the position of the CRC that the approval of a
development proposal by the Plan Commission is a direct and formal affirmation that the
proposed development does, in fact, conform to the development and redevelopment
plans of the community.
The developer has been working with the Plan Commission for an extended period of
time prior to the Plan Commission approval of the Gramercy project at its June 20, 2006,
meeting. The CRC has undertaken the development of the Gramercy ED Plan on a
parallel track, based on the representations of the developer, as well as the quality of
previous developments undertaken and implemented by the developer. Based on the
Gramercy project approval by the Carmel Plan Commission, the CRC will take
appropriate action to approve this ED Plan, as well as other documents appropriate to the
initiation of the ED Area designation process. As the ED Area designation process
concludes, the CRC will also afford the Plan Commission the opportunity to review the
specific ED Area designation, as well as supporting documents, in order to absolutely
affirm conformity with other plans of development and redevelopment, and the CRC will
not continue the ED Area designation process until this affirmation is received from the
Plan Commission.
Economic Development Strategy
The Economic Development Strategy for the Gramercy ED Area revolves around the
redevelopment plan which was approved by the Carmel Plan Commission on June 20,
Gramercy Economic Development Plan: Draft (060711) 19
2006. The Plan Commission approval is considered by the CRC to constitute primary
evidence that the proposed project conforms to the plan of development for the city of
Carmel, however, the CRC will formally affirm this conclusion by presenting the ED
Plan to the Plan Commission separately, after the ED Plan has been approved by the
CRC.
Property Tax, AV TIF: Projections Strategy
H. J. Umbaugh, acting as Financial Advisors for the developer, have prepared initial
estimates of the property tax impacts of the proposed Gramercy development. H. J.
Umbaugh has determined that the base AV for the Mohawk Hills complex is
approximately $28M. The developer has indicated that the completed Gramercy project
will have a "build -out value" (term used by the developer) of $300M to $500M, and H. J.
Umbaugh has indicated that the completed project will have a projected AV of
approximately $275M, based on assessment parameters used by Umbaugh.
The Gramercy project is projected to require more than 10 years to complete, with the
developer's projection that the final phase will be completed by March 1, 2019. This
project phasing will have an obvious impact on TIF revenue streams, and must be
considered by the CRC /City in shaping any TIF financing.
COIT Enhancement
The developer's Financial Advisor, H. J. Umbaugh has also prepared an estimate of
potential new COIT revenue to be generated by the project, based on the developer's
projections of income for residential units proposed as part of the Gramercy project. The
table below reflects the COIT projection provided by H. J. Umbaugh.
The method of projection approximately nets the number of existing units at Mohawk
hills (564) against the total number of Gramercy's proposed housing units (2,268) for a
net increase of 1,700 units, which the developer is projecting will all come from outside
of Hamilton County, and thus would represent new COIT revenue for the County and
City.
Estimates /projections of "average median" household income by household types were
provided by the developer.
Clearly, the table below reflects the developer's intent that the housing component of
Gramercy is not focused on family housing (only 90 of 2,268 units are projected for
families), but rather on young professionals and empty nester /retirees. The Gramercy
design appears consistent with such a unit mix, focusing on high locational visibility and
easy access to offices /employment and shopping, which are commonly considered
market preferences by these demographic groups. At the same time, it should be
understood that the projections of future performance provided by Umbaugh, or any other
consultant, are intended purely for illustrative purposes and do not represent any
guarantee of future performance, especially considering the current questions swirling
around the COIT distributions by the State.
Gramercy Economic Development Plan: Draft (060711) 20
Estimated Additional Annual COIT
of new Average Estimated Estimated Estimated
Households Median Additional Additional Additional
Household from Outside Income* Annual Income Annual COIT Annual
Types Hamilton County (total) COIT (city)
Empty Nesters
Retirees 260 $156,000 $40,560,000 $405,600 $93,000
Traditional
Non Traditional
Families 90 $178,000 $16,020,000 $160,200 $37,000
Younger Singles
Couples 1,350 $125,000 $168,750,000 $1,687,500 $387,000
Totals 1,700 $225,330,000 $2,253,300 $517,000
the term "average median" is likely an unintended misnomer. The terms "average" and "median" have
similar mathematical application, however the combination of both terms appears redundant. We are
certain this is inadvertent.
the Umbaugh calculations table presents a "total" of the "average median incomes" as $459,000, which
appears to be a typographical error. While it is possible to compute the sum of three averages, such a
number, in this case has questionable mathematical meaning.
Regardless of the projection method, it would appear that the Gramercy proposal
increases the number of housing units located on this site by over 400 which logically
suggests that some of those housing units will be occupied by new Hamilton County
households.
Economic Development Projects
The CRC's partnership with Buckingham includes consideration of TIF funding for the
following projects and estimated costs. It should be noted that all estimated project costs
are subject to confirmation and review by the CRC at the time of funding, as well as
being potentially subject to limitations placed on TIF funding by the CRC, in its sole
discretion.
Preliminary Estimate of Gramercy TIF Projects Costs
Cost Item Estimated Cost
Streets, curbs, paths, lighting, demolition, stormwater management, soft 12,000,000
costs, etc.
Public open spaces parks 2,600,000
Public parking garage 4,000,000
126 Street Improvements 700,000
Auman Neighborhood Improvements 700,000
Total Estimated Project Costs 20, 000, 000
PUBLIC PARKING GARAGE
Gramercy Economic Development Plan: Draft (060711) 21
The developer has requested that the CRC consider providing TIF funding for a
public parking garage in the preliminary amount of $4M. This garage would
enable the developer to increase the developmental intensity of the site by
reducing the amount of land consumed by surface parking. This increased
developmental intensity is consistent with the overall trend toward increased
urban densities which is being proposed and supported by the Carmel Plan
Commission (as affirmed by the approval of the Gramercy PUD proposal by the
Carmel Plan commission on June 20, 2006).
IMPROVEMENTS TO 126 STREET
The developer has included a preliminary amount of $0.7M for providing
improvements to 126 Street at the north end of the Gramercy development. The
increased developmental intensity is projected to increase traffic on local
thoroughfares, and this set -aside of TIF funding is intended to address those
traffic issues and problems.
IMPROVEMENTS TO A UMAN NEIGHBORHOOD
The developer has also requested that the CRC consider providing an estimated
$0.7M in TIF funding for the mitigation of potential developmental impacts on
the Auman neighborhood which might be caused by the Gramercy development.
PUBLIC OPEN SPACES PARKS
The Gramercy development proposal includes setting aside portions of the
property for public amenities, such as public open spaces, green areas and parks.
The developer has requested that the CRC consider designating approximately
$2.6M for the development of these public spaces as part of the TIF contribution
to the project.
STREET, CURBS, SOFT COSTS, ETC.
The developer has requested that the City /CRC set aside $12M in TIF funding for
a broad category of costs including streets, curbs, paths, storm water management,
lighting and other costs.
/gramercy ed plan dra 060707
Gramercy Economic Development Plan: Draft (060711) 22
Appendix A*
Mohawk Hills Redevelopment aka Gramercy
Conceptul Unit Mix Subject to Change
Mohawk Hills site only- 116.6 acres
3/27/2006
Note: Block acreages refer to developable blocks only excludes ROW and parks
Retail s.f. per acre 10,000
Rental average s.f. 1,000
Product mix:
0.32 0.38 0.28 0.02
Phase Built Block Acres Average Total Rental Condo Town- Live- S.f. Retail S.f. S.f. Hotel Parking
occupied Res. Res. flats homes work Office garage
by 3/1 of Density Units
1 2008 1 4.18 18 75.2 24.1 28.6 21.1 1.5
1 2008 2 2.39 18 43.0 13.8 16.3 12.0 0.9
1 2008 3 0.87 18 15.7 5.0 6.0 4.4 0.3
1 2009 7 2.43 18 43.7 14.0 16.6 12.2 0.9
1 2009 10 2 18 36.0 11.5 13.7 10.1 0.7
1 2009 15(a) 1.74 18 31.3 10.0 11.9 8.8 0.6
1 2010 11 2.65 18 47.7 15.3 18.1 13.4 1.0
1 2010 16 1.3 18 23.4 7.5 8.9 6.6 0.5 7,500 5,000
1 2010 20(a) 2.56 35 89.7 28.7 34.1 25.1 1.8 5,000 5,000
3 2012 15(b) 1.74 18 31.3 10.0 11.9 8.8 0.6
3 2012 20(b) 1.10 25 27.5 8.8 10.4 7.7 0.5
3 2013 23 5.48 25 137.0 43.8 52.1 38.4 2.7
3 2013 24 2.75 60 165.0 52.8 62.7 46.2 3.3
3 2013 29 0.8 25 20.0 6.4 7.6 5.6 0.4 3,000
3 2014 28 3.91 25 97.8 31.3 37.1 27.4 2.0 10,000
3 2014 30 4.09 35 143.2 45.8 54.4 40.1 2.9 20,450 Y
4 2015 21 1.08 35 37.8 12.1 14.4 10.6 0.8
4 2015 22 1.66 35 58.1 18.6 22.1 16.3 1.2
4 2015 25 2.37 60 142.2 45.5 54.0 39.8 2.8
4 2016 26 2.05 60 123.0 39.4 46.7 34.4 2.5
4 2016 27 2.7 35 94.5 30.2 35.9 26.5 1.9
4 2016 31 1.67 35 58.5 18.7 22.2 16.4 1.2 15,000 15,000 Y
4 2017 32 4.29 35 75.1 24.0 28.5 21.0 1.5 120,000
5 2017 4 2.07 25 51.8 16.6 19.7 14.5 1.0
5 2017 5 2.34 25 58.5 18.7 22.2 16.4 1.2
5 2017 6 1.86 25 46.5 14.9 17.7 13.0 0.9
5 2018 8 2.34 25 58.5 18.7 22.2 16.4 1.2 5,000
5 2018 9 4.07 25 101.8 32.6 38.7 28.5 2.0 5,000
5 2018 12 1.38 35 48.3 15.5 18.4 13.5 1.0
5 2018 13 2.05 35 71.8 23.0 27.3 20.1 1.4
5 2019 14 1.63 35 57.1 18.3 21.7 16.0 1.1
5 2019 17 1.2 35 42.0 13.4 16.0 11.8 0.8 8,000 15,000
5 2019 18 2.51 35 87.9 28.1 33.4 24.6 1.8
5 2019 19 0.8 35 28.0 9.0 10.6 7.8 0.6
ITOTAL 78.06 2,268 726 862 635 45 78,950 40,000 120,000 I
Gramercy Economic Development Plan: Draft (060711) 23
document provided by Buckingham Properties
Gramercy Economic Development Plan: Draft (060711) 24