Proposal would put Carmel City Council in control of park impact fees

Carmel’s Midtown was the place to be recently on an unseasonably warm late-winter afternoon.

Walkers, runners and bikers took to the Monon Greenway, while ping-pong players and loungers headed to Monon Plaza.

The city’s downtown parks over the past decade have become some of its most notable and popular features. They’re among some 700 acres of land in Carmel dedicated to parks, large and small.

But a funding stream Carmel uses to develop parks has become a source of tension among officials and even the subject of a recently dismissed lawsuit. Now, the Carmel City Council is considering stepping in to oversee how those funds are spent.

Park impact fees are charged to developers and used to support park construction.

But the city has routinely waived the park impact fee, allowing developers to instead pay a credit to the Carmel Redevelopment Commission, which has spent the funds developing plazas and green space in the city’s urban core.

Carmel charges developers $4,882 per dwelling unit in park impact fees, the most in Hamilton County; a 250-unit apartment building would result in more than $1.2 million for park construction and maintenance. By comparison, Fishers charges developers $3,513 per single-family dwelling and $2,108 per multifamily unit.

“The goal [of park impact fees] is to ensure that, as we expand and grow and as we have more people, that we’ve got the amenities necessary for them to live in the best place they can,” Carmel City Council member Ryan Locke said.

The Legislature established park impact fees in 1996 as an alternative funding mechanism to pay for park improvements in fast-growing areas.

Since 1996, Carmel has increased in physical size through 56 annexations and in population from around 30,000 residents to more than 100,000. Downtown has experienced rapid redevelopment, and farm fields formerly in Clay Township have been transformed into Carmel neighborhoods.

Source of tension

Park impact fee credits are sometimes used as a negotiating chip by the Carmel Redevelopment Commission when it works with developers on major downtown public-private projects.

That practice, however, has created tension between the CRC and Carmel Clay Parks & Recreation, which wants park spending more evenly distributed citywide. The parks department in December filed a lawsuit against the city, and the Carmel City Council is now looking to step in and be the arbiter of how park impact fees are used and whether developers should be granted the credit.

“I am very disappointed that two government entities—who have been partners for over 30 years—that one felt the need to sue the other,” Carmel City Council member Jeff Worrell said.

Parks department officials argued in the lawsuit that the city inappropriately diverted millions of dollars through park impact fee credits to the CRC to be used in small spaces in the urban core to the detriment of larger, traditional parks throughout the city.

IBJ counted at least nine instances last November and December when a credit was granted to a developer.

Before 2010, Carmel Clay Parks & Recreation was the only entity that could grant impact fee credits. The Carmel City Council that year expanded the right to the Carmel Board of Public Works, an entity composed of the mayor and two people appointed by the mayor.

Over the past decade, the Board of Public Works granted more than $25 million in park impact fee credits. Approximately $6.2 million of that was granted for three projects late last year during former Mayor Jim Brainard’s final weeks in office. Another six projects also received credits, but those amounts have yet to be defined because the number of units in the buildings has not been set.

Brainard told IBJ in December before he left office that the Carmel Redevelopment Commission has spent $50 million on downtown parks, and a fraction of that has come from park impact fees. He argued that money coming from downtown development and public-private partnerships should be spent where it is generated and not in suburban areas of Carmel.

The city’s downtown parks include Midtown Plaza, Carter Green, Monon Boulevard and Monon Greenway, the Kawachinagano Japanese Garden and Freedom Circle Veterans Memorial.

CRC Director Henry Mestetsky has said publicly that waiving park impact fees is a negotiating tool that helps seal major public-private deals.

He told IBJ that green space is sometimes the centerpiece of a project, such as at a $700 million development at East 111th Street and North Pennsylvania Avenue by Carmel-based Pedcor Community Development Corp. that is slated to include 912 multifamily units, 58 for-sale town houses, 430,000 square feet of retail and office space, two public parking garages, and a public park/plaza.

“The central core needs as much parks infrastructure as in the suburbs,” Mestetsky said. “It’s just a different kind of parks infrastructure.”

But Carmel Clay Parks & Recreation officials said in the lawsuit that the practice has resulted in construction delays because of a lack of funds, particularly at the future Bear Creek Park near West 146th Street and Shelbourne Road. Bear Creek Park is one of three projects on which Parks & Recreation is spending park impact fee funds. The others are West Park and an acquisition and development along the White River corridor.

Carmel Clay Parks & Recreation also receives some funding from the city, but it is a separate entity created in 1991 by an interlocal agreement between the city and Clay Township, and it does not answer to the Mayor’s Office.

On Tuesday, the Carmel Clay Board of Parks & Recreation voted to call off the lawsuit because it said in a statement that Finkam and the City Council are committed to enhancing “transparency regarding the issuance of impact fee credits.”

“This is an issue we are happy to move beyond,” Carmel Clay Parks & Recreation Director Michael Klitzing said in written remarks.

City Council action

Should the City Council approve a proposed change to the process, the Board of Works would no longer have the authority to grant credits. Instead, the credit would first be heard by the plan commission and ultimately approved by the City Council.

The City Council would also oversee all park impact fee spending. If Carmel Clay Parks & Recreation or the Carmel Redevelopment Commission wants to use park impact fees to fund a project, the directors would be required to first meet to discuss their needs and then approach the City Council for approval.

“The first question we would ask to either of them would be, ‘Have you talked to the other one?’ to really spur collaboration,” Carmel City Council member Matthew Snyder said.

Worrell said the current system of using the Carmel Board of Public Works worked for a time, but “things change.”

“I think getting the City Council [involved], which is a body that’s elected by the people and has to answer to the voters, I think that is ultimately a good thing,” Worrell said. “So, to me, this is more of an evolution than righting a wrong.”

Mestetsky said the move would ensure transparency and more cooperation between parks and redevelopment.

“At the same time, it recognizes that you need all the tools and arrows in the quiver,” he said. “You need all the tools in the tool chest to be able to put together public-private partnerships.”

Klitzing agreed.

“The important component of what’s being proposed is that it increases significantly the transparency for everything that has to do with impact fees, which in my perspective, is a good thing,” he said. “I think that’s something that we can all rally around.”

The Carmel Plan Commission is reviewing language for the proposed amendment to the city’s unified development ordinance. The commission will likely hold a public hearing in April and vote on a recommendation. The amendment would next go to the City Council for approval.

Locke said he believes there is consensus among City Council members that the change is necessary and would give the City Council the authority to be a fiduciary check and balance.

“The goal is to open the process to create transparency to help foster collaboration,” he said. “I think this issue just has become one of those things that needs one more step in it.”•