Carmel poised to build city's 19th parking garage

Kar Auction Services.

CARMEL, Ind. — The Carmel City Council is poised to approve $10.5 million in bonds to pay for a parking garage for KAR Auction Services, the 19th garage the city has participated in funding.

KAR Auction Services, which provides used-car sellers and buyers with support services, would use the money for its planned $82-million, five-story, 250,000-square-foot building at 111th and Illinois streets along the U.S. 31 corridor.

The firm announced plans to build the project in September, contingent on a number of incentives from the city and state, including the parking garage for its employees. Monday, the council reviewed plans to approve the bonds. A vote is expected Dec. 18. 

If approved, KAR Auction Services will retain 900 jobs and hire 400 by 2020 with average salaries upward of $90,000, city officials said. The company has been operating in a 180,000-square-foot building it leases, also along U.S. 31 in Carmel at Main and Illinois streets. 

The bonds would be paid back by tax-increment financing, property taxes collected from the project. Carmel officials anticipate the property will generate $1 million in annual taxes. In all, $900,000 will pay back the bonds annually. The Carmel Redevelopment Commission will keep the remaining $100,000.

KAR Auction Services will purchase the bonds and assume the risk, according to documents filed with the city. Carmel will not be liable for shortfalls and it will not count toward the city's total debt, said Bruce Donaldson, Carmel's bond attorney. 

The city anticipates KAR Auction Services will receive an interest rate of 4.5 to 5.5 percent on its bonds. 

Related: Carmel's bond rating downgraded due to debt

This deal is structured differently than the city's public parking garages at Midtown, City Center and the Arts & Design District, where the city purchased the bonds directly and holds the debt. 

Since Mayor Jim Brainard took office in 1996, the city has become significantly involved in financing parking to spark development.

Carmel has participating in funding 13 garages that are open, though the deals are often structured differently. Three more are under construction or approved in Midtown and one is under construction in the Arts & Design District. Another has been approved at the Proscenium, Anderson Birkla's project at Carmel Drive and Range Line Road. 

If approved, construction on the new headquarters and parking garage will begin in the first quarter of 2018 and be completed by the third quarter of 2019. 

Indiana Economic Development Corp. also is offering the company $6.45 million in tax credits and $500,000 in training grants that will be collectible if the company follows through on the job creation plans. The state will offer Hamilton County $1 million in infrastructure assistance. 

KAR's Auction Services (NYSE: KAR) has $3.15 billion in annual revenue and employs 17,400 in the U.S., Canada, Mexico and the United Kingdom. It employees 1,600 people throughout Indiana, including auction and office locations in Fort Wayne, Indianapolis, Plainfield and South Bend. 

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Call IndyStar reporter Chris Sikich at (317) 444-6036. Follow him on Twitter: @ChrisSikich and at facebook.com/chris.sikich.