PPI study examines two-decade transformation of downtown Carmel

CARMEL – A comprehensive analysis by the Indiana University Public Policy Institute shows how two decades of public investment into Carmel’s central core has impacted the city and its taxpayers.

The benefits by the numbers are detailed in the PPI report, showing more private investment, more jobs, less vacant land, more employed persons, and more taxable assessed value have been realized.

The success of the redevelopment of its central core has helped cement Carmel’s national reputation as one of the country’s best suburbs. However, the PPI report does acknowledge that the project was not without disagreement over the development process and concern regarding Tax Increment Financing as a funding source, among other issues.

The two-decade transformation of the City of Carmel into a nationally recognized “best place to live” holds many lessons for city, county, and state government policymakers considering similar efforts, according to the study.

The PPI study not only examined the fiscal and economic contributions of the city’s core redevelopment strategies, but also sought to objectively document the broader issues through which redevelopment was pursued and achieved.

“The creation of public spaces that contribute to a community’s overall well-being, both economically and socially, can transform a city’s image and density,” said study co-author Drew Klacik. “And while it’s good public policy from both a cost and revenue perspective, it isn’t easy.

“The development, design and implementation process can affect the volume and intensity of support for as well as opposition to any project with public investment,” Klacik added. “The more ambitious and long-term the project is the more important that process becomes.”

Beginning with the approval of a comprehensive plan by the Carmel Plan Commission in 1997, Mayor Jim Brainard and the city council sought to shape the growth of downtown in a way that steered away from development of retail centers and office parks. The adoption of the City Center Redevelopment Area Plan in 1998 aimed to make the City Center a focal point and gathering place for residents and visitors to Carmel.

“We looked at the sprawl taking place in other suburbs and decided we wanted to go in a different direction,” said Brainard. “Rather than continue to spend millions of dollars on new roads, fire stations and other public services, we chose to invest in the under-developed areas of our central core, where we already had police and fire coverage, schools and utilities. We were also confident that this investment in the city’s future gave us a better chance at attracting private investment.”

In the decade between 2004 and 2014, 565 building permits were issued by the City of Carmel in the City Center/Old Town area, with an additional 904 permits issued within a half mile of the redevelopment areas. Undeveloped land within the development area shrank from 23 percent in 1994 to 2 percent in 2014.

According to PPI researchers Klacik and John Marron, the project area experienced a 43.8 percent increase in the number of employed residents living within Old Town during that time period. Additionally, the percentage increase in gross taxable assessed value in the area far outpaced that of surrounding Hamilton County communities.

Research also suggests that the dense, mixed-use development will require the city to spend fewer resources on maintaining infrastructure and reduce the cost of public safety.

Other key economic findings include:

  • The $174 million investment in the project area resulted in an additional $110 million of economic activity within Hamilton County;
  • More than 3,300 jobs and nearly $140 million in employee compensation are associated with total investment in the district;
  • More than $150 million in new single- and multi-family housing construction has occurred in the neighborhoods surrounding City Center and the Arts & Design District.

Over the course of several months, PPI researchers interviewed dozens of the participants, including proponents and critics, to gain a better understanding of the perspectives related to Carmel’s core redevelopment outcomes, process, and financing strategies. While the general consensus among interviewees was that local government should identify and develop enterprising plans that fit the community’s goals, disagreement arose over what constitutes appropriate fiscal support of such projects.

The discussion of the appropriate level of public investment was directly related to the amount of public money invested in Carmel and the financial condition of the city. Some argued that too much post-infrastructure subsidy had occurred and that the city finances were at risk. Others felt that the city was financially sound and that the level of investment was appropriate. In general, the financial argument revolved around issues of quality versus cost.

Based on their discussions, PPI researchers developed some key takeaways for local government officials who are aspiring to lead their cities forward through transformational place-making redevelopment projects:

  • It is important to be mindful of the tension between the minutia and the immediacy of the construction and the broader, more time-consuming consensus building effort;
  • Visionary leaders are always vulnerable to claims that things are good enough, that too much attention is focused on a specific place, that the project costs too much, as well as disagreement over individual tastes and preferences;
  • The rewards associated with being creative and innovative can transform communities and potentially lead to a rapid rise in national rankings;
  • It is difficult to determine when to begin to reduce public involvement, and the risks associated with too early withdrawal are enormous.

Researchers also note that it’s impossible to be certain of the effort and money required with such long-term aspirational projects and project leaders must constantly respond to changing markets, new opportunities and risks.

“Those considering visionary and transformational efforts in other communities should be aware of the community and political risks and rewards inherent in these undertakings,” Klacik said. “Commitment in the face of challenges is essential to a project’s success, as is developing a process that strives to be inclusive in design, sensitive to community input, and sharing of credit, risk, and blame.”

You can download a copy of the full report at PPI’s website.