Carmel approves a 69% rate increase on new homes to pay for park upgrades

The cost of building new homes in Carmel will rise as the city moves forward, with a 69% increase in construction costs for homebuilders to help pay for park upgrades.

The Carmel City Council on Monday unanimously approved an impact fee increase from $4,882 to $8,275 per home or apartment, which will likely be passed on to homebuyers and renters. The rate increase will take place gradually, with an increase of 11.13% per year from 2025 to 2029.

“We make no apologies for the rates we increase,” said Michael Klitzing, CEO of Carmel Clay Parks and Recreation. “The amount of investment this community has made in parks and recreation is incomparable to that of our other communities. It is truly incomparable to almost any community in the country.”

The collection of fees will go entirely to the parks department for new projects to meet the recreational demand of additional residents moving to the city. It comes at a time when the parks are facing a $3.5 million annual revenue loss because Clay Township’s share of county income taxes will decline when the municipality pays off an old bond in 2025.

State law requires cities to review impact fees every five years and adjust them to reflect, among other things, future park needs, population growth and estimated and projected land values.

Steve Lains, executive director of the Builders Association of Greater Indianapolis, previously told IndyStar that the increase will increase the cost of new homes. But Kirsh said the increase for buyers of the types of luxury homes being built in Carmel would be “insignificant” given the cost of the homes.

Previous coverage: An increase in the cost of new homes to pay for Carmel Parks could mean higher prices for homebuyers

City Council Vice President Adam Aasen, a member of the Carmel Housing Task Force, agreed with that assessment during Monday’s meeting in Carmel.

“We’re talking about $500,000 to $600,000 homes,” Aasen said. “If we voted no on this, it wouldn’t solve anything for affordable housing in Carmel.”

Aasen emphasized that the impact fee is only levied on new construction in the city. It will not affect residents moving into already built homes in the community or those rebuilding on a lot previously occupied by a home, he said.

Carmel charges builders the highest impact fees for parks of any city in Hamilton County, but the other three major cities in the county charge builders extra for roads, which Carmel does not.

The parks department will focus in the near term on projects at seven parks, including a playground, splash pad, trails and shelters at Bear Creek Park and trails, boardwalks, restrooms and parking at Thomas Marcuccilli Nature Park.

Other parks receiving funding from the impact fees include West Park, the White River corridor, Central Core Parks, Chinese Garden and Japanese Garden. The impact fees will generate about $33.5 million in revenue for the parks department from next year through 2029, Klitzing estimates.

“People choose to move to Carmel because of the quality of life, because of the incredible assets we have created within the parks system,” he said. “To preserve the park system, we should not apologize for the fees.”

IndyStar reporter John Tuohy contributed to this article.

Contact Jake Allen at [email protected]. Follow him on Twitter @Jake_Allen19.