Free-market capitalism benefits society because it rewards innovation, investment and prudent risk while punishing recklessness and incompetence. But when a community's need for a product is acknowledged, and the private sector still refuses to respond, to what degree – if any – should government intervene?
That question cuts to the heart of a new attempt to address an old problem: Fort Wayne's lack of immediately available, large and up-to-date industrial buildings. Some will say the incentives go too far – while others already fear it will not go far enough.
“Between Jan. 11 and Aug. 16 of 2012, we had 91 requests for industrial buildings. But when we broke it down, we couldn't offer anything to 47 percent (of the prospects), said Ashley Steenman of the Fort Wayne-Allen County Economic Development Alliance. Although the city has no shortage of vacant buildings, it does lack a specific type of building very much in demand: structures containing at least 100,000 square feet and at least 30 feet of clearance between floor and ceiling.
As I mentioned, there's nothing particularly new about this shortage. Twenty-nine years ago this month, I wrote a story that began this way: “A lack of vacant, high-quality industrial buildings may be costing Fort Wayne jobs.” The Alliance, city, county and Airport Authority deserve credit for tackling the problem at long last.
But if the lack of supply is both obvious and longstanding, why haven't private developers already profited by meeting the demand?
“It's an election year, and there's been a fear of economic uncertainty. Some markets are more risk-averse, and we're seeing that here,” said Patrick Dooley, vice president/airport development.
Developer Barry Sturges, who in 1984 expressed concern that Fort Wayne was at a competitive disadvantage when trying to attract industries that “want to come into a town and be open in 90 days,” added that post-bailout lenders have also become more cautious, reluctant to fund construction of so-called “spec” (“speculative”) buildings for which there is no immediate buyer or rent-paying tenant.
A few years ago, of course, economic-development leaders insisted Fort Wayne could attract more high-paying jobs if only it would provide large tracts of “shovel-ready” land capable of accommodating industrial tenants needing to build quickly. The county spent $1.4 million on 150 acres near the General Motors plant and the land remains largely undeveloped, and off the tax rolls, today.
Perhaps the best part of the current proposal is that it does not anticipate a similar large up-front investment from government. For one thing, two of the sites being specifically promoted in the Alliance proposal – 35 acres behind the General Mills warehouse on Bluffton and one of three sites near Fort Wayne International Airport – are already owned by government.
If the area seems to be targeting the area near the airport, that may not be an accident. Dooley noted that the recent installation of sewers along Airport Expressway toward Interstate 69 and the nearby GM plant could boost the entire corridor – a corridor that includes the Franklin Electric headquarters now under construction.
Steenman said developers who find tenants able to create at least 50 jobs paying an average of at least $20 an hour can qualify for incentives designed to encourage risk. And at a projected construction cost of between $4 million and $10 million, the risk will be considerable. Those incentives include the forgiveness of real estate taxes for up to three years and the payment of interest costs on the developer's loan if the building is not sold or leased within 12 months.
But County Commissioner Nelson Peters and developer Bill Bean say the proposal to “consider” paying interest costs after the fact misses the point. Developers need an incentive to begin a project, they said, even though Bean bristles at the notion that other developers could be competing for business using his tax dollars.
The programs seem to pose minimal risk to public dollars. Still, I can't help but remember back to 1983 when developer Sam Fletcher walked into the office, told me he was frustrated with the lack of competitors' willingness to do spec projects and pledged to build some himself. By the following year he had spent $1 million on three buildings in an industrial park off Engle Road.
But those buildings all contained 20,000 square feet or less, and even Fletcher admitted a developer couldn't afford to erect, heat, cool, insure and pay taxes on a building of 40,000 square feet or more that might remain empty for months or years.
“If there's a proven need, we need to do what we can do,” Peters said. I suppose so, but it's too bad that government – yet again – must take the lead.