Fort Wayne City Council endorses plan for Electric Works funding; now the real work begins
Not even one cent changed hands, but City Council’s newly stated willingness to consider millions of dollars in public funds for the Electric Works was hailed Tuesday as a crucial major step forward for the $213 million project that might have died Tuesday without it.
“This is an important step and will signal to 100 (leasing prospects) that we can move forward,” Jeff Kingsbury of Indianapolis-based Greenstreet Ltd., one of three partners in developer RTM Ventures, told council before members voted 7-2 in favor of a non-binding resolution that specifies steps council might be willing to consider in support of the redevelopment of the former General Electric campus. Developers say about $65 million in local funding is needed to close the project’s financing gap, and while the city’s portion may amount to only about one-third of that total, Kingsbury made it clear local public support is essential not only to secure tenants but private financing as well. And with $50 million in anticipated historic tax credits set to lose about 20 percent of their value July 1 because of recent tax-reform legislation, resolution co-sponsors John Crawford and Geoff Paddock made it clear there’s no time to waste.
“This is a broad outline of the pathway council might consider in the future. Without it the developers would have to walk away,” said Crawford, R-at large.
As The News-Sentinel first reported last week, the resolution expresses council’s willingness to consider $13.6 million in loans and grants from the city’s Legacy fund, along with $3 million in economic development income taxes. Council is also willing to consider earmarking $3 million in Legacy funds as a back up for a bond for the project and a separate $6 million bond to be issued by the city’s Redevelopment Commission and repaid by taxes generated by the project. Council could also consider other incentives, including some backed by property taxes if necessary.
Use of the Legacy fund, created through the sale of the city’s former electric utility, requires approval of at least six of council’s nine members. Tuesday, even some who voted in the majority indicated they hope to see more details before formally awarding any money. Michael Barranda, R-at large, questioned whether the city would receive any assets in exchange for its contribution — something not currently contemplated.
Under questioning from Jason Arp, R-4th — who voted no along with Paul Ensley, R-1st, RTM partner Kevan Biggs of Decatur-based Biggs Development said the developers will receive a fee of about $16 million and provide about $18 million in equity as part of the project’s estimated $86 million in private capital. That amounts to about 40 percent of the first phase cost of $213 million, Biggs said, noting other local projects have had a similar ratio of public and private investment.
The Capital Improvement Board and the Allen County Commissioners have already approved $3 million in loans for environmental clean up, and Crawford said other possible sources of local funds include the Allen County Council, the city’s Redevelopment Commission, more from the CIB and private foundations.
The Legacy Fund currently has about $22 million in unencumbered funds, but Crawford said more would become available in the future as Indiana Michigan Power makes additional payments and loans and paid off. “We’re not depleting the fund,” he said, adding that if the developers cannot find adequate financing and the project does not move forward, the project would not receive any funds promised by the city.
In a news release issued just hours before the meeting, RTM Ventures said interest among potential tenants is increasing. The firm “has actively engaged more than 100 regionally and locally based retail and office tenant prospects. Nearly 90 percent of qualified prospects are either planning new ventures at Electric Works or planning to expand their existing business,” the statement said. “To date, Electric Works has secured interest and letters of intent covering 114,200 square feet, nearly 50 percent of the project’s pre-leasing goal. This does not include letters of intent signed by Fort Wayne Community Schools or the Fort Wayne Public Market . . . it also does not include the 70,000-square-foot Electric Works Innovation Space, which will offer flexible lease terms to entrepreneurs and small businesses.”
A 2017 study by Novogradac & Co., certified public accountants, estimated the first phase will generate at least $100 million in local tax revenues over its first 20 years compared to about $120,000 annually now. In addition, the project is expected to create more than 2,000 construction and related jobs during its development and support a total of 2,800-plus jobs during its operation. It’s also expected to generate nearly $400 million in annual economic impact once operational.
The Indiana Economic Development Corp. previously approved a $50 million tax credit for the project, largest in its history, and the the city was recently notified it had been authorized to approve $55 million in New Market Credits. If the project does not go forward, Crawford warned, the state and Historic Tax Credits could be lost.
The first of the project’s two phases will focus on buildings west of Broadway, producing 224,000 square feet of office space, 113,000 square feet of institutional/education space, 83,000 square feet for retail/restaurants and a food hall, 83,000 square feet of dedicated innovation space/facilities, 82,000 square feet of residential space and 31,000 square feet of amenity/recreational space. The second phase, east of Broadway, would come later.
The CIB on Friday, meanwhile, is expected to consider awarding a contract that would lead to an assessment of the project’s financial and market projections. It is unclear, however, whether such a study could be completed in time to guide future CIB funding decisions within the timeline outlined by developers.