UPDATED: Mayor Tom Henry agrees to $62 million for Electric Works, but with a lot of strings attached to protect the public; developer responds
The administration of Mayor Tom Henry says it will pursue the full $62 million in local public funds being sought by developers of Electric Works, but only under conditions outlined in a draft of a development agreement release by the city Wednesday.
“City and developer agree to pursue the authorizations and approvals necessary for the city to provide the public funding and the developer agrees to provide the commitments and approvals necessary for the developer to develop, finance and construct the project,” the agreement states. “If either party is unable to obtain the necessary authorizations, commitments or approvals on or before Aug. 31, 2018, then either party may terminate” the agreement.
“In light of the scale of the initial public investment requested and the potential for substantial future requests for public investment in the project and in necessary public infrastructure supporting the project, the city has conditioned its agreement to provide the $62 million in public investment upon the satisfaction of certain conditions . . . designed to assure the city and the public that the public investment is being made in a wise manner.”
Those conditions include: The city must review and approve the environmental conditions found on the former General Electric campus and approve any remediation plan. Allen County and the Capital Improvement Board have already pledged a total of $3 million for environmental clean up but the cost is expected to be closer to $7 million; the developer must provide evidence the project can be constructed at the anticipated cost of about $220 million; the city must review and approve commitments to lease a minimum of 250,000 square feet within the project; the city must review and approve the strategic marketing analysis prepared by the developer’s consultant, RCLCO, Inc., which concluded there is a market demand for the project’s offices, apartments, shops and other features. Also;
The developer must demonstrate that the economic impact predicted for the project will occur within a time frame acceptable to the city; the developer must provide a strategic plan showing there will be sufficient parking for the project; the developer shall have obtained all approvals for construction; and the city shall have approved the final construction plans.
Henry previously suggested capping the contribution to the project from the city and CIB at $50 million.
RTM Partner Josh Parker said nothing in the proposal is expected to be a deal-breaker.
“I’m gratified by all the hard work and eager to dive in to the negotiations. I’m gratified the mayor has stepped up as a great champion of the project,” Parker said. With so much public money at stake, he added, it’s understandable “the city doesn’t want to be left holding the bag, and neither do we. The $62 million represented in this draft will complete the full local investment, an important and notable milestone in this process.
“At the same time, it’s important to remember that this a draft agreement, not a final agreement. We look forward to the next step in this process: working closely and collaboratively with the city and county towards a negotiated, final development agreement that ensures a smart and sound local investment in Electric Works and helps bring high-quality jobs and significant economic impact to our city, county and region.”
The draft also states that all federal, state and local monies for the project, along with all private loans and investments, be made available simultaneously as a part of a single closing after all conditions have been satisfied. If those conditions are not met by Dec. 31, either party may terminate the agreement.
The developer must post a $5 million letter of credit payable to the city in the event of a default until the project has been completed. The developer will be able to withdraw a development fee (about $16 million) only after the project has been completed and has stabilized financially.