KEVIN LEININGER: Does the new Electric Works deal end tension between Fort Wayne and developers? Or simply reflect it?
Before Mayor Tom Henry and the backers of Electric Works finally announced completion of a development agreement last week, the $220 million project nearly collapsed as the sometimes-tense negotiations dragged on for more than two months. Terms of the deal suggest a degree of mutual skepticism remains, however.
“To us, the biggest change (in the final agreement vs. the draft Henry proposed in July) is that it’s more predictable and objective, with less left to the city’s discretion,” said Josh Parker, partner in RTM Ventures. “The fear was (the city) wasn’t really behind the project.”
Parker is hardly alone in that suspicion, of course. City Councilman and 2019 Republican mayoral candidate John Crawford has publicly questioned Henry’s commitment to Electric Works, as Sweetwater Sound founder Chuck Surack. And despite his professed support Henry himself has often exuded caution, initially wanting to cap local public funding at $50 million instead of the requested $65 million and suggesting unprecedented terms in the initial development proposal “designed to assure the city and public that the public investment is being made in a wise manner.”
The July draft illustrates how the city intended to accomplish that goal; the deal announced last month indicates the degree to which RTM Ventures is unwilling to trust the city’s good faith.
In the city’s initial proposal, for example, RTM was asked to provide evidence that 250,000 square feet had been leased to tenants “that are credit worthy in the reasonable opinion of the city” under lease terms “reasonably acceptable to the city.” Further, RTM was asked to demonstrate “to the satisfaction of the city” that the projected economic benefits are likely to occur “within a time frame acceptable to the city.”
The final draft, on the other hand, is simultaneously more limiting but also more liberating from the developers’ standpoint. In order to address concerns Electric Works will simply attract existing tenants and jobs instead of create new ones, the deal requires at least 25,000 square feet to be filled by tenants or jobs new to Allen County. But it also reduces or eliminates city discretion over the matter by giving the authority to review leases and letters of intent to “an independent financial consultant selected by the city with at least 10 years’ experience in the (Indiana) commercial real estate industry.”
The new agreement also gives RTM more latitude about how and when it may withdraw development fees that have been estimated at about $16 million. RTM has already spent millions on the project, Parker said.
The proposed local funding package includes $45 million from the Capital Improvement Board, $10 million from the city’s Legacy fund and a total of $7 million in local economic development income taxes from the city and county. RTM will be approaching various local governments over the next 60 to 90 days, and Parker said “the good news is that the CIB, Legacy and (Fort Wayne’s) Redevelopment Commission all have members appointed by the mayor.” It’s good news to RTM because the deal obligates the city to support its funding requests, not to mention a 10-year delay on the property taxes generated by the project. The city would also provide more than $5 million in lights, sidewalks, utilities and other infrastructure not included in the $62 million package.
Because of the slow-motion negotiations, RTM recently missed a window to receive a $16 million New Market Tax Credit. RTM will seek new credits next year, however, and Parker said his doubts about the future of Electric Works have been replaced by confidence — in large part because the final deal gives developers more explicit control over their own destiny.
With work on Electric Works’ massive phase one now moving forward and a proposed second phase east of Broadway expected to cost $226 million, this is no time for mistrust or suspicion between the city and developers. There are plenty of reasons to support or question such a large and expensive undertaking, but there is no room for hidden motives or phoniness on anybody’s part. Fort Wayne’s ability to attract development in the future may not hinge on the outcome of Electric Works but cannot help but be influenced by the integrity of the process.
Both sides have said they intend to work together for their mutual benefit. With both Surack and Parkview Health reportedly mulling investments in the project, now’s the time to prove it.
This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at firstname.lastname@example.org or call him at 461-8355.