UPDATED BREAKING NEWS: Capital Improvement Board OKs $45M for Electric Works; full $65M in public funding now pledged
Electric Works developers said they needed $65 million in local public funding to make the massive project work, and now they have it.
That was assured Tuesday when the Fort Wayne-Allen County Capital Improvement Board voted 7-0 to approve a bond of up to $45 million toward the $250 million redevelopment of the former General Electric campus, to be repaid through food and beverage taxes. Thanks to interest and other expenses, actual cost of the bond is expected to be about $94 million.
To get the money, however, developer RTM Ventures will have to meet certain benchmarks, including having at least 250,000 square feet under lease by June 30, 2019. Closing is expected by Aug. 31, by which time RTM must have all of its private financing in place.
RTM’s Jeff Kingsbury said both targets are achievable. “We have a project now,” he said.
The project previously received a commitment of $3.5 million in local income taxes from the Allen County Commissioners, a total of $3 million from the commissioners and Capital Improvement Board for environmental remediation, and $13.5 million from City Council in Legacy funds and local income taxes.
RTM will not get any of the public funds until it meets its leasing and private funding obligations.
In addition to the $45 million for Electric Works, the CIB must also pay for a debt service reserve of as much as $4 million and about $400,000 or so in various issuance fees.
As The News-Sentinel reported last month, as of July 31 the CIB had a balance of about $8.6 million but about $6.6 million in commitments due within one year for such projects as riverfront development, new downtown hotels and $2 million for environmental clean up for Electric Works, leaving the CIB with only $2 million or so in unencumbered funds. But the food and beverage tax generates about $5 million annually, an amount that has been increasing by about 3 percent ($150,000) per year. The bond payment was factored on current income, meaning the CIB’s cash reserves would grow over time should that trend continue. The CIB’s cash flow will also improve once $2.5 million of debt from previous improvements at the Memorial Coliseum is retired in 2026.
All of which made CIB members confident they can not only afford to repay the Electric Works bond but will have money left over for other projects — about $60.3 million over the life of the bond, not counting expected increases in revenue.
“There’s no question risk is involved, but this could be transformational,” CIB member Steve Brody said.
“This is an opportunity to prove we are a community that values quality of place,” Chairman Jim Cook agreed.
Former City Councilman and CIB member Ben Eisbart said that in his 30 years of public life, “This is the most difficult decision because of the project’s size and scope. But it is transformational.”
“This is not a perfect project, and we need to manage our expectations” added CIB member and developer Don Steininger. “But you have to get started to know” what will happen.
In a statement, RTM’s Josh Parker said “Securing local investment in Electric Works is an important step and milestone for this project and the community . . . In addition to securing local investment, today’s vote is important for another reason: It strengthens our ability as a development team to meet the thresholds and benchmarks necessary to begin construction . . . Combined with the (recent) announcement of Parkview Health as a significant tenant, we are excited about building upon the incredible public momentum behind Electric Works by beginning environmental clean-up and preparing for the start of construction in 2019.”