KEVIN LEININGER: Cracking the chicken-or-egg standoff would ease concerns about Electric Works
“So, are you ready to write something in support of the project yet?” one of the Electric Works developers asked following the 90-minute forum that attracted more than 100 people to the Grand Wayne Center Tuesday.
Not quite, despite the public’s obvious interest in redevelopment of the old General Electric campus, the project’s unquestioned potential and the developers’ apparent candor in answering sometimes-pointed questions posed by myself and Karen Francisco of the Journal Gazette with help from readers and people in the audience.
My ambivalence proceeds from a classic Catch-22: Without firm commitments from rent-paying, job-creating tenants, the rosy economic projections being used to justify a request for $65 million in local public funds amount to little more than educated guesses. But without that $65 million, developers insist, financing for the $221 million project can’t be completed and tenants can’t be signed.
Some people, of course, oppose Electric Works purely on principle: Public dollars shouldn’t be gambled on such a massive and unique (at least for Fort Wayne) project, especially when the private sector is putting up just 40 percent of the cash. It’s an opinion I respect, even though partners in RTM Ventures argue the project would not happen at all without the subsidies needed to keep rents affordable in the Fort Wayne market.
On paper, though, the public stands to profit, too — handsomely.
Once the source of as many as 20,000 jobs, the 39-acre campus is a derelict hulk just south of downtown, contributing to blight and generating a mere $120,000 in property taxes. According to previous projections expected to be reaffirmed by a new study this week, an operational Electric Works would create nearly 2,000 construction jobs, more than 1,500 on-site jobs, $387 million in annual economic impact and generate nearly $101 million in local taxes over 20 years.
Predicting taxes is complicated by the fact that the project is expected to receive an abatement that would dramatically reduce taxes on improvements for 10 years. What’s more, Electric Works would no doubt be included in a tax increment financing (TIF) district that would earmark taxes taxes generated by the project for infrastructure and other uses in the district and to repay any loans made from the city’s Legacy fund. That means the project’s property taxes wouldn’t be distributed for general use, although developers say they would compensate the public for the tax breaks through an annual “payment in lieu of taxes” starting at about $440,000 and a contribution of $150,000 per year to a “community enhancement fund” that would benefit the surrounding neighborhood.
But without a thriving project both taxes and non-tax payments would be in question, which means it all comes back to RTM’s ability to attract not only a sufficient number of long-term tenants but also a diverse mix able to sustain the project through the inevitable ups and downs of the economic cycle.
The developers insist they are working to do just that, with several prospects prepared to commit once financing is in place. Until all the public and private funding is committed, they say, the money is not at risk because construction won’t begin until at least 250,000 square feet or so is leased. But phase one will contain 534,500 square feet.
Unless the developers are sharing information about prospective tenants with local officials who will have to make funding decisions, I suspect they are wrestling with the same contradictions I am: the desire to support what truly could be a “transformational” project for Fort Wayne tempered by the realization that not even signed leases can eliminate the risk posed by such a huge and complicated undertaking.
But such leases would mitigate that risk, and more: They would provide the tangible reassurance to officials and public alike that this project is more than rosy scenarios and pretty pictures — the kind of reassurance that invites and
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.