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Councilman’s proposal would use restaurant tax to help restaurants hurt by COVID-19

Debra Herscher, a server at Hall's Restaurant at Triangle Park, arranges the plates and silverware on her tray before serving them up to her lunchtime customers. (News-Sentinel.com file photo)
Jason Arp

With restaurants closed or operating at reduced levels because of COVID-19, City Council is set to consider a plan to help them using some of the tax they pay — and to give local elected officials more control over that source of funds.

A non-binding resolution to be considered Tuesday requests that the Fort Wayne-Allen County Capital Improvement Board “do an analysis of its current and anticipated financial position and evaluate and report any ability to provide a grant or loan to businesses that generate the Supplemental Food and Beverage Tax.” The CIB oversees the 1 percent tax collected by restaurants in Allen County.

Sponsored by Jason Arp, R-4th — who often opposes government-subsidized economic development projects — the resolution contends that “in this time of significant financial hardship for many restaurants and other businesses that generate the (tax), it is unconscionable” not to assist the food and hospitality industry that generates the revenue in the first place.

Arp wants the CIB to submit its report within 30 days.

The resolution also asks Allen County’s state representatives and senators to “evaluate ways to change the requirements for the (tax) to allow local officials more ability to manage and monitor this tax, including issuing a moratorium or reallocating, especially during times that the tax can be better used by elected officials than an unelected board.”

The CIB’s directors are appointed by the mayor of Fort Wayne (three) and the Allen County Commissioners (three), and together they select a seventh director.

As The News-Sentinel reported last month, food and beverage tax revenues have been rising annually by about 3 percent in recent years. But the CIB has conservatively projected a flat income of about $5.3 million per year, in large part to satisfy financial markets that it will be able to repay various bonds backed by the tax. Thanks to its various commitments, including payments toward the Ash Brokerage parking garage and improvements at the city-owned Civic Center garage, the CIB expects to have a balance at the end of this year of about $4 million.

That year-end balance is expected to hover between $5.8 million and $6.7 million through 2025 as the CIB begins to make payments on other commitments, including $25.7 million for the $88.7 million downtown Riverfront at Promenade Park project and $45 million for Electric Works, which would back a bond requiring about $91 million to repay between 2022 and 2046.

And that doesn’t even include two other projects for which the city sought CIB support in November: $6.5 million over 25 years for the proposed $43 million Ruoff Home Mortgage headquarters and $16.7 million over 25 years toward a $20.8 million mixed-use project near Parkview Field that would include a parking garage designed in part for Ruoff’s use. The board has not yet acted on those requests, however.

The CIB’s revenues will improve greatly in 2026 after the bond used to fund expansion of the Memorial Coliseum comes off the books. That will create a one-time annual collection of about $18.5 million, then increase the annual income to a projected $7.7 million or so, reaching a year-end balance of nearly $88 million by 2049.

Shutdowns and slowdowns caused by COVID-19 will affect those tax projections, but the actual impact has not yet been calculated. The CIB could recover the money pledged to Electric Works if developers cannot close the $250 million redevelopment of the General Electric campus by June or receive another extension from the city.

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