Fort Wayne city officials will pursue $62 million in public funding requested by the developers of the Electric Works project south of downtown, but only if the development meets a list of specific conditions, according to a draft development agreement released by the city Wednesday.
The draft agreement shows that the city will seek approval for $62 million in public funding for the project, higher than the $50 million Mayor Tom Henry suggested at a news conference this year.
Although the document does not outline specifically where the funds will come from, it does mention city Redevelopment Authority Lease Revenue Bonds as a possible source.
It's likely a $13.6 million Legacy Fund request will also be part of the public funding package.
The city and the developers have until Aug. 31 to secure the necessary approvals. If that does not happen, either party has the right to terminate the agreement. But because it is a draft, some aspects of the agreement could change in the coming weeks. City spokesman John Perlich did not have an answer Wednesday for when the agreement could go before City Council.
“It will take some time for feedback and negotiations between us and the development team,” Perlich said. “Once a final agreement is in place and the exact breakdown of where local funding would come from (is determined), then it would go to the various governing bodies for approval.”
Josh Parker, a partner in RTM Ventures, reiterated that the agreement released Wednesday is just a draft.
“We're thankful to the mayor, city council and county leaders for their support, leadership and considerable efforts that went into this draft agreement. Combined with the $3 million already committed by the (Allen County-Fort Wayne Capital Improvement Board) and county commissioners, the $62 million represented in this draft will complete the full local investment of $65 million, an important and notable milestone in this process,” Parker said.
“At the same time, it's important to remember that this is 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.”
For the funding to go through, RTM Ventures must meet a set of specific conditions, including city review of environmental conditions on site.
The developers must also provide evidence that it is possible to build the project close to the original $221 million estimate. RTM will also have to show that it has secured lease commitments from potential tenants.
It appears RCLCO, the firm hired by RTM Ventures to perform a market analysis for the project at the behest of the Capital Improvement Board, will also have a role moving forward. As part of the agreement released Wednesday, RCLCO will be tasked with creating a strategic market analysis and analysis of potential tenants for city approval.
“Developer shall have demonstrated to the satisfaction of city that the results projected in the impact study (including, but not limited to, the creation of jobs, the increase in wage rates and the generation of local tax revenues) are likely to occur within the completed project within a time frame acceptable to the city,” the draft agreement states.
The city also expects to receive a strategic parking strategy for the site. Once the project begins collecting tax increment financing revenue, RTM Ventures will also be expected to contribute to the city's Public Art Fund. The firm will be expected to contribute 1 percent of the total value of tax increment funds generated by the project, with a cap of $100,000.
In addition to the conditions RTM Ventures must meet in order to receive $62 million in city funds, the agreement outlines several economic development incentives to assist the development.
As part of the agreement, City Council can expect to be asked to create an economic development area for the site and approve a 10-year business personal property tax abatement.
The agreement also lays out a list of several tenants that would be prohibited from opening on the Electric Works campus. Those include adult book stores; drug paraphernalia stores or “head shops”; tattoo parlors; adult entertainment establishments such as strip clubs; fast food restaurants, with the exception of quick-stop restaurants like Panera Bread, Chipotle Grill or Starbucks; and casinos.
City Councilman Russ Jehl, R-2nd, who held a news conference last month outlining conditions he would like to see included in the final development agreement, said he was happy to see that there are some taxpayer protections included in the document, namely a $5 million line of credit from RTM Ventures to the city in the event that the firm folds. Additionally, RTM can collect its developer fee only when the project is complete.
But Jehl said the council was not made aware of the draft agreement before it was made public.
“The administration has neglected to provide council any updates since April, and therefore I don't know what's in it and am learning, along with the public, the details of the agreement,” Jehl said. “With that, I hope council will join me in trying to get brought up to speed by forming an advisory committee of local real estate developers and professionals who can help look at this agreement and provide council with sound advice on it.”
Jehl said he's still eager to see the specific breakdown of how the city would contribute $62 million toward the project, as well as “details as to why this would be a good investment of public funds.”
“Ultimately, the question is whether or not this is a good investment for the taxpayer and whether or not adequate provisions are being installed to protect the taxpayer,” Jehl said.
“I hope that communication from the administration increases as it moves forward with figuring out a public financing package, because the only way for this deal to come together is if we have a united city government. Leaving council out of negotiations is not going to get us there.”
For the Electric Works Economic Development draft summary, click here.
For the full 30-page draft of the Electric Works Economic Development, click here.