Josh Parker with RTM Ventures answers questions on the Electric Works project with Mayor Tom Henry and Kevan Biggs of Biggs Development looking on Thursday afternoon at the GE campus.( Photos by Michelle Davies | The Journal Gazette)
Josh Parker of Cross Street Partners, which is part of Electric Works developer RTM Ventures, addresses the assembled crowd at the GE Club Thursday to announce the finalization of an economic development agreement with the city of Fort Wayne to redevelop the former General Electric site south of downtown.
Friday, August 31, 2018 1:00 am
Electric Works economic deal set
City, developer agree on project benchmarks
DAVE GONG | The Journal Gazette
The city of Fort Wayne and developer RTM Ventures have signed an economic development agreement for the former General Electric campus south of downtown that outlines specific benchmarks required to secure $62 million in city funds for the project.
Mayor Tom Henry was joined by Kevan Biggs and Josh Parker of RTM Ventures on Thursday to announce the agreement, which drew support from area officials, including City Councilman John Crawford, R-at large, who has been a proponent of the project. Crawford is seeking the 2019 Republican nomination for mayor.
“I am pleased to see that the city administration, after months of indecision, has finally stepped up to take action on the Electric Works project. I believe the former General Electric campus has huge economic potential for downtown Fort Wayne and will be a game-changer for our entire region,” Crawford said in a statement. “It is gratifying to see the mayor take action to move this important initiative forward. This is a positive step in the right direction.”
The agreement announced Thursday comes after months of negotiations and one draft agreement released by city officials in June.
The new economic development agreement outlines a list of conditions that must be met by specific dates for the project to move forward.
Notably, the city must approve 250,000 square feet of lease commitments – 100,000 square feet by Dec. 31 and the rest by June 30, 2019. Of that 250,000 square feet, at least 150,000 must be from tenants new to Allen County or who are bringing with them jobs that are new to the area.
“The tenants must occupy and conduct business within the leased premises and the terms and conditions of the lease must be reviewed and approved by an independent consultant,” a summary of the agreement states.
It's a requirement that was not a component of other recent public-private partnerships with the city. Although requirements for pre-leasing activity are common, Biggs said this specific provision is “unique.”
“The provisions around the definition of net new jobs is a little unique in this circumstance, but we do understand kind of the city's reasoning for putting that kind of information in,” Biggs said. “But as we've expressed to the community, this is a project that is catalytic. That's our intent.”
Biggs added it's always been RTM's intention to bring new jobs to the area rather than simply move people from other parts of the city to the Electric Works campus.
In an interview Thursday, Henry said other project agreements have included various benchmarks. The square-footage requirement was included in this agreement, he said, because of the scope of the project.
“It's terribly important to us to have new jobs brought in,” Henry said. “Moving jobs just around the community really isn't going to do that much.
“We need to create an environment to attract new businesses and new investors and new employees. So we built that in as part of the ultimate agreement and they've agreed to it.”
Both Henry and Biggs said they're confident they'll be able to satisfy that requirement by the necessary deadlines. “We wouldn't be here today if I didn't have some level of confidence,” Henry said.
RTM Ventures is confident the benchmarks will be met based on interactions the firm has already had with potential tenants, Biggs said.
“This project has certainly received national attention and people have paid attention to that,” Biggs said. “Our goal here, ... is to put Fort Wayne on the map where in other circumstances we would have never been in that conversation. We're already seeing those results.”
Biggs added he thinks Thursday's announcement will generate even more interest from potential tenants now that there's a clear path forward.
In addition to the pre-leasing requirement, the city must get necessary public funding approvals from the Fort Wayne Redevelopment Commission, the Legacy Joint Funding Committee and the Fort Wayne City Council by Oct. 31. However, if necessary, the city can extend that deadline to Nov. 30.
RTM Ventures in turn must provide commitments and approvals required to develop, finance and build the project within 60 days of the city's approvals, but no later than Dec. 31.
Public infrastructure improvements to support the development will be paid for through real estate property taxes.
The agreement also contains requirements that the city approve environmental conditions and any remediation that must be done on the site. The city also has to approve a marketing analysis from RCLCO Inc., and RTM Ventures must provide a parking plan to show there is sufficient parking.
It's been more than two months since city officials released a draft agreement outlining preliminary requirements for the project. The deal is complicated and took intense negotiations to complete, Biggs said.
“We would have liked to have seen it move more expeditiously. It was very clear from the city that this is the biggest project that they've ever taken on,” Biggs said. “And I think they wanted to certainly take the necessary time to be sure we got it right, and we appreciate that too, because we didn't want to go into an agreement where there were some details that were neither satisfactory to the city or unsatisfactory to us as well that could be problematic down the road.”
RTM Ventures still expects a 24-month construction cycle, said Kevin Erb, the firm's director of public relations. Since construction won't begin until 2019, completion is expected in 2021. Original estimates, which were based on a 2018 start date, Erb said, projected completion in 2020.
The delay isn't expected to cause a wholesale loss in funding, Erb said, but it could cause some of the developer's tax credits to devalue.
“Maybe some of the tax credits may begin to diminish in value by the end of 2020, so say, for example, we get 80 percent of Phase 1 by the end of 2020, the value on some of those remaining 20 percent of tax credits that are a portion of the financing would diminish in value,” Erb said.
“It depends on how far along we are and how much of the credits we're still leveraging at that point.”
The agreement will now go before the Fort Wayne Redevelopment for further consideration.