The last significant local road block to the Electric Works project was lifted Tuesday morning when members of the Capital Improvement Board voted unanimously to issue $45 million in bonds to support it.
Hundreds of local construction jobs also are one step closer to becoming reality. Larry Weigand, CEO of Weigand Construction, said Electric Works represents “a ton of opportunity” for the region's construction workforce.
“That's been marching orders from the developers, to keep as much work local as possible. Weigand Construction is also committed to that,” he said.
Weigand, who attended the Capital Improvement Board meeting, estimated that up to 300 workers could be on site daily at the former General Electric campus. Up to 1,000 trades workers could be employed there over the first phase of construction, he said.
Weigand Construction, a fourth-generation local firm, was chosen about 11/2 years ago to coordinate the redevelopment.
About three dozen onlookers burst into applause after the Allen County-Fort Wayne Capital Improvement Board adjourned its meeting Tuesday. The seven members' votes played a critical role in advancing the $248 million project, which will include residential, educational, office, retail and innovation spaces. A food hall and year-round farmers market is also in the plans.
Like a high-stakes game of Jenga, the project would fall apart without $65 million in local financial support, developers RTM Ventures have said repeatedly.
After Tuesday's meeting, Jeff Kingsbury, a partner in RTM Ventures, described the bonding approval as “a significant milestone.”
“It shows the state, it shows the capital markets of the private investment community that the local community supports this project and is ready for it,” he said.
Almost 75 percent of the $248 million funding for Electric Works would come from sources outside the community, comprised of federal, state and private money.
Kingsbury acknowledged, however, “there's still a lot of work to do.”
The developer's responsibilities include signing leasing agreements, securing a commercial loan, and finding buyers for state and federal tax credits awarded to the project. Large corporations can buy the credits at a markdown but apply them at full value to offset state and federal tax bills.
John Urbahns, executive vice president of economic development for Greater Fort Wayne, said after the meeting that his organization has supported Electric Works from the beginning and will work with the developer to identify and woo potential tenants.
“I'm excited the project is moving forward,” he added.
Now that the seven-member CIB has voted to support selling bonds for the project, the Fort Wayne Redevelopment Authority will begin the process of issuing them, a procedure likely to stretch into the spring.
The CIB has promised to make annual debt payments using the income stream created from the 1 percent food and beverage tax levied by restaurants throughout Allen County.
Approval from the CIB wasn't a gimme. But discussion during the meeting was primarily limited to a review of the city's process in identifying funding sources and how bonding would work. Bonds won't be sold until all other funding sources are secured and the deal closes, a marathon signature session projected for June 30.
Fort Wayne City Council, the Allen County commissioners, the Legacy Joint Funding Committee and the Downtown Development Trust have already pledged a combined $20 million, which includes $3 million in remediation money from the county and the CIB.
Nancy Townsend, the city's redevelopment director, assured CIB members: “No dollar would get spent unless all dollars get spent.”
Todd Samuelson, a certified public accountant with H.J. Umbaugh & Associates, has worked with city staffers for months to review funding options. He provided CIB members two graphs, one projecting flat food and beverage tax income and one factoring in a 3 percent annual increase.
“Some may say we're too conservative,” he said, referring to the flat projection, “but I think it's good to be conservative going into these things.”
The average food and beverage tax income over the past three years was $7.1 million a year, he said. If that amount remains flat, the CIB would have about $60 million left over to allocate to other projects. Factoring in a 3 percent annual increase, that fund would balloon to about $185 million, he said.
Samuelson's calculations assume about 4.75 percent interest on the bonds. The final cost – including principal, interest and fees – would be about $94 million.
The CIB's approval is capped at 6.5 percent interest, based on language in the resolution. If lenders demand more than that amount, the issue would have to come back before the board for a vote.
Samuelson cautioned, however, that the CIB's income stream wouldn't support much more than that.
Steve Brody, a CIB member, highlighted during the meeting that final language in the board's resolution requires that “executed written leases” for at least 250,000 square feet of space in Electric Works be provided by the developer before June 30.
Brody previously told The Journal Gazette that he wanted stronger language on top of leasing requirements already laid out in the city's contract with RTM Ventures. Brody said letters of intent aren't legally binding.
CIB members also placed an Aug. 31 deadline on their bonding approval. That allows two months' leeway beyond the expected deal closing date of June 30.
Before casting his yes vote, CIB President Jim Cook said he couldn't remember another local project with such widespread community support.
Ben Eisbart, board vice president, said it was the most difficult decision he's had to make in 30 years of public service.
“I wish the developers well in doing this,” Eisbart said before voting yes. “Godspeed, and make those deadlines.”
Don Steininger, a board member, voiced reservations before voting to issue the $45 million in bonds.
“This is not a perfect project, believe me, it's not,” he said. “There are a lot of questions to be answered.”
Steininger worries that expectations are too high, that the space will take longer to fill with tenants than people expect.
“This is a marathon, not a sprint,” he added.
Construction at the 32-acre campus – roughly the size of Glenbrook Square and its surrounding parking lots – is expected to begin in the second half of next year. Weigand previously said he's eager to tackle reviving the abandoned buildings, some that date back to the late 1800s.
Weigand Construction's previous projects include Parkview Field, Ash Skyline Plaza, Skyline Tower, Cityscape Flats and Parkview Regional Medical Center.