Electric Works' supporters are anxiously awaiting Tuesday's Capital Improvement Board vote on whether to support $45 million in bonds for the project that developers say would transform the abandoned former General Electric campus into a vibrant, regional destination.
Their anxiety has been stoked by behind-the-scenes comments reportedly made by Mayor Tom Henry, who has publicly supported the $248 million first phase.
Proponents of Electric Works have spent months securing funding commitments from Fort Wayne City Council, the Allen County commissioners, the Legacy Joint Funding Committee and the Downtown Development Trust.
Despite the apparent momentum, however, the committed funds combine for less than one-third – or $20 million – of the total $65 million request from developer RTM Ventures. Without the $45 million bonds being considered by the Allen County-Fort Wayne Capital Improvement Board, the project wouldn't be financially viable, developers have said.
So to a large extent, Electric Works' fate lies in the hands of a board whose members weren't elected and can't be held accountable by voters. The seven-member CIB comprises three members appointed by Henry, three members appointed by the Allen County commissioners and one member chosen by the other six to serve as president.
'Their own free will'
Nelson Peters, Allen County commissioner, said the three commissioners spoke recently to their CIB appointees, explaining the reasons the commissioners unanimously support funding Electric Works. But that was the extent of the conversation.
“We in no way are about to coerce our appointees” on how to vote, Peters said last week. “They were appointed to use their own free will.”
John Perlich, the mayor's spokesman, described Henry's approach as similar.
“Mayor Henry indicated to me that he has encouraged his appointments to support the Electric Works project. He also said his appointments have and should continue to do their due diligence on the project,” Perlich said last week in an email.
John Stafford, a consultant to the CIB, said if the board doesn't support issuing $45 million in bonds, the city will not live up to its end of the final agreement hammered out over the summer between the Fort Wayne Redevelopment Commission and RTM Ventures.
That means the developer could “ask to renegotiate or walk away,” Stafford said.
“Conversely, if the developer doesn't meet all the commitments they have in the agreement, the city could walk away or ask to renegotiate,” he added.
The developer's commitments 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 their state and federal tax bills.
Almost 75 percent of the funding for Electric Works would come from sources outside the community, comprised of federal, state and private money.
Nuts and bolts
If at least four CIB members support selling bonds for the project, Fort Wayne Redevelopment Authority would issue them.
CIB would promise to make annual debt payments using the income stream created from the 1 percent food and beverage tax that has been levied by restaurants throughout Allen County. Although the amount collected varies annually, depending on how much people spend in local restaurants, it is a reliable revenue stream.
The food and beverage tax was adopted in 1985 to support construction of Memorial Coliseum's expo center. The money generated was later used to pay for Memorial Coliseum's roof-raising expansion.
In 2009, the General Assembly decided to expand the approved uses for food and beverage tax collections. That's when CIB was born. After that, any money not committed to Coliseum capital projects could be used for other economic development and capital improvement projects throughout the community.
Since 2010, when the CIB received its first appropriation, the total amount collected has ranged from $5.5 million to $7.6 million each year. After subtracting the $2.4 million to $2.6 million needed to make bond payments on prior Memorial Coliseum projects, the CIB has received roughly $3 million to $5 million each year for the past decade.
Among the projects that have received CIB funding commitments are the Hampton Inn & Suites being built adjacent to Parkview Field; the parking garage beneath Ash Skyline Plaza; the planned downtown boutique hotel; riverfront development; and purchase of the North River property, the former OmniSource site.
If CIB commits $45 million to Electric Works, the total it would pay after interest and other fees would be closer to $95 million, Stafford said. The consultant estimated it would take 27 or 28 years to pay off the debt.
It's too early to calculate exact numbers because the bonds wouldn't be issued for several months, during which time interest rates could change. Also, it's still unknown which potential underwriter would offer the most favorable terms to win the deal.
Ben Eisbart, a CIB member, estimated that the CIB's entire income stream would be tied up three or four years if board members approve RTM Ventures' request. After that, some Coliseum debt would be retired, freeing $2.4 million to $2.6 million a year for other requests. Eisbart wonders what local economic development opportunities could be lost during that window.
Choosing between Electric Works and other, future projects is a matter of policy and priorities. Stafford said there isn't a definitive answer to Eisbart's question.
Eisbart also expressed doubt about Electric Works' viability. The project's supporters believe that question has been adequately addressed.
Jeff Kingsbury, a partner in developer RTM Ventures, stressed Thursday that no local money would be paid out until the day the deal closes. And that closing won't happen unless the developers keep their commitments to secure outside private loans, sell federal and state tax credits, and sign up tenants, he said.
Until the full local funding piece is in place, Kingsbury said, it's difficult for him and partners Joshua Parker and Kevan Biggs to reach agreements with others.
For one thing, they don't have a date when work can begin, which makes it impossible for potential tenants to know when they might be able to move in.
A sticking point during discussions with city officials has been their desire to ensure that enough quality tenants are committed to moving in, Kingsbury said. But the developer's seven-plus-page letter of intent includes a confidentiality clause that forbids both parties from discussing the deal.
Secrecy is necessary, he said, because contracts are typically signed about two years before occupancy, and companies often don't want to tip off a current landlord about plans to move or worry employees about potential changes.
But in a document shared with city officials last month, the developer revealed it has signed letters of intent on 64,500 square feet of space and proposed leasing agreements for another 21,272 square feet under legal review.
Those agreements don't include previously announced leasing commitments from Parkview Health, Fort Wayne Community Schools and Indiana Tech, he said. Those pending deals, along with others, are among more than 220,000 square feet in either the concept or active planning stages.
Even so, Kingsbury said, “I'm confident we're going to hit those leasing targets – because we have to. If we don't perform, no local money goes in.”
And no local money goes into Electric Works unless the community commits the requested $65 million in one form or another.
“If CIB doesn't approve $45 million (in bonds), either somebody else has to kick in more,” Stafford said, or the deal gets renegotiated or dies.
Dave Gong of The Journal Gazette contributed to this story.