The developer of a proposed large subdivision in southeast Fort Wayne is one step closer to getting more than $5 million in assistance from the city's Legacy Fund.
Jerry Starks, the developer of Roosevelt Reserves, plans to put 263 market-rate homes in a subdivision near the intersection of Tillman and Hessen Cassel roads. Starks has said the biggest challenge is to work around the land's floodplain.
Roosevelt Reserves would be Fort Wayne's first residential tax increment financing district, “which captures tax increment generated by residential uses in addition to commercial uses,” Joe Giant, redevelopment manager, told the city's Redevelopment Commission Monday. A $5.2 million loan to Roosevelt Reserves would be paid back by the tax increment captured by the district over about 18 years.
The Legacy Fund request will be introduced at the Fort Wayne City Council today with discussion and passage set for Feb. 8.
Jonathan Leist, deputy director of redevelopment, said at the Redevelopment Commission meeting that developers and real estate agents have identified an appraisal gap. The cost of new market-rate construction is higher than the values at which the homes will be appraised.
“This makes it difficult to obtain a mortgage for these market-rate homes, despite evidence of demand,” he said.
To address the gap, Giant said the Legacy Fund loan would help out with $5.2 million of $12.9 million estimated for total site preparation and public infrastructure costs. The preparation and infrastructure costs are later added to the prices of homes. With the Legacy Fund covering about two-fifths of the up-front costs, homes will be sold for a price in line with the appraisals.
The loan would be doled out in three sections. First, $2.4 million will be given to Starks for infrastructure – sewer, storm sewer, water, streets and sidewalks – for the first 122 lots.
Once those homes are completed, Starks will receive $1.6 million for the next 80 lots and then $1.2 million for the last 61 lots. When the project is completed, it is expected to draw $52 million in new private investment, Leist read from a report.
“It will be the first project of its kind to begin reversing the systemic and negative impacts that exist due to the appraisal gap,” Leist said.
A City Council committee suggested an addition to the agreement, which would typically extend 25 years, so the tax increment financing district will end when the loan is paid back in 17-18 years. Leist said council members requested the tax increment return to the city at that point since the infrastructure, such as streets, will likely need repairs then.
Commission members asked several questions to clarify what exactly the public funds would go toward. The members, all participating virtually, granted approval with Nathan Hartman in opposition. Member Jason Arp was not present.