After hearing from Fort Wayne’s economic development staff that RTM Ventures was still missing $51 million in commitments for the now $280 million Electric Works project, the Fort Wayne Redevelopment Commission on Aug. 3 voted unanimously to cancel its pledge for public money with the developer.
The meeting undid in minutes a project that’s been in the works for about five years.
Developers said the project would generate about $300 million in economic impact during its multi-year construction, and possibly pump roughly $400 million more into the economy when Phase 1’s 700,000-square-foot space opened in 2022.
“There’s no way of sugar coating this,” said Fort Wayne City Councilman Geoff Paddock, D-5th, whose district covers the former General Electric complex where the project sits.
It’s a blow for Paddock, who has worked on the project for five years, including with then-City Councilman John Crawford, a Republican. So many businesses and education and cultural groups had signed leases, most recently Do it Best, which would bring 500 jobs and add 100 more in a few years, Paddock said.
He believes the city should have continued with the project “so close to the finish line,” and believes that the financing could have been worked out by the September closing date.
However, since RTM owns the complex, it’s unlikely that another developer could immediately step in to take on the project, Paddock said.
RTM’s attorney Pete Mallers disputed at the meeting about the number given by redevelopment staff, saying that $8 million was in the process of being put into letter form as requested by the city. And since both sides were talking, they should continue under the agreement.
RTM said in a statement, “We were taken by surprise by the meeting and shocked by the Redevelopment Commission’s vote to cancel the Economic Development Agreement on Electric Works. In the face of a global pandemic and historically high unemployment, we are planning to start construction this fall, spending $200 million over the next 24 months, and generating 2,000 construction and related jobs when this community needs it most, including a workforce development program and a commitment to growing minority-, women,- and veteran-business enterprises.
“This deal is not dead. We own 40-acres and the most historic buildings in Fort Wayne, have full construction drawings, a shovel ready site, over 60% pre-leasing including Indiana’s largest privately held company as an anchor tenant, along with leading organizations like Parkview Health, Fort Wayne Community Schools, Fort Wayne Metals, Indiana Tech, IU Ventures, and Medical Informatics Engineering, among others. With the support of local investors and civic leaders, businesses big and small, the Indiana Economic Development Corporation, five local and regional banks, and federal and state tax credit investors nationwide, we have met the conditions of the Economic Development Agreement. We’re ready to move to closing this $280 million deal and getting people to work. We hope the City and Redevelopment Commission will come back to the table.”
Now City Council wants to know what’s next. All the members signed a letter sent Aug. 5 to the head of the city’s redevelopment department. Among its questions, what happens to uncollected debts such as payments to City Utilities that are public money and is the city’s right of first refusal on purchasing the land now gone with the cancellation of the agreement.
“Reasonable people disagree on the wisdom of Electric Works’ public funding and whether it was time to pull the plug,” Councilman Russ Jehl, R-2nd, said in an email accompanying a copy of the letter that was sent to media. “Regardless, we all deserve a real explanation and a plan moving forward, which is why Council members of both sides of the issue signed the letter and President Didier is adding Redevelopment to our agenda.”
Redevelopment leaders have been invited to address council at its meeting at 5:30 p.m. Aug. 18. Due to COVID only essential participants will be allowed into the session, but it will be streamed on City TV and Facebook.
During the meeting, Jon Bomberger, of Faegre Drinker Biddle & Reath LLP and representing the city, said RTM had $30 million missing, $22 million of it in undocumented support and another $8 million unexplained, in equity investment, and $21 million missing in equity funding.
While the city has been given emails or letters about promises of funding, it has no documentation that the commitments are in place.
As Nancy Townsend, the city’s redevelopment director, explained, the public portion of the project, $65 million, has been in place since November 2018 and staff’s No. 1 priority was protecting those public dollars.
Townsend, whose staff received a number of documents on the July 30 deadline and spent the weekend looking them over, said it wouldn’t be the first major project that moved on without the initial developer, citing the riverfront as one example. The project is daunting, she pointed out, in terms of the large space and the fact that many investors may not have heard of Fort Wayne.
Commission president Christopher Guerin said he had asked redevelopment staff to update the commissioners as the deadline for having financing in place expired July 30. According to the economic development agreement, both sides had five days from then to terminate the agreement.
Guerin, who phoned into the meeting, reluctantly agreed to allow Mallers to speak, but said the meeting was not a public hearing and would not allow Paddock to get an answer when he asked what the vote means for other government bodies that were part of the process.
Paddock said after the meeting that the city’s $10 million in Legacy funding helped create buy-in from other groups on the project.
Mayor Tom Henry’s spokesman, John Perlich, wrote in an email, “Since there isn’t an agreement in place now, local public funding doesn’t move ahead. The result for the (Capital Improvement Board), Allen County, and City Council is that the funding is no longer set aside since the EDA doesn’t exist now.
“If a reengagement occurs between the local public funding partners and RTM Ventures, a new EDA and new funding commitments from the public bodies would need to take place.
“Mayor Henry recognizes this was a difficult decision for the Redevelopment Commission to make. He trusts their expertise and decision. It’s vital that taxpayer dollars are protected and not be at risk of potentially losing $60 million in an initiative that wasn’t going to be able to move forward under the EDA that is no longer in effect. The local public funding partners did everything possible to try to help bring the project to fruition, but the private development side as it currently stands wasn’t able to complete the private sector portion of the partnership. We’re optimistic that there will be a significant development on the former GE site in the future.”
Ben Wahli, president of the West Central Neighborhood Association that contains the former GE complex, expressed shock at the meeting’s outcome. “It seems like a trivial thing,” said Wahli, who attended the meeting to support the developers, “... to cancel (the agreement) over a note that’s coming out of underwriting.”
The project was to have such an impact on not only his neighborhood and the city but northeast Indiana as well, he said, noting that minority-, women- and veteran-owned business were being brought in to compete and benefit from contracts on the project.
Wahli planned to attend a neighborhood association meeting later in the evening and call for members to contact the mayor’s and redevelopment offices.
Cedric Walker, founder of Joshua’s Hand, which was approached about a year ago and contracted by Broadway Redevelopment Partners and Weigand Construction to advocate for minority owners for contract opportunities on the Electric Works project, attended the commission’s meeting.
“First it was surprise,” Walker said of his reaction. “Then it was disappointment. Then it turned into outrage.”
He feels the decision was a political move.
“I don’t believe the decision was made for the good of the city.”