The partners developing Electric Works are asking the Capital Improvement Board to guarantee more than $23 million toward the proposed $248 million project – money to be paid only if the deal collapses.
In that event, the Allen County Fort Wayne Capital Improvement Board would acquire sole ownership of the former General Electric campus property along Broadway just south of downtown and control its fate.
The Journal Gazette on Wednesday acquired a letter detailing the request. The three-page communication dated Tuesday was written by Josh Parker of RTM Ventures on behalf of himself and partners Jeff Kingsbury and Kevan Biggs. It was addressed to Jim Cook, chairman of the Capital Improvement Board.
Parker said the developers have had an “unexpected yet enormous challenge” in getting deep-pocketed investors to sign onto the project.
“After meeting with over 40 institutional-quality investors, we were able to receive an investment proposal from Rubenstein Partners of Philadelphia,” he wrote. “Rubenstein is willing to lend $23 million necessary to move the project to final fund closing, but in order to do so, they have requested that CIB act as a guarantor of their loan.”
In a phone interview Wednesday evening, Parker said the $23 million guarantee would be needed only if the $45 million already approved by the Capital Improvement Board is not needed. One transaction or the other would be completed – not both.
“This project has exhausted every option that we have ever done on a deal,” he said. “We don't have another option.”
Cook couldn't be reached for comment.
Electric Works will include 39 acres, 18 historic buildings and more than 1.2 million square feet of space for offices, innovation and retail, among other uses. Supporters say the project would transform the abandoned former General Electric campus into a vibrant, regional destination.
Winning a requested $45 million funding commitment from the Capital Improvement Board in November 2018 was far from a gimme.
Although the board's seven members ultimately voted unanimously in favor of issuing bonds to support Electric Works, some seemed more than a little reluctant. A factor that might have swayed the skeptics was the developers' assurance no city money would be spent unless the developers lined up the entire funding package.
Nancy Townsend, the city's redevelopment director, assured Capital Improvement Board members: “No dollar would get spent unless all dollars get spent.”
If the $248 million funding package comes together, the Capital Improvement Board would direct the Fort Wayne Redevelopment Authority to issue bonds to cover its $45 million commitment.
The Capital Improvement Board would make annual debt payments using the income stream created from the 1% food and beverage tax that has been levied by restaurants throughout Allen County. Presumably, the same funding stream would be used to pay off $23.2 million raised through bonds if the deal doesn't close.
“Redevelopment and the city attorneys have been working very hard in the last few weeks to determine the feasibility and structure for the CIB to provide this guaranty,” Parker wrote to Cook. “I am pleased to share that John Bomberger, John Stafford and Tim Haffner, working with Pete Mallers, have developed a path forward which is acceptable to Rubenstein.”
Parker said a $23.2 million loan from Rubenstein is “absolutely critical” to refinance the existing mortgage and pay invoices to architects, engineers, lawyers and consultants, many of whom are local. Those bills are due.
If the deal closes, Parker anticipates Rubenstein would make an additional investment, bringing its total to about $50 million.
A guarantee from the Capital Improvement Board would assure Rubenstein that ts initial $23.2 million loan wouldn't be lost if the full Electric Works funding package doesn't come together.
The Capital Improvement Board, acting as a co-signer on the developers' loan, would take ownership of the Electric Works campus. The property has been appraised at more than $41 million by an independent firm.
Despite investing more than $6 million in the project, Parker and his partners would walk away with nothing if that were to happen, despite making various improvements to the site.
Fort Wayne City Council, the Allen County commissioners, the Legacy Joint Funding Committee and the Downtown Development Trust have pledged a combined $20 million, which includes $3 million in remediation money from the county and the Capital Improvement Board.
Almost 75% of the $248 million funding would come from sources outside the community, comprised of federal, state and private money.
In his letter, Parker requested a spot on the Capital Improvement Board's Nov. 21 meeting agenda or earlier. He advised Cook that the guarantee – if it's coming – would need to be approved by the end of November.
“I want to emphasize,” Parker said in his letter, “that this is the final piece that will allow the project to come to fruition.”
At a glance
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 the Capital Improvement Board 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.
Among the projects that have received Capital Improvement Board funding commitments are the Hampton Inn & Suites 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.
– Sherry Slater, The Journal Gazette