GE project figuring out funding
By Sherry Slater | The Journal Gazette
The estimated cost of redeveloping the local GE campus is more than most people can comprehend: $300 million.
But no one source is bankrolling the crumbling complex’s renaissance along Broadway, near Taylor Street. Instead, the developers are assembling a financial package that relies on public and private investment.
To make it work, about $90 million would have to come from local, state and federal sources, lead developer Joshua Parker said. Those sources, in turn, require that Parker’s firm, Cross Street Partners, put its own money at risk along with funds from investors.
In high-stakes economic development, almost every government group angles to be the last to commit grants, tax breaks, loans and other incentives to ensure projects have solid private-sector backing before public money is promised.
The same will likely be true for the 31-acre campus being referred to as Fort Wayne Electric Works.
The development initiative comes as at least 10 housing, commercial and retail projects – all needing funding – are proposed or under way in the downtown area.
Cross Street, a Baltimore firm, is partnering with two Indiana developers on the project: Decatur firm Biggs Development, headed by Kevan Biggs, and Indianapolis firm Greenstreet Limited. Jeff Kingsbury, Greenstreet’s managing principal, is a Fort Wayne native.
Each firm is committing cash to the deal and courting outside investors. Together, they will contribute 15 percent to 20 percent of the cost. They also will apply for – and guarantee – senior bank loans for 40 percent to 50 percent of the deal.
Parker said it’s too early to name names, but he’s planning local tours for bankers from five different national lenders in the next six weeks.
Cross Street’s vision for the site calls for creating places where people can work, play, learn and live, but details are still under discussion.
The developers have been contacted by people wanting to lease office space or interested in renting apartments, Parker said. He expects details to crystallize in late summer. The demand for each type of space will factor into the design.
“It’s been very encouraging,” Parker said last week. “We’re anxious to get going on it. And we want to do it in a thoughtful way.”
The 17 vacant buildings that make up General Electric’s formerly bustling campus attracted 10,000 workers daily when it was a U.S. defense contractor during World War II.
GE and Cross Street officials haven’t signed the final sales contract, but the parties expect to complete details soon and ink the deal this summer.
It’s too early to speculate on specifics of the GE campus financial package, said John Perlich, spokesman for Mayor Tom Henry. But, he added, Henry is committed to the project.
“As part of last month’s announcement, the city of Fort Wayne indicated it would agree to seek a new TIF district for the area,” Perlich said in an email.
A tax increment financing district, or TIF, requires that all new property revenue generated in the district be used to pay for infrastructure projects only within that district. GE’s campus project will need road, sidewalk and other improvements.
Other economic development incentives potentially available for the project include:
- Dino Credits – The nickname for the Industrial Recovery Tax Credit refers to its use to encourage development of vacant industrial facilities – or dinosaurs.
Offered through the Indiana Economic Development Corp., Dino Credits can be applied to offset state tax liability. The credits can be used to offset costs for architectural and engineering fees, construction management, permitting and other hard costs.
Items not eligible include legal and accounting fees, property insurance, feasibility studies, loan and other soft costs.
- Historic Rehabilitation Tax Credits – The federal program provides incentives to developers to find new uses for existing structures that are vacant or under-used. Officials describe it as “one of the nation’s most successful and cost-effective community revitalization programs.”
In the past 40 years, the program has leveraged over $84 billion in private investment to preserve 42,293 historic properties, according to its website.
- New Markets Tax Credits – The federal aid is designed to drive commercial investment in low-income neighborhoods. Although the Fort Wayne New Markets Revitalization Fund failed to receive an allotment of tax credits in November, it’s possible the developers could find a recipient willing to use a portion of its allocation on the GE campus project.
- Regional Cities Initiative – The $42 million grant given to northeast Indiana this year is going fast – maybe too fast to contribute to this project. The Northeast Indiana Regional Development Authority has approved $33.8 million in grants for projects expected to improve the quality of place and attract additional investment in the region.
Seven additional projects have been presented to the board, which has yet to vote on them.
“At this point the RDA has heard more requests than they have available,” said Michael Galbraith, director of The Road to One Million and staff for the Regional Development Authority. “As far as GE (or any other project) is concerned, the RDA is not currently reviewing new presentations.”
But state lawmakers are considering proposals for additional ways to fund RDAs statewide.
- Legacy Fund – The fund, created with $75 million received from the lease and sale of the city’s old electric utility, has been designated for transformative local projects.
Among the projects supported so far are the city’s downtown riverfront development project. Officials approved a $10 million appropriation for Phase 1A, which has a total price of about $20 million. Plans include a riverfront promenade, green space and pavilion on the south bank, as well as a tree canopy trail, children’s play area and river access point on the north bank.
The Fort Wayne Legacy Joint Funding Committee has approved a $2.5 million loan toward developing The Landing and a $1 million loan for renovations to Quimby Village’s Clyde Theatre.
Although Cross Street has never tackled such an ambitious project, the firm’s partners have previous experience in large development deals, including part of the American Tobacco Campus in Durham, North Carolina.
That experience, and the fact the firm committed to developing the entire campus, were important factors in Cross Street being selected from four bidders, GE spokesman Matt Conkrite said previously.
Fort Wayne officials also bring experience to the table. Their expertise is in tapping funding sources.
“They’ve been working for years. They’ve been doing public-private partnerships,” Parker said last week. “That’s what gives us the confidence to tackle a big project like this one.”