The Landing lands Legacy loan
Council OKs 1st-time use of fund for lending, not grant
By Rosa Salter Rodriguez | The Journal Gazette
By a 7-2 vote, the Fort Wayne City Council approved a $2.5 million loan from the Legacy Fund to help The Landing project take off.
Planned as a $35.7 million rehabilitation of several historic buildings and the demolition of the former Rosemarie Hotel in the 100 block of Columbia Street downtown, the project will include restaurants, bars and retail stores at street level and office space and apartments on the upper floors.
After two hours of verbal sparring on the specifics of the loan, the council passed a twice-amended version of the financing, which represents the first time the Legacy Fund has ventured into lending instead of providing grants.
The fund, now at just over $30 million, consists of money from the lease and sale of Fort Wayne’s former electric power utility.
That the money was being lent instead of being given away, although still carrying significant risk, makes the funding proposal more attractive, said John Crawford, R-at large.
“Loans are so much better than grants because a grant means we never have a chance to get our money back,” he said, referring to a concern that the Legacy Fund not dip below a threshold that would threaten the size of the fund.
Council President Tom Didier, R-3rd, agreed. “Yes, there is a risk in this project, but you’ve got to take calculated risks,” he said.
However, Michael Barranda, R-at large, worried the council was making up policies for Legacy lending on the fly.
He offered an amendment, which was approved, to send the loan back to the Legacy Fund’s investment committee to determine and approve the final language based on terms outlined in the recommendation passed last night.
Russ Jehl, R-2nd, offered a second successful amendment – that if the developer returns with an additional local government funding request, the council could reopen the agreement.
A third amendment that could have brought the final loan agreement back to the council failed after being suggested by Paul Ensley, R-1st.
Ensley and Jason Arp, R-4th, voted against the loan, saying they thought it was too risky and provided too good a deal for the developer, which was sought out by the Legacy Fund committee for its expertise in turning around old, underused neighborhoods.
The two dissenters questioned the percentage of the project actually funded by the government as opposed to private investment and how much the city would kick in for planned streetscape improvements.
After the meeting, Barranda said the loan’s interest rate was 2.5 percent that in actuality might be lower and that the loan was structured to require interest-only payments with a balloon payment after 15 years.
But he also said payments might accelerate if the project proves an early success. If that happens, Crawford noted, it will return at least $350,000 in taxes on buildings that are now barely generating revenue.
Steve Smith, CEO of The Model Group, said he was impressed by the level of community interest and engagement in the project, which he described as a linchpin for other downtown development because of its central location between current investments including Parkview Field and the proposed investment in the riverfront park project.
Among the next steps needed to secure project financing is approval of a $6.9 million request for Regional Cities funding from the Northeast Indiana Regional Development Authority. He pointed out that body is likely to look at the city’s willingness to commit money in making its decision.