FORT WAYNE — The announcement that Ash Brokerage would move its national headquarters to downtown Fort Wayne as part of a $71 million development was hailed by city officials.
Also lauded was the news that a $32 million residential package of townhomes, apartments and condos by Hanning & Bean Enterprises would be included in the project, which will cover most of a city block.
But officials were quieter about exactly what the city’s $19.5 million portion of the project would be and they were silent on how that commitment would be paid for.
City officials plan to disclose their plans publicly for the project, which includes an $11.7 million parking garage. The details will be released Monday.
Though the final amounts have yet to be set and separate bodies need to approve the moves, the estimated $19.5 million in costs the city is responsible for will come from:
•The Capital Improvements Board
•The Legacy Fund
•The Civic Center Tax Increment Finance District
The Civic Center TIF district covering the area uses the increase in property taxes from new development to pay for capital improvements in the district. Usually, those improvements are infrastructure improvements, such as sewers or roads, that enabled the development in the first place, but the money can also be spent on improvements that have a public benefit.
Redevelopment Director Greg Leatherman said the Civic Center TIF district’s biggest obligation is to make loan payments on Grand Wayne Center. Officials also recently said the TIF district would give $750,000 toward the Embassy Theatre Foundation’s efforts to bring life to the long-defunct Indiana Hotel.
Officials said the TIF has about $5.2 million on hand, enough to cover the $4.3 million cost of the land. The property comprises nearly a city block between Wayne and Berry streets from Webster to Harrison streets, with the exception of the five-story brick building at Berry and Webster, home to attorneys Shambaugh, Kast, Beck & Williams.
“We’re in good shape from a cash standpoint to buy the land,” Leatherman said.
The City Council will be asked to direct between $1 million and $2 million from the Legacy Fund, money from the lease and sale of the city’s old electric utility, City Power & Light. The Legacy Fund, which has about $27 million on hand not already earmarked, is meant to be used for transformative and catalyst projects.
Spending from the Legacy Fund requires approval by a supermajority of the City Council; if approved, the money would go toward site preparation, said John Urbahns, the city’s director of community development. Site preparation, which will include demolishing existing buildings and construction readiness, is expected to cost about $2.7 million.
The Capital Improvements Board will be asked for several million dollars over several years to make the loan payments for the project.
Officials don’t know the amount or the length of time because the terms of the loan haven’t been determined. That will involve balancing the money available from the CIB with the amount the TIF district will generate once property tax phase-ins shrink and the development begins to pay into the TIF fund.
Tax phase-ins, formerly known as tax abatements, freeze the tax on a property where a big investment is made. The owner keeps paying the same amount of property taxes, plus the increased taxes that are phased in gradually.
The agreement with the developers calls for a 10-year phase-in on the project, with the first year of the tax increase being zero and the amount rising 10 percent a year so that in the 10th year the owners pay 100 percent.
At one point, officials estimated they would need about $5.5 million from the Capital Improvements Board over 10 years. But now officials say they need to figure out the terms of the loan to know how much would be needed to cover and thus how much to ask for from the board.
The board collects some state income and sales taxes from IPFW, Grand Wayne Center, Memorial Coliseum and the Holiday Inn near the Coliseum, but most of its funding comes from county food and beverage tax money left over after Coliseum debt payments are made. The board is expected to accumulate up to $85 million over the next 17 years, with the money earmarked for large, capital projects that attract high-wage jobs.
With the TIF district and Legacy Fund paying for land acquisition and at least part of the site preparation, that leaves about $13.5 million that will have to be borrowed to pay for the 750-space, four-story parking garage.
The best part of the package, officials said, is that the development itself will pay for the development, and taxpayers will not be on the hook, even in a worst-case scenario.
Leatherman said the final development agreements, which are being worked out, will spell out clearly what Ash Brokerage and Hanning & Bean must do and when. That is especially important because the city’s portion of the development – the parking garage – essentially forms the foundation for the other two buildings, which go on top of it. Urbahns said the agreement will be structured to ensure that the city does not build a parking ramp only to have nothing built on top.
“We’re not going to build a garage without the projects,” Urbahns said. “We will only be building a garage if these buildings are going on top.”
Even if that were not the case, Leatherman said, and the city did end up with a parking garage without the private developments, the TIF district could cover the loan payments, meaning taxpayers would not be on the hook.
“It would severely limit other projects in the district, but the money would be there,” Leatherman said.
Because of the benefits of owning the land and the opportunities presented if the city later goes forward with the parking garage, Leatherman said he believes the Redevelopment Commission will approve buying the land at its meeting Oct. 14. The Capital Improvement Board meets Oct. 17.
Officials said the beauty of the project is that years of work created the environment for a $51.6 million private investment that will bring 300 jobs and 100 housing units downtown. The city’s part of the project is to help with the two biggest barriers to downtown development, property acquisition and parking, and with the exception of the Legacy money, both of those will be paid for by development itself, rather than taxpayers.
Urbahns said the project does almost everything planners have wanted for years, including consolidating surface parking lots into a garage, creating street-level retail and residential units.
“It’s going to create a tremendous amount of activity downtown,” Leatherman said.