The Journal Gazette
Sunday, May 26, 2019 1:00 am

Future of Electric Works at risk

Developers: Powerful entities working against project

SHERRY SLATER | The Journal Gazette

Electric Works' spark is in serious danger of being snuffed out, the developers have revealed to The Journal Gazette.

In a letter on Page 15A in today's Perspective section, the partners in RTM Ventures say the $248 million first phase in redevelopment of the former General Electric campus “will not move forward” unless something changes.

Josh Parker, Kevan Biggs and Jeff Kingsbury signed the letter that alleges “a small group of people in positions of influence and power ... are working aggressively to thwart the progress of this project and the potential of this community.”

In an exclusive interview, Parker declined to name who he believed is trying to sabotage the mixed-use development that includes residential, retail, office, education and entertainment tenants, with an emphasis on innovation.

The result of the alleged intervention, the developers said, is that some potential investors and tenants have become skittish, unwilling to commit to the project.

RTM Ventures has leasing commitments for more than 100,000 square feet but need at least 330,000 of the 700,000-square-foot total spoken for before bankers will sign off on the deal, Parker said.

“To those that seek to stop progress out of your own fear of change, financial profit or political gain,” the partners wrote, “we're asking you to put the interest of this community ahead of your own and commit yourselves to support Fort Wayne in moving this transformative project forward.”

'A critical moment'

Parker stressed his commitment to the project.

“We're heavily invested, we care deeply and we want to get this done,” he said. “If we don't get this done, Fort Wayne's star is going to dim just a little bit, and it's not fair. It doesn't have to.”

The letter published today describes this as “a critical moment in the life of Electric Works.”

In the phone interview, Parker warned that the project is “far from a done deal.”

“I think there's a sense of complacency, that it's a sure thing,” he said. “I think we all need to be eyes wide open.”

Successful projects in other cities rely on a redevelopment strategy that builds on “a public-private partnership and significant leasing ... from multiple anchor institutions to drive innovation in partnership with business,” the partners wrote.

The success of innovation districts is driven by “eds and meds,” as developers refer to schools and hospitals. Typically, a major institution becomes an anchor tenant.

Parker said the model isn't working here, where multiple universities and health care providers split market share.

Although Parkview Health, the Indiana University Research and Technology Corp., Fort Wayne Community Schools and Indiana Tech have signed letters of intent to lease space, no one entity has stepped up to claim a significant presence in Electric Works.

Duke University's commitment to the American Tobacco campus has been critical to its success, according to economic development officials in Durham, North Carolina. The renovation project is widely considered the model for what could happen in Fort Wayne.

Before bankers or other investors would sign onto the American Tobacco campus, developers had to secure Duke's commitment to lease 150,000 square feet of office space. As of 2017, the university occupied 220,000 square feet of the 600,000-square-foot total.

Parker is investigating other economic models but believes eds and meds could still be a driver here if those already committed form a consortium and draw in additional organizations, including Purdue University Fort Wayne, the University of Notre Dame, Trine University and Huntington University.

For Electric Works to succeed, Parker said, it needs to be a regional economic development priority. Greater Fort Wayne Inc. and the Northeast Indiana Regional Partnership – the organizations responsible for local and regional economic development – have each publicly supported the project.

Now, Parker wants residents, business leaders and elected officials to double-down by encouraging more educational and medical institutions to make leasing commitments.

He believes enthusiastic local support is needed to counter the project's detractors.

Mayoral stance

Multiple sources have told The Journal Gazette that Mayor Tom Henry and Deputy Mayor Karl Bandemer have said in private meetings that they doubt Electric Works will succeed.

The city officials have not been skeptical in public, however.

In a year-end interview published in December, Henry said Electric Works was one of two successes that stood out for him in 2018.

“We were finally able to put together a public package that we could send forward to the (Electric Works) developers that we think was appropriate enough to protect taxpayers and at the same time share the vision of the developers,” Henry said at that time. “That due diligence took us awhile through 2018, but we were able to do that.”

It's unclear whether Henry, who is running for reelection, has shaped his public remarks in response to local survey results that found nine in 10 respondents support Electric Works.

Henry, a Democrat, will face Republican Tim Smith in the November general election.

Playing 'hardball'

Doubts about Henry's support for the project were in the spotlight last year, when the city was negotiating a contract with RTM Ventures.

The Henry administration imposed what even some independent sources believed were unusually harsh requirements in the contract. Out-of-state experts contacted last year by The Journal Gazette questioned whether local officials wanted the deal to go through.

In June, Rick Dickinson, president and CEO of the Greater Dubuque Development Corp., reviewed some of the negotiation's sticking points.

In his role with the private, nonprofit organization, Dickinson has reviewed many public-private development contracts in his part of Iowa, where projects include riverfront development and adaptive reuse of abandoned industrial buildings.

Typical contracts define specific actions the developer must complete according to a timeline, Dickinson said. If those requirements aren't met, he said, the contracts spell out penalties, including requiring the developer to pay back some or all taxpayer money received.

What they don't include, he said, is a requirement that the developer can't be paid for thousands of hours invested in the project until after it is finished and financially self-sustaining.

Dickinson described the clause restricting payment to the developers – a clause city officials insisted on – as “pretty unusual.” He'd never seen or heard of one before.

“That type of clause in a development agreement would seem to be more punitive than incentive,” he said last June. “In a successful project, typically, there's more collaboration than hardball” during negotiations.

Adrenaline shot

Parker is dealing with the hand he was dealt, detractors and all.

If mentioning their efforts in print doesn't persuade them to stop undermining Electric Works, he plans to “address it further.” Although, he admits, he's not sure what his options are.

In the meantime, RTM Ventures has hired Eric Doden, Greater Fort Wayne's former CEO and the Indiana Economic Development Corp.'s former president, as a consultant.

Doden, who supported Electric Works from its earliest days, is expected to bring a shot of adrenaline to the developers' effort to find tenants.

Their goal is to begin construction by Nov. 1.

But, according to the letter from Parker, Biggs and Kingsbury, “If it is clear that cannot be accomplished, Eric will work with us to restructure the deal or sell the property to make sure that everyone who has been on our team is made whole and that this community gets a catalytic project that it deserves.”

No local, state or federal funds are at risk. None of the money will be paid to the developers unless they secure a bank loan and close the deal, signing necessary paperwork and receiving payments all on the same day.

If the project falls apart, Parker said, Fort Wayne will have lost a significant opportunity because high-growth, startup companies are scouting locations nationwide.

“This is not an 'If you build it, they will come'” situation, he said. “This is: If you don't build it, they won't come.”

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