City officials' commitment to Electric Works' developers remains in question despite the project's looming deadline.
Nancy Townsend, Fort Wayne's redevelopment director, told The Journal Gazette that officials are “not going to give up on this vision” of redeveloping the former General Electric campus near downtown – but haven't tied those hopes exclusively to RTM Ventures.
In a separate interview, Mayor Tom Henry expressed doubts about whether partners Josh Parker, Jeff Kingsbury and Kevan Biggs have what it takes to complete the $275 million, mixed-use project.
Do it Best, the hardware cooperative signed on to anchor Electric Works, doesn't harbor any such concerns.
Four executives – including president and CEO Dan Starr – sat down with The Journal Gazette this month at the cooperative's New Haven headquarters to share their enthusiasm for the project and confidence in the three men at its helm.
“We've been really heartened, we've really been pleased, that the developers have been able to make so much progress despite COVID-19,” Starr said, referring to securing financing and leasing commitments.
'For what gain?'
The suggestion that another, more experienced developer might be a better fit for Electric Works met with the Do it Best executives' resounding disapproval.
“I haven't had anyone propose that to me, and if they did, I'd try to talk them out of it,” Starr said. “And for what gain? It would delay the project.”
Dent Johnson, vice president of merchandising, agreed.
“There's been a lot made of the complexity of this deal,” he said. “That, alone, would create a considerable delay. I think that would be a very, very complicated plan to restart with a new developer.”
Another major wrinkle in city officials' hope to find another developer is that they city doesn't own the site – RTM Ventures does. City officials assume that if the developers defaulted on their loan that the lender would sell the property to the city. But that sequence of events isn't guaranteed.
The project's funding sources include:
• Industrial Recovery Tax Credits – also called Dino Credits: A state incentive offered to encourage development of vacant industrial facilities, or dinosaurs.
• Historic Rehabilitation Tax Credits: A federal program that provides incentives to developers to find new uses for existing structures that are vacant or underused.
• New Markets Tax Credits: A federal effort designed to drive commercial investment in low-income neighborhoods.
None of the three would transfer automatically to a new developer. The Dino Credits program, which approved $50 million, is no longer accepting applications. And Electric Works was grandfathered in for $34 million under a more valuable Historic Tax Credits program than the one currently offering credits, Kingsbury said.
“RTM Ventures procured key federal and state tax credits at the right time,” he said in an email.
Additional funding sources would include a $62 million bank loan to the developers, $62 million from bonds to be issued by the city and the developers' own investments.
Do it Best has invested in architects' headquarters renderings and office layout plans.
Company officials are busy reviewing office furniture and information technology wiring options, said Randy Rusk, communications director.
The supplier to thousands of independent home-improvement stores also has begun talking with other future Electric Works tenants about opportunities for collaboration, said Dent Johnson, vice president of merchandising.
If Electric Works doesn't break ground in the next couple of months, Starr said, Do it Best would be placed “in a very difficult position.”
Fort Wayne – and northeast Indiana – doesn't offer an adequate alternative, he said. Do it Best plans to move its 440 employees and create up to 90 more white-collar jobs in the next several years.
“We continue to need a future home,” he said. “There is nothing I can look at today that even comes close to meeting our needs.”
Electric Works' size isn't the only feature that Do it Best officials find compelling.
When Starr announced the planned move in a February meeting with headquarters staff, he asked how many had a personal tie to the former General Electric campus through family or friends. He estimated 80% of the workers raised their hands.
“It's a history worth saving,” he said. “We think it's going to be a great recruiting opportunity for us and our future.”
The COVID-19 pandemic has pushed the national economy into recession and some companies into bankruptcy, but Do it Best has prospered. Starr said the co-op's most recent fiscal year, which ended the last Friday in June, set a company revenue record.
The corporation's 2019 sales were $3.5 billion. Its fiscal 2020 results are scheduled to be released this week.
Hardware stores never closed because they were deemed essential businesses by state and federal officials. Consumers, who were shut out of offices, restaurants and ball parks, turned to gardening, home improvement and other projects.
That kept Do it Best member stores ringing up sales and the corporation that supplies them flush with cash. Even before the sales boom, the company's 12-member board of directors, all store owners – none of whom live in Indiana, approved the headquarters move into Electric Works because “they were convinced on the merit, and merit only” of the proposal, Starr said.
He said Electric Works' timing is also optimal because it will pump $200 million outside money into the community. About 2,000 skilled trades positions would be created when work begins in the 31-acre campus, he said.
State officials are fully on board. Gov. Eric Holcomb attended Do it Best's headquarters announcement in February, when his enthusiasm was evident. “It is a transformational day. It is a historic day. It is a joyous day,” he said, adding that cities around the country are looking at Fort Wayne as an example because of the Electric Works project.
“This is an equation-changer for our state,” Holcomb said then.
Rich Lynch, vice president of marketing, said the project made sense in February, before the pandemic, but is even more valuable to the local, regional and state economies during it.
“The timing,” he said, “couldn't be better.”
July 30 is the deadline for RTM Ventures to meet financial requirements outlined in its Economic Development Agreement with the city of Fort Wayne. The developers need to show they have their ducks in a row before city officials go to the bond market to raise $62 million.
The firm's partners are confident they will meet each bullet point to a “commercially reasonable” standard, as specified in the contract. Developer Josh Parker is bracing, however, for city officials to interpret the requirements in strict ways that make them difficult to fulfill.
Oct. 30 is the deadline for all funding sources to bring money to the table for the project's closing. Closing is when contracts are signed and money changes hands. Workers and construction equipment can start work at the site the following day.
City officials unilaterally extended the deadline by 30 days and announced it would be the last extension approved.
– Sherry Slater, The Journal Gazette