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Just the numbers, Ma’am

By Jim Sack

Fort Wayne Reader

2018-04-19

For those who haven’t been, mayoral news conferences in the grand mayoral suite are usually upbeat, noisy affairs with a score reporters jostling equipment, laughing with each other and eventually focusing on a rostrum behind which the mayor and guests stand to offer policy decisions and field questions. Sometimes the mayor arrays the police chief, department officials, relevant private citizens and members of his staff behind him outnumbering him and giving weight, sometimes additional voice to his comments.

The most recent announcement featured just the mayor and corporate council Tim Haffner.

When they walked to the rostrum with the city seal affixed front and center, the noisy, fidgety media slowly quieted. Ten seconds passed and the mayor began a sober assessment of the path forward in the matter of the Electric Works project that seems to have no end, the project that has taken our attention from all other development in Fort Wayne…

Mayor Tom Henry’s message was measured, serious, and firm. The city, he read, welcomed a proposal in writing from the consortium of groups proposing to repurpose the hulking General Electric campus to a life-work-buy-study-repose-invent-dine campus with sparkling fountains and charming walks set amid nature’s leafy splendor.

However, he added, city had not yet received a firm proposal from the developers, only occasional letters that included elements of a proposal. Nor had the city received other details that would give heart to the vision that the sprawling campus with 1.4 million square feet of space would fall neatly into line as yet another grand success in the long string of successful projects in our downtown.

At this point it is all about money.

Firstly, Mayor Henry said the city share would be $50 million, not the $65 million the developers demand.

Then the mayor noted that the city share of the funding would be a grant, not a loan, so whatever Legacy and CIB (Capital Investment Board) money would be infused in the project would not be repaid.

He added that the city wants to see the list of signed renters for the project. After all, filling the space with businesses and activity will be the payback on our investment, and so far the developers have not announced any major tenants.

Mr. Henry added that we citizens could expect most of our $50 million to go toward sidewalks, streets, sewer work, remediation, utilities and the other basics that underpin a project, and that would continue to benefit the city whether the EW project prospers or not.

TV reporter (They come and go so quickly it is hard to tell whether he was a reporter or just someone from the street.) asked a key question: “Is there a plan B?” The mayor said staff was considering alternatives. Hmmm.

Another reporter asked whether the New Years Eve 2020 deadline for using historic credits — among the looming deadlines cited by the developers to hurry up and close the deal — was only a deadline for historic elements, such as cornice work, gargoyle restoration, and tuck pointing, not a deadline for the certified completion of the whole shebang. A light bulb could be seen going off in the mayor’s mind.

So now we wait. We are told the signed, complete and formal proposal from the developers will be in the hands of the city’s negotiation team early in May.

As for those negotiations, the leader of the city team will be Tim Haffner, corporate council to the city. His dad, Kenny, was the city electrician for many years, a wire-haired terrier of a man with a strong work ethic and a time’s awastin’, let’s-get-to-work attitude inherited by his son. Among Tim’s siblings is a leading advocate for the disabled, and a top-level commander in the Fort Wayne Police Department. Tim was involved in negotiating the ballpark deal and a dozen redevelopment issues along the way. He is a tough negotiator and will line up a team of number crunchers, urban policy wonks, and real estate development experts behind him. He is thoroughly Fort Wayne.

But city council will be a final arbiter in the matter. Legacy fund allocations, deemed essential to the success of the project, have to win six votes, a super-majority, to pass council. As it stands there are four rather firm votes for passage, two firmly against and three in the middle leaning toward passage. The three would all like to find a way to support a project which could be the biggest game-changer for the city since the ballpark. …Or become the biggest money pit in our history and a albatross around the neck of city finances for the next 30 years.

A stickler is the city’s nearly exhausted capacity to bond, that is to borrow in the normal way, using the normal flow of taxes as collateral. One councilman asked how the community would feel if used our streets as collateral. Pledge Berry and Wayne to a lender. Or, perhaps a tax increase?

Think of what that means. If your family had maxed out your normal credit cards it compares to getting a couple new credit cards to pay off the old cards, or getting a second or third job. In short, community income would be going increasingly to pay the interest on the cards, instead of taking care of the family’s other needs. If we borrow to the max when will it start impacting road repair, sidewalks, public safety and all the other functions of government?

If this huge project falters or fails what will that mean to city finances?

In real estate, professional investors live by an edict never to become emotionally involved in a deal, never to look beyond the numbers, avoid the siren song of the glossy pictures and uplifting videos.

The EW deal has to be based on the economic viability of the project and, on whether we can afford the $100 million or more the developers demand of us. Yes, the $50 million is openers, and doesn’t take into consideration cost overruns and the effects of economic woes. And how much will that developer proposed new road and parking garage cost, and additional city legal fees. Want to make a guess who will pay for them?

EW is all about the numbers, cost and a conservative ROI. If they don’t work we have to refocus on Plan B.