Council urges federal funds for GE
In an 8-0 vote Tuesday, the Fort Wayne City Council approved a nonbinding resolution encouraging Mayor Tom Henry’s administration to include federal New Markets Tax Credits in a larger deal for public funding for the proposed Electric Works redevelopment project.
The resolution’s intent, Councilman Russ Jehl said, is to prevent the city from “negotiating against itself” as it considers contributing 221 million.
RTM Ventures, which is trying to secure public funding from the city and Allen County, will meet with the city’s Legacy Joint Funding Committee today to ask for more than $13 million in grants and loans from the Legacy Fund.
The Fort Wayne Plan Commission approved two rezoning requests and a primary development plan for the Electric Works project. City Council will consider final approval of the rezoning requests and development plan in the coming weeks.
Federal New Markets Tax Credits were created in 2000 and are awarded on a competitive basis to community development entities. Fort Wayne received $55 million in tax credit authority this year, said Sharon Feasel, director of the city’s New Markets Tax Credits Development Fund.
Once community development entities receive their allotted tax credit authority, they sell the credits to investors, which are typically large financial institutions. The funds generated from that sale are then invested into selected projects. A typical sale nets about 20 percent of the tax credit allocation committed to the project.
When a private investor buys the tax credits, the investor is locked into the project for seven years. For this reason, Feasel said most investors consider the credits a form of private investment, not public.
“They don’t just take our tax credits and go off,” Feasel said. “They actually underwrite that deal very carefully, because the IRS has very punitive recapture rules that actually go back to Day 1 of the seven years, even if you’re in your seventh year and about ready to have the whole compliance period end.”
Eligible projects must be in a qualifying low-income area and have a considerable community impact.
Although projects must be primarily commercial, mixed-used developments are eligible for funding. Fort Wayne was one of only 73 communities to receive the tax credits this year. A total of 230 communities applied.
The tax credits announced in February will be used over the next two years.
Also, RTM Ventures will hold a community education meeting about Electric Works at 5:30 p.m. Tuesday. It will include a question-and-answer session with developers Josh Parker, Kevan Biggs and Jeff Kingsbury.
A location has not been determined.
During a public hearing during Tuesday’s meeting, three people spoke in favor of a proposal by Councilman Jason Arp, R-4th, to eliminate Allen County’s business personal property tax.
That tax is frequently waived through the city’s tax abatement process and amounts to council picking winners and losers in Fort Wayne’s business landscape, says Arp, who sponsored a similar proposal in 2016.
Arp’s proposal was defeated in a 5-3 vote in September 2016. Some of the issues raised two years ago include the lack of an alternate revenue stream to replace the tax and concerns over impacts to residents across the city’s six districts.
Of those who spoke, only one was a business owner. Mike McArdle, vice president of marketing at McCoy Bolt Works Inc., said his company is planning a $2 million expansion in Fort Wayne and would consider moving elsewhere if required to pay a business personal property tax.
McArdle said that expansion represents a $60,000 tax implication.
“We could easily locate that elsewhere, and frankly we will, to avoid the taxes,” McArdle said, noting his company has been in Fort Wayne about 70 years. “We stay here because we’re all from here. There are plenty of compelling reasons to be elsewhere but we choose to be here.”
The council plans to vote on the issue as early as June.