Capital stacking has become Terre Haute Mayor Brandon Sakbun’s go-to method of raising funds for city projects.
The practice involves doggedly searching for financing from every possible source — local to federal tax dollars, numerous state and federal grants, philanthropic and nonprofit organizations, American Rescue Plan Act (ARPA) funding and, pivotally, private investment.
“We’re going to keep looking for opportunities to say, ‘If you want to invest in a smart way in the city of Terre Haute, how can we do that?’” Sakbun said in an interview. “To truthfully have a transformation project, let’s enter in this public-private partnership and follow this concept of capital stacking to get the biggest bang for our buck.”
He added, “It’s the P3 model — public-private partnership. If you look at successful communities across the Midwest — and really, honestly, this is my model for government at the local level — in a state like Indiana with property tax caps and a limited budget, you are trying to have a transformational impact at the lowest amount you spend.
“You cannot do or fix everything, but with the private sector what you can do is allow them to have a transformational impact.”
Used sparingly in the past, when project budgets were largely financed through a combination of local and state taxes and occasional grants, Sakbun said he now pursues the strategy for practically everything.
ARPA funding has recently been a large part of capital stacking, though most of the money that was provided to the local region has been allocated to other projects.
Examples cited
Sakbun listed a number of projects benefiting from capital stacking and some that never would have gotten off the ground without it. He included a couple of projects that others are trying to raise funds for, to which the city has contributed.
• Chances and Services for Youth Chief Operating Officer Brandon Halleck has been seeking money for a much-needed childcare facility on the East Side, which Sakbun calls “a perfect example of capital stacking.”
Not only has Halleck approached the city, county and other businesses and nonprofits, but “He’s applying for a federally funded grant with the Department of Defense,” Sakbun said.
Halleck believes that members of the 181st Intelligence Wing, based at the Terre Haute Air National Guard Base, will gratefully avail their families to the childcare facility’s services, particularly during weekend maneuvers.
“To me, that’s incredible,” Sakbun said of Halleck’s outreach efforts. “That’s what we should strive to do at every level of every project. We look at every entity we want to get involved in a project.”
Halleck has received ARPA funds from both the Terre Haute City Council and the Vigo County Council and has reached out to local foundations and state and federal funding sources.
He said he has reached $4 million in promised money for the $6.8 million project and has an additional $1.8 million in requests awaiting response. He will commit $150,000 from donations received during this fall’s “Dancing with the Terre Haute Stars” benefit to the childcare project and has been preliminarily approved for a $1.5 million matching grant from United Way of the Wabash Valley.
Halleck has asked myriad money sources for donations in the past, he said, but “nothing of this magnitude.”
• Next Step's’ $1.7 million project to provide homes for 27 women seeking help overcoming addition while pregnant and/or parenting has been essentially fully financed through capital stacking, Sakbun said.
Both the Division of Mental Health and Addiction and the United Way provided $750,000, and Next Step’s fundraising efforts have nearly covered the remainder. The city has mopped up around the edges.
“The city of Terre Haute — what can we do?” Sakbun said. “We can provide labor and services for demolition, administrative paperwork, the clearing of the lot, and we can advocate for that group when they apply for a state-level grant. All that comes together and … that, to me, is the beauty of the public/private partnership model.”
• Thrive West Central’s ambitious Homes For The Future has been a boon to the community, a project that received a combined $10 million in ARPA grants from the city and county. Thrive transformed a $150,000 investment for 15 homes into millions of dollars from developers building those homes. Construction has begun or been completed on hundreds of different housing projects.
• Downtown’s new hotel project, which could incorporate a parking garage and skywalks, is capitally stacked. Construction costs are estimated at $69 million, with $55 million coming from private investment, making for an 80%-20% private-public partnership. ARPA money will kick in an additional $3 million and the State’s Tax Incentive Financing program will help prevent the city’s general fund from getting involved.
“If a developer is willing to put $60 million into your community, and says, ‘Hey, here’s where we’re short; would you be willing to partner?’ — that’s when you have those conversations,” Sakbun said.
The mayor also noted that a total of $80 million in private investments will be coming to a city with a population of 60,000 for sundry downtown revitalization projects.
• The Rea Park makeover, including a thorough renovation of the park’s clubhouse, was a project that the city couldn’t afford on its own, Sakbun said. That’s when the Friends of Rea Park stepped in.
“A nonprofit group fundraised and said, ‘Here’s what we can bring to the table to help you get there,’” Sakbun said, calling the project a “public/public partnership.”
• After the city demolishes the old police station at Wabash Avenue and 12th Street, a multiuse building will be constructed using capital-stacked funds. “A lot of different developers are interested in that parcel,” Sakbun said.
• Other projects benefitting from capital stacking, Sakbun said, include the imminent Brown Street stormwater project, the railroad overpass at 8th Avenue and 13th Street coming in 2028 and the lavish Herz-Rose Park makeover, expected to be completed at the end of the year.
Boosting the public/private investment strategy also improves odds of receiving Regional Economic Acceleration and Development Initiative funding, the mayor said.
“The state has a limited budget, so when they’re saying, ‘I’ll give someone $20 million who can bring $200 million into a project,’ that’s a lot better of a deal than saying, ‘I’ll give someone $20 million to someone who can bring in $80 million,” he said. “You’re looking for the biggest bang for the buck.”
Moreover, the more a city does business with private entities, the more other private entities will want to get involved as well, Sakbun said.