BY DERRICK GINGERY, Greater Fort Wayne Business Weekly
derrickg@fwbusiness.com
As the city considers a proposal for the first, and likely most essential, piece of the Harrison Square project, it also is working to create another instrument that could be used to entice developers to jump on the $125-million bandwagon.
One developer is interested in building the proposed hotel, which would be constructed along Jefferson Boulevard across from the Grand Wayne Center. White Lodging Services Corp., along with Acquest Realty Advisors Inc., want to build a full-service Marriott hotel downtown.
Merrillville-based White Lodging operates a Courtyard by Marriott on West Washington Center Road in Fort Wayne and several other properties in Indiana and 13 other states.
Specifics about the White Lodging proposal were not available at press time Feb. 14. The city is requiring that the hotel have at least 250 rooms. Consultant C.H. Johnson Consulting Inc. is reviewing the proposal and then will send it to the Fort Wayne Redevelopment Commission.
"This company from the beginning has been very interested in not only the hotel but the Harrison Square proposal," said City Public Information Officer John Perlich.
Greg Leatherman, city deputy director of development, said the target date to have a development agreement for the hotel in place is the end of March.
Leatherman said he was not disappointed at receiving only one proposal. A second company said a reduction in available Community Revitalization Enhancement District tax credits kept it from submitting its own proposal.
After the state reduced the available CRED tax credit for the Fort Wayne Newspapers printing facility project, city officials could only offer about half of the tax credits they had initially expected for the hotel. Leatherman said that turned out to be a problem for many potential developers.
In addition to the hotel, Harrison Square would include retail and residential space, as well as a new baseball stadium for the Fort Wayne Wizards.
As the Harrison Square project begins to take shape, city officials are about to apply to a federal program that could create a low-interest loan or other financing tools to help pay for parts of Harrison Square and other commercial projects in low-income areas.
"When you're trying to think of a way to make a project happen, this may help," said Sharon Feasel, city economic development specialist.
Economic development officials are hoping the U.S. Treasury Department gives Fort Wayne income-tax credits from the Community Development Financial Institutions Fund. Similar to low-income housing credits, the income-tax credits are designed to entice commercial investment in traditionally low-income areas.
"It is a program that served to get some projects happening in low-income communities where, because the risk is higher, banks tend to shy away from them," Feasel said.
The Treasury Department has $3.9 billion in credits available this year for banks, local governments and other organizations that apply. If Fort Wayne receives an allocation, the city would sell the credits to local and national institutional investors. Feasel said that would create a pot of available cash the city could use to finance local projects.
The program distributes 39-percent tax credits that last for seven years. Investors would not purchase them dollar-for-dollar, Feasel said. But if, for example, they were purchased for 70 cents on the dollar, $10 million in credits could be converted to $7 million in cash that could be used for low-interest loans or other financing tools.
"We would take the cash and become like a community development bank and invest in projects we would like to see in low-income neighborhoods," Feasel said. "We might provide a (financial) product as part of the financing."
Fort Wayne's application is expected to be sent at the end of the month. A response is not likely until this summer. Fort Wayne New Markets Revitalization Fund LLC was created to administer the program, if the city is approved.
The New Markets Tax Credit Program, which the city is applying to join, has distributed $12.1 billion in allocation authority since the first awards were made in 2002. That's resulted in $6.2 billion in investments in community development entities, according to the Treasury Department.
A U.S. Government Accountability Office report found the program is growing, and investors surveyed said they have increased their budgets for low-income communities because of the credit. The GAO analysis also found businesses may be shifting investment funds from other assets to the New Markets Tax Credit, and some individual investors are directing new funds to the program. In some cases, the GAO reported, the credit alone may not have been enough to justify investment.
Several agencies in Indiana have received credits through the program. The Indiana Redevelopment Corp. received $25 million and the Community Bankers Association of Indiana Inc. received $50 million in 2003 to provide low-interest loans and other programs to promote economic development.
No similar grants were awarded to Indiana agencies since then, according to the Treasury Department's Web site.
The federal tax credits would join a growing list of inducements the city has at its disposal to entice developers to build in town. The CRED tax credit program is well-known. The city also uses tax abatements and industrial revenue bonds to attract businesses.
The Treasury Department will look at Fort Wayne's potential development projects as part of its approval process.
Harrison Square could be one of those projects. Feasel said it is part of a low-income area and money raised from the sale of tax credits could be used to finance commercial portions of the mixed-use development.