Monday, July 30, 2007

Fort Wayne Heads Down Indy's Path With Downtown Development

The Fort Wayne Journal-Gazette's Benjamin Lanka has an excellent story today about Fort Wayne's aggressive plan to pump up a $120 million in private initiatives with a massive investment of public funds in its downtown Harrison Square project, involving a baseball stadium for a minor league team, hotel, condominiums, retail and parking garage. Lanka sees a connection in the Harrison Square project and what has property taxpayers elsewhere around the state worked up in a frenzy over rising property taxes. Lanka writes:

Property owners across the state have picketed and protested after seeing tax bills skyrocket this year.

But the same factors causing homeowners to cringe may also have kept the Harrison Square development from being scrapped.

Property trending, rising tax levies and other factors allowed the city to keep the project alive even after a key component – the private investment in a downtown hotel – was slashed. Yet there is still a chance a tax appeal from the owners of Jefferson Pointe could put the project’s promised financing in jeopardy.

The $120 million downtown development is financed from an almost even split of public and private investment. The development includes a $35 million Courtyard by Marriott with parking garage, new condominiums, new retail and a $30 million city-owned baseball stadium. Mayor Graham Richard has long promised that the project can be done without using any general property taxes.

To do this, the city structured a deal that includes public money from a variety of other sources. The primary sources of public money are income taxes, property taxes generated by the project itself and property taxes generated by the Jefferson Pointe area.


Yes, that Marriott Hotel involves the same hotelier Indianapolis is offering a $65 million subsidy to build a new hotel next to the Indiana Convention Center--White Lodging Services. As Lanka's story notes, White's decision to downsize the size of the hotel would have sent the entire project into a tailspin but for the new taxes the city is getting from higher assessments and higher tax levies. Harrison Square sits in a tax increment finance (TIF) district, which saw its total assessed value increase by $41 million this year, allowing the city to capture $42 million in tax revenues over the life of the project. Much of those new-found revenues are coming from nearby Jefferson Pointe, which is contesting the tax assessments. The project will face a shortfall if Jefferson Pointe succeeds in challenging its assessment, which increased from $27.6 million to $64.3 million. That's more than a 100% increase!

In an interesting side note, Lanka quotes the city's consultant on the project, John Stafford, who is the same person Gov. Daniels appointed to his commission to study reforming local government financing. Lanka writes, "John Stafford, a consultant for the city on the project, said it would have been next to impossible to keep that promise [not to use more than half of the revenues from the TIF district] without the increased taxes." "It certainly would have been very difficult," he said. In other words, Stafford thinks it's just fine that other taxpayers have to pick up the tab so a billionaire like Dean White can get a massive public subsidy for building a new hotel in downtown Fort Wayne, just like he got in Indianapolis.

10 comments:

Anonymous said...
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Anonymous said...

Same old game just a different city.
Given the fact that the COIT increase is not "earmarked" you can rest assured that a good chunk will be sent to another entity like the CIB for use with deals Bart still had on the table from downtown developers.
I suppose Ft. Wayne wants to get into the convention business too.

Anonymous said...
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Anonymous said...

Indy better get busy filling the new Lucas Oil Stadium, expanded Convention Center and new Hotels with "PAYING" customers to justify these huge public investments.

They are off to a slow start considering CEDIA just announced it wont be back before 2012 and PRI still questionable for 2010.

Poor Strategy said...

How can Fort Wayne justify another publically funded baseball stadium considering the relatively new baseball field next to the Coliseum?

Anonymous said...

As someone who attends three large conventions a year, and has helped plan one of them, I can tell you that the headquarters hotel's amenities are important.

The availability of a certain number of rooms, and meeting space of certain size, is critical. Each of these conventions is highly-sought-after by cities.

That said, at some point, every major city is going to pony up with the required amenities.

So, I'd want to hitch my star to a city with foresight to build these structures.

And I'd want to live in a city that had the same foresight, with the proper mix of local and private funds. Emphasis on "proper."

The real question open for debate is: at what point does the clutch kick in, and the gears shift? If a hotelier were ready to build a hotel with X number of rooms and meeting space, without subsidy, when does a public subsidy provide return for the investment?

It's a solid question. In Indy, I think we had that debate, altho I recognize many disagree. To be honest, I don't know any decent-sized organization that would consider a Ft. Wayne for these types of conventions. But I could be wrong.

FW's downtown has not been the same since Wolf & Dessauer left. It's a dump.

Anonymous said...

I am all for Fort Wayne redeveloping its downtown, but I question their priorities and their judgement on this deal.

lori said...

More corporate moguls getting richer on the taxpayers backs. What does the average hotel worker make? Can you live downtown Indy on those wages?

bobett said...

Thanks kindly for shedding light
on Fort Wayne's mis-step to future progress. Why is it, Indiana folks
just do not understand how to make
money.

If you care to read more or make a comment about Fort Wayne's Indy
Envy...go to... downtownfortwaynebaseball.blogspot.com/2007/07/financial-dynamics.html

ROACH said...

http://x-wire.blogspot.com/2007/08/how-to-decimate-property-tax-base-in.html