FORT WAYNE – A million dollars here, a million dollars there, $5 million for the Ash Brokerage project
From the headlines, it can seem like the Legacy Fund is being depleted faster than a sailor’s bankroll.
The Legacy Fund, money from the lease and sale of the city’s old electric utility, City Power & Light, began 2012 with about $47 million, meant to be used for transformational projects to improve the quality of life in Fort Wayne.
But now, after all the spending, is there anything left?
Cash left in fund
The short answer is yes, there is a lot left, and a lot more yet to come in.
In fact, if no more spending is approved from the fund, Legacy will be worth $101.9 million in 2025, when I&M makes its last payment.
The fund was created in 2011 with $38 million from a trust account created by leasing City Power & Light to I&M for three decades. Added to that was $39 million from I&M to sell the utility and the rights to all the city’s former customers. The city received $5 million of the $39 million, upfront and the rest is to be paid over 15 years.
You have to remember we get $2.5 million a year on average from I&M through 2024, said City Controller Pat Roller. On top of that, there’s the 6 percent investment earnings, which is actually a pretty conservative estimate.
The fund began the year with $51.7 million on hand, but much of the spending approved last year is now being withdrawn, and some new spending – including the $5 million toward a parking garage for the Ash Brokerage project downtown approved recently – is expected to require withdrawals this year. All told, the withdrawals are expected to total $15.7 million this year, dropping the fund to $36 million.
But then there’s the money coming in: $2.2 million from I&M and $3.1 million in investment earnings. It should end the year with $41.4 million – that’s only $5.6 million less than the fund had in it before anything was spent.
A lot of what we have been spending lately (out of the fund) is for things we’ve been talking about for a long time, Roller said. But it’s coming out in dribs and drabs a little bit.
An example is the riverfront study, which was one of the first projects proposed and the first spending approved. Each project must get separate approval by the City Council, which requires a 6-vote supermajority from the 9-member body.
The comprehensive study of the city’s riverfront and what can and should be done with it, was approved in February 2013, but is just now taking place and being paid for this year.
The youth sports study, the roundabouts, the trails – these are all things we’ve talked about, Roller said, noting that they were approved as concepts in late 2012, and then each project was individually approved later.
That process – where a project and its costs generate headlines when it is proposed as a concept, approved, and work begins – adds to the perception that money is flowing out of the Legacy Fund like water.
But all told, all of the spending approved so far, including the $5 million for the Ash Brokerage project, totals $25 million, and some of that will not even be spent until 2017.
And that spending will pay off, Roller said, noting that the $5 million from Legacy is making a $100 million investment in downtown possible, an investment that nearly went to the outskirts of town instead.
Ash Brokerage is planning an eight-story, 95,000-square-foot, $29 million headquarters building on the block bounded by Harrison, Wayne, Webster and Berry streets downtown.
The company will move its 200 employees to the new building and add 115 more.
Also in the project is a $30 million, 17-story residential tower of 100 townhomes, apartments and condos by Hanning & Bean Enterprises. Both projects will sit on top of a city-owned 1,200-space parking garage, which will be surrounded by street-level retail.
When you think of $100 million for Ash altogether, a $5 million contribution (from Legacy) is pretty small, Roller said. That’s just 5 percent of the project.
Fund to grow
Of course, the projection that the fund will hold more than $100 million in 2025 is just a projection, and assumes no further spending, which all officials admit is unlikely.
Will something come up? If the project is transformational, the answer to it is probably going to be yes,’ Roller said. At the same time, we’ve been very careful on how we spend these dollars, and what’s clear is everyone wants to protect this money and at the same time do what’s best for Fort Wayne.
City Councilman Tom Smith, R-1st, has been a passionate defender of being extremely cautious with every penny in the fund.
Legacy money is viewed by the citizens as a community treasure, and its use has to be very, very carefully explained, he said recently.
Smith opposed using Legacy money to entice an airline to offer daily flights to the East Coast and only grudgingly agreed to using Legacy money to fund only half the proposal. He also opposed using it to help pay for a study needed for high-speed passenger rail between Columbus, Ohio, and Chicago, though he backed the study – which was eventually paid for another way.
And now that most of the original slate of projects is moving through the pipeline, Smith wants to ensure that future requests get at least the same level of scrutiny – if not more.
People need to understand that Legacy is the money not of first resort, but the money of last resort, he said.
He will propose an internal review committee and guidelines for future spending.
This is as much for today as it is for the future, Smith said. I want to raise the bar as far as reasonably possible. This is truly special money.