Q&A with Kevan Biggs, President and Owner of Biggs Group
From the earliest days of the Electric Works project, it’s been marketed as an innovation district where residents will work, play, and live.
While companies, like Do it Best, are already working on campus and dining amenities, like Union Street Market, are activating the space, the housing portion of the development is only beginning to take shape.
Kevan Biggs, President and Owner of Biggs Group, is a leading member of the team developing housing on and around the 720,000-square-foot campus. Since his grandfather founded the company in Decatur in 1959, Biggs has been deeply immersed in many types of housing projects across the Northeast Indiana region, ranging from affordable apartments to artist lofts, subdivision developments and even custom builds.
“We cover the waterfront on housing, but we’re primarily focused on semi-custom housing in the for-sale, single-family realm,” Biggs says. “We also do affordable and market-rate apartments around the state, primarily in rural communities.”
One prominent Fort Wayne development that Biggs Group helped create was the Renaissance Pointe Community Homes in Southeast Fort Wayne in 2011, which offered 66 new-construction, lease-to-own single-family homes for people seeking to build wealth through home ownership.
So when it comes to housing at Electric Works—Fort Wayne’s largest project to date—Biggs seeks to apply his team’s knowledge of affordable and accessible housing to help mitigate the effects of rising property values, which can displace long-time residents and residents on a fixed income. Even so, providing safe, affordable housing anywhere in Fort Wayne these days is no simple task.
“I’ve never seen this before where there’s such a tension between the demand and the affordability and even the feasibility of providing additional housing,” Biggs says.
In many ways, the challenges and barriers his team faces with housing at Electric Works reflect deeper issues in the national housing system.
We sat down with Biggs to learn more about what’s in store for housing on campus and how it might be utilized to help reduce the effects of gentrification.
Let’s start off with a basic overview. What are some of the first types of housing projects being planned for Electric Works?
KB: We prepared a master plan for the entire campus back in 2016 when we were competing for the opportunity to buy this campus from General Electric. That included the West Campus and East Campus, as a whole, and we’ve always had residential units—both market rate and affordable—as a key part of the overall vision.
One reason we’re focusing on rental housing, such as apartments, rather than say, for-sale housing like condominiums, is because we can’t develop condos and utilize the federal historic tax credit and the new markets tax credit, which we’re relying on for this project. We could potentially add different types of rental and for-sale housing in future phases of Electric Works when we’re not utilizing these funding sources. But right now, we’re focused on apartments (both market-rate and affordable).
Housing is a key component of Electric Works, and it’s just now beginning to take shape. What caused the delay, and what projects are underway?
KB: When we launched the plans for West Campus originally, we had the top two floors of Building 26 slated for market-rate apartments. But when Do it Best chose Electric Works as their global headquarters, they needed that space. It was critical that we keep Indiana’s largest privately held company in Fort Wayne (and Indiana), so we redesigned the plans for Building 26 and shifted the housing to Phase 2.
Our first apartments will be part of a mixed-use development called the Elex, named to honor an organization of women employed at General Electric, which was founded in 1916. We’re planning to break ground this summer, with completion in early 2025.
The Elex includes ground-floor commercial space, and it will be an all-new construction project that encompasses the current parking garage on the West Campus. There will be nearly 300 apartment units, which will basically “wrap” around the West and North sides of the current parking garage, from the ground level up five stories, to better blend the parking garage into the surrounding West Central neighborhood. These will be one, two and three-bedroom units, with a range of price points.
As part of the Elex, we also have plans for affordable apartments for households age 55 and older that are income-qualified in an adjacent building fronting on Broadway.
You mentioned affordable apartments for age 55+ at the Elex. Are these units only for seniors? We remember hearing about affordable artist lofts on campus at some point, too. What’s being done to increase the amount of inclusive, affordable housing?
KB: Our market study and the studies done by the City of Fort Wayne clearly showed that there is a strong demand Downtown and throughout Allen County for affordable apartments. And that need is particularly acute for households 55 and older.
However, the exact number of affordable units is not yet available, and we are refining the plans and financial model to see how we can maximize the number of affordable units. Electric Works has received national attention, and that includes investors. We have sought investors who share our vision of creating a meaningful and sustainable impact in the city, region, and state. We have an equity investor who is working with us to see how we can expand the affordability of some of the units, which would not have an age qualification.
Rewind to that 2016 master plan, and we had plans for artist lofts in the historic buildings on the East Campus. A lot has changed in the last seven years, but as we begin refining the plans for East Campus later this year, we will try to find solutions that match the characteristics of the existing buildings, the financial tools we have available, and the needs of the market.
Let’s talk more about affordable housing, in general. What defines “affordable”?
KB: I’ve heard people say there’s little-a affordable and capital-A affordable. Capital-A affordable means it is funded through a government or quasi-government program that requires residents to be income-verified to live on the property. That’s what we’re talking about here with the apartments at the Elex for households 55 and older.
Section 42 of the IRS code are capital-A affordable funding sources, so we have to verify income on those projects. Essentially, it’s defined as residents earning 60 percent of the Area Median Income (AMI) and below.
Little-a affordable doesn’t have those strict requirements. It’s loosely defined as the lowest market rate in town with no income verification. But it’s challenging for developers to do it, unless they can layer other soft funding sources together to keep the rents lower.
When we’re working around the region, we often ask communities: What do you mean by “affordable,” and where do you want us to focus our efforts? Do you want us to find capital-A affordable, income-verified funding, or are there other sources of funds that a community can offer that do not have compliance attached to them? In that case, we can do little-a affordable housing.
This challenge to fund little-a affordable housing reflects the growing shortage of middle-income housing in cities. Tell us more about that.
KB: There’s a lack of middle-income housing nationwide, and the need for it continues to grow. A lot of it is driven by the fact that 60 percent AMI is often the ceiling for capital-A affordable housing projects. So if you make just more than 60 percent AMI, say in that 80-100 percent AMI range, which is where many people fall, then you don’t have very many options, because typically market-rate housing starts significantly higher. And that gap between 60 percent AMI and market rate continues to grow, especially in a market like Fort Wayne where we’ve seen rents going up, and they’re up going fast.
If you look at the big picture, I wouldn’t say rents here are out of line with other cities. But our market is catching up. And this growing “missing middle” is really challenging for communities because there’s no good source of reliable funds for the housing industry to grab ahold of and say: We’re going to solve this problem in a meaningful way.
Working in this space at Biggs Group, we’ve wrestled with the lack of middle-income housing in Northeast Indiana for decades. We understand the affordable housing piece really well, and we’ve also built and managed market-rate housing, so it’s been very stark for us to see the gap growing in between.
Let’s go back to the concept for artist lofts at Electric Works. How does this housing type fit into the affordable housing puzzle, and who qualifies as an “artist”?
KB: Artist lofts, or artist housing, is a very unique part of affordable housing because it qualifies for federal, capital-A tax credits, but it also gives preference to a specific population or workforce demographic.
Typically, to qualify for tax credits, you can’t give preference to any one group. For instance, you can’t provide housing that’s only for plumbers or only for techies. However, years ago, an exception was made pertaining to Section 42 of the IRS code, and housing specifically for artists is now allowed.
We developed our first artist lofts project, known as 2nd Street Lofts, in Decatur a few years ago, and to determine who qualified, we came up with a system where we formed a separate sub-committee, largely made up of people in the community. This group was charged with reviewing applications from self-proclaimed artists and deciding if they qualified. Section 42 of the IRS code is rather silent on the selection process, so it’s up to each development how they decide to define an “artist.”
Along with affordable housing, gentrification is another concern about Electric Works as it expands. How is Electric Works working to prevent displacement through housing on campus?
KB: Gentrification is a potential outcome of any major public-private partnership, where hundreds of millions of dollars are invested in a community, whether that’s Electric Works or the Riverfront. It can change the character of a surrounding neighborhood through the influx of more affluent residents and businesses, potentially pushing out long-time residents who no longer find the area affordable because of an increase in property values and/or property taxes.
We believe that investing in underinvested communities is a good thing, and the best antidote to gentrification is a diversity of housing options, including professionally managed affordable housing; it’s been part of our plan for Electric Works from day one. From the time we crafted the first master plan in 2016, we knew that—intentionally or not—this project would change its surrounding community, and we wanted to create a positive impact on all residents, including those who are already here, and those who have yet to come.
Professionally managed affordable housing, as we’ll have at the Elex, is important because if affordable housing is not professionally managed, you often hear the term “slumlord,” where you have people buying a bunch of low-end houses, doing the very least to get HUD to take a Section 8 voucher on them. Then you have renters living in squalor. Slumlords don’t care if they have good renters or bad renters as long as they’re paying rent.
When gentrification occurs, it does not distinguish between good neighbors and bad neighbors; it simply pushes out all low-income renters. However, we all know there are good low-income neighbors, as well as bad low-income neighbors. Undesirable neighbors who have a criminal or sex offender history get screened out by professionally managed properties that adhere strictly to fair-housing guidelines. Gentrification can often be seen in a negative light due to its effects on low-income housing, but with proper planning and good thoughtful development, meaningful investments that cause neighborhood values to rise can be seen in a good light.
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This story was originally published in The Local, a weekly email newsletter by Fort Wayne reporter Kara Hackett. Learn more at thelocalfw.com.
