Matt Wachter, who has a tax lawyer’s love for the intricacies of federal Opportunity Zones and historic tax credits, has used those skills for nearly four years to advance a $100 million transformation of downtown Erie.
But now, Wachter, the vice president of finance and development for the Erie Downtown Development Corp, will be leaving the organization. He departs Friday to run investment and finance for Carnegie Foundry, described as a Pittsburgh-based robotics and artificial intelligence lab, backed by Carnegie Mellon University and a number of Fortune 500 companies.
Wachter, who last week thanked the EDDC board for the opportunity and for its investments in the community, said the timing for his departure seemed right both for himself and for the EDDC.
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A former associate at the Erie law firm of MacDonald Illig, where he served as a member ofthe firm’s business transactions and trusts and estates practice groups, Wachter was the person with primary responsibility for building what is sometimes called the capital stack to fulfill the EDDC’s vision for downtown Erie.
Along with CEO John Persinger, who is also a lawyer, it was his job to piece together a mixture of investments, loans and tax credits to give life to a plan to rebuild Erie’s downtown by buying and transforming downtown properties.
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Historically, selling investors on Erie has been a challenge, Persinger said.
Even now, at a moment of increased momentum in Erie, the EDDC’s $26.5 million investment that built the Flagship City Public Market, the Flagship City Food Hall and 28 apartments is appraised at only $7.7 million.
That situation called on for something more than an understanding of tax law and finance.
“There needs to be some creativity in how you structure (financing) so that everyone can benefit,” Persinger said. That includes, “the professionals who are working on the projects, the people who are investing in these projects and anyone who is lending debt. It not only needs to work from a financial perspective but from a community impact perspective.”
Federal Opportunity Zones, which provide special tax benefits for investors who use capital gains to invest in designated low-income areas, would prove to be the EDDC’s most important tool to finance its projects.
Not only was the EDDC invited to Washington, D.C. in 2020 as the White House touted the organization for its leadership in Opportunity Zones, but Erie won top honors in a nationwide contest highlighting Opportunity Zone leaders, sponsored by Forbes and Sorenson Impact. It also secured more than $35 million in Opportunity Zone investments from Erie Insurance and Boston-based Arctaris Impact Investors.
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Success can be measured other ways, including the completion of 42 new apartments, all of which have been leased.
Persinger assigns much of the credit for the success of the EDDC to the support, expertise and encouragement of the board of the EDDC and the board of the Erie Downtown Equity Funding, which provided an initial investment of $27.5 million.
“Matt played a critical role in helping attract early-stage investors and he put together financial models that made people want to invest in these projects.” Persinger said, “The food hall and the market are great examples of how we are able to take a building that was falling down, and one where we knew it was going to cost more than it would appraise for, and attract a national Opportunity Zone investor, a historic tax credit investor, local investors and local debt, and not only make it work from a financial perspective but make it work from a community perspective.”
They have innovated in other ways. Instead of charging rent to tenants of the food hall, some of them new startups, the EDDC paid all upfront costs and collects a portion of gross sales each month.
Like Persinger, Wachter credited investors and the board with believing in the effort.
What’s next for Wachter’s position at the EDDC?
So what happens now — does the EDDC begin looking for the financial point person who can replace Wachter?
That’s not clear, Persinger said. The needs of the organization may be changing as it moves closer to the completion of its initial round of about $100 million worth of projects, which will include the completion of a new parking garage and a new mixed-used building on the northwest corner of Fifth and State streets.
“There is less of a capital-raising requirement for that role and more financial reporting and compliance,” Persinger said. “Responsibilities are shifting naturally within the organization.”
The future needs of the organization — and whether or not a replacement will be hired for Wachter — seem to hinge on whether or not the EDDC plans future investments once the work now planned or underway has been completed.
It’s too soon to say for sure what happens next, Persinger said.
“We still have a lot of work to get done,” he said.
Wachter, who went to work at the EDDC when it had just three employees — including himself, Persinger and Nicole Reitzell, vice president of community engagement and social impact — leaves an organization that has grown to about 20 employees.
Wachter, who will continue to live in Erie, said he looks forward to what’s next for the EDDC.
“I couldn’t be more proud of what has been accomplished for Erie,” he said.