Thursday, September 24, 2020

Lakewood reaches settlement with hospital site developer


This sign at the corner of Detroit and Belle avenues in downtown
Lakewood was removed in April as the city and a developer of the
former Lakewood Hospital property parted ways. A settlement be-
tween the two will allow the city to move forward with another de-
veloper to return the site to productive use (The Lakewood Citizen).

According to a statement released today by the City of Lakewood, the city has reached a settlement agreement with Carnegie Management and Development Corp. of Westlake regarding the redevelopment of the former Lakewood Hospital site. The settlement resulted from the early termination of an agreement between the two parties before construction began.

City officials were happy to move on, noting that the settlement allows the city to "cleanly" move forward in developing the site with a new development partner. NEOtrans broke the story in April that Carnegie withdrew as developer of the 5.6-acre, city-owned site at Detroit and Belle avenues in downtown Lakewood. The development project was called One Lakewood Place.

The settlement agreement must still be ratified by City Council, which will likely take place in October. The matter has been the subject of recent executive session meetings between Mayor Meghan George's administration and council members.

City officials touted the deal, stating that it is "a great outcome because it lets us move forward with the process" of redeveloping the hospital site, said a Lakewood City Hall source who was not authorized to speak publicly about the matter.

However, a dollar amount associated with the settlement has not been publicly released and city officials declined to provide the number at this time. The source could say only that "it's not a big number." However, the source acknowledged the settlement amount will become public in October when it appears in legislative form for council to approve.

The last rendering of Carnegie's vision for One Lakewood Place,
featuring a late addition -- an eight-story boutique hotel incor-
porated into the historic Curtis Block at left (CMDC).

"We are very excited about recent news related to this site," an official statement from the city. "As you likely know, after an exhaustive search and selection process for development, the city previously entered into agreements with a developer. Unfortunately, this project was not able to move forward."

"Our focus then turned to how we could most efficiently and expeditiously proceed with development without any concern or worry of further difficulties related to any agreements," the statement continued. "We were able to achieve this."

"In exchange for this clean walkaway, subject to legislative approval, the city obtained due diligence materials and market studies, all of which will provide great value and time savings to any future developer of the site and positions the city perfectly for discussions and negotiations with a new development team. This outcome is wonderful news and we believe is in the best interest of the city moving forward," the city's statement concluded.

Council President Dan O'Malley did not return a phone call seeking comment prior to publication of this article.

Carnegie was selected from among several development teams by previous Mayor Mike Summers to redevelop the hospital site. An agreement was reached with Carnegie which planned a $72 million first phase of development including 200 housing units, 100,000 square feet of offices, 84,000 square feet of retail and an eight-story boutique hotel. All buildings on the site were razed except for the historic and vacant Curtis Block, 14501 Detroit Ave.

The runner-up plan to Carnegie's was this one, proposed by CASTO
and featuring a 12-story mixed-use building fronted by a public plaza
on Detroit Avenue. City officials reportedly like this plan (Dimit).

After clearing and excavating the property, soil pollutants from the hospital's basement laundry facilities were discovered late into the inspection. That necessitated $2 million worth of clean-up costs that each side said was the responsibility of the other. Also, an uncharted creek was discovered under the site. A pump house was built on the site to redirect the stream's water flow.

On April 16, four months after she took office, Mayor George said the city attempted to modify its development and use agreement (DUA) with Carnegie Management and Development Corp. relating to the One Lakewood Place project. She said it was Carnegie who ceased negotiations with the city.

Although Carnegie President and CEO Rustom Khouri did not respond to requests for comment, a member of his development team spoke off the record to NEOtrans, saying the city caused Carnegie to incur additional, unplanned costs. The source said Carnegie's project budget of $72 million for the first phase of One Lakewood Place was realistic.

City officials reportedly have not decided their next course of action. One option is to re-bid a request for proposals from development teams. But privately some administration officials and council members said they liked the 2017 runner-up bidder for the ex-hospital site -- a team led by CASTO of Columbus, North Pointe Realty of Mayfield Heights and Dimit Architects of Lakewood.

This is the site plan submitted by the runner-up
team seeking to redevelop the former Lakewood
Hospital property. Detroit Avenue is at the top
with Belle Avenue on the left and Marlowe
Avenue on the right (Dimit).

That group proposed a $62 million project with 280 residential units (apartments and townhomes), 23,673 square feet of ground-floor retail, restaurants and community spaces, 50,265 square feet of offices plus 569 parking spaces.

Their proposal centered around a public plaza, public lawn and a 12-story building containing eight stories of apartments over three stories of offices over ground-floor community center, plus retail or restaurants. The uses in that building would amount to 108 residential units, 50,265 square feet of offices and 11,400 square feet of usable ground-floor space.

A CASTO spokesperson did not respond to an e-mail prior to publication, asking if the company was still interested in being considered as a developer of the hospital site. 

CASTO's first Cleveland development is The Dexter, a five-story, 116-unit apartment building over a ground-floor retail/restaurant space at Fulton Road and Franklin Boulevard in Cleveland's Ohio City neighborhood. It is pursuing other development opportunities in Greater Cleveland. CASTO recently pursued acqusition and development of riverfront property on the Flats West Bank but walked away from the deal.


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