Thursday, September 3, 2020

University Circle towers' financing secured, spring start eyed

Circle Square would create a new downtown for University Circle,
Ohio's fourth-largest employment center and one of Ohio's fastest-
growing employment and residential districts. It is proposed to be
built less than a block from where a vibrant mini-downtown called
Doans Corners stood until the 1970s (CPC-MDP).


Seeing the $300 million Circle Square development back on Cleveland's City Planning Commission's docket again is great news for University Circle and the region. At the start of summer, it was uncertain whether the massive project would see the light of day again, or at least in so ambitious a scale.

March 6, 2020 was last time the downtown-scale Circle Square development was on Planning Commission's agenda. A few things have changed since then, and we're not just talking about the weather.

The pandemic swept the globe and smacked the financial markets with an uncertainty not seen in a century. Given that, financiers asked if it was wise to pursue a project as significant as Circle Square that featured an 11-story apartment building and a 24-story residential tower in just the first phase.

Such a question is why the University Circle project hasn't been subjected to further design-review by the city since early March when the temperature in Cleveland struggled to escape the 30s. The developers, Midwest Development Partners of Cleveland and White Oak Realty Partners of Chicago, were since put in a holding pattern by their financiers including Ponski Capital Partners and others.

A proposed 24-story residential tower at 10600 Chester Ave. and adjoining
parking garage are once again making their way through the design-review
process after a six-month hiatus during which the entire Circle Square
 development seemed very much in doubt (CPC-MDP).

Before the pandemic, they had hoped to start construction in June. But by the time June rolled around, the project was in serious doubt.

That also put the Cleveland Public Library (CPL) in a bind as it planned to build a new facility for its Martin Luther King Jr. (MLK) Branch on the ground floor of the 11-story apartment building, called Library Lofts, 10553 Euclid Ave.

"The developers will let us know by July 1, 2020 whether they will go forward with the apartments above the branch or not," said CPL Chief Legal Officer Joyce Dodrill at the May 21 CPL board meeting.

"We are hoping that they will come through with that (project). Although we do have bond money involved in that project, we are working with the developer who has incurred a delay because of financing. We are currently delayed as we wait to hear from the developers in terms of building apartments over our branch," Dodrill added.

Library Lofts apartments over a new MLK Branch library was
approved by Planning Commission last winter in the hopes that
construction could start in June 2020. But pandemic-related
uncertainty put the project at risk until financing ultimately
came through this summer. The existing Fenway Manor
apartments are seen at right in this view (CPC-MDP).

But by July, the economy was rebounding and there was a light at the end of the pandemic's tunnel. Reaching that light should lead to further economic recovery in Ohio's fourth-largest employment center -- University Circle.

The developers of Circle Square got the good news they wanted. The project's financiers were back on board.

That's why Circle Square is back before Planning Commission after a six-month hiatus. The Library Lofts and associated MLK Branch library had already received final approval last winter. But the 24-story apartment tower at 10600 Chester Ave. and a public parking garage at 10590 Chester Ave. had so far gotten only conceptual approval until now. Both still had to get schematic approval, followed by final approval.

Schematic approval was given by the commission Sept. 4 for the 10600 Chester tower, public garage and street plans. If final approval follows in a couple of months, and if CPL and the developers are on the same timetable, construction could begin in the spring, possibly as early as March, according to a source close to one of the developers who said the timing now depends on CPL's readiness.

Circle Square's conceptual masterplan features residential, retail,
hotel and offices in a setting similar to the mini-downtown that
once tood at Euclid Avenue and East 105th Street, at the bottom
of the image, for more than 100 years (CPC-MDP).

But library officials said they are waiting on the developers adding that CPL needs to move forward soon on construction of the MLK Branch as well as three other Phase 1A library facilities -- Hough Branch, Jefferson Branch and Woodland Branch that will include a new Central Distribution Facility & Book Storage. These and other buildings are part of a 10-year, $100 million CPL facilities masterplan.

"Because the library issued bonds for the funding of our masterplan project, we are required by law under IRS regulations to spend down the proceeds within a five-year period," Dodrill said. "We are actually required to spend down 85 percent of the bond funds within three years."

She said if CPL is unable to complete that, it would have to seek a three- to five-year extension. If CPL failed to meet the extension, the bonds could lose their tax-exempt status which would cost the library substantially more money to pay back the bonds as well as possibly face some IRS sanctions.

"We have to build around the existing MLK library," said Steve Rubin, partner at Midwest Development Partners at the Sept. 4 Planning Commission meeting. "It has caused some unique challenges which requires us to build from outside in."

Several high-speed turning lanes for cars are due to be removed
to make way for Circle Square and to make this area safer and
more comfortable for pedestrians (CPC-MDP).

Circle Square is ultimately buoyed by recent projects in Cleveland's "second downtown." They include First Interstate Properties' 276-unit, $116 million One University Circle, 10730 Euclid Ave., which opened in September 2019. Midwest Development Partners' 272-unit, $50 million Centric Apartments, 1999 Circle Dr., opened in December 2018. Both attracted 95 percent occupancies less than one year after opening despite top-of-the-market rents.

If the developers' and CPL's schedules can be worked out to accelerate Circle Square, there's no reason why construction couldn't begin sooner rather than later.

"We're excited about a shovel hitting the ground in 2021," said Chris Ronayne, president of University Circle Inc. "This is good for our construction trades and it's good for continued momentum in a complicated time."

He also noted that the project will force a redesign of streets into more of a grid that will slow cars and eliminate gentle turning lanes that allowed traffic to move faster. The existing "spaghetti junction" of roadways makes that area dangerous for pedestrians.

The view looking north on Stokes Boulevard-East 107th Street north from
the proposed new Reserve Court. At left and above in the foreground is
a future hotel with the 10600 Chester residential tower just beyond. At
right are proposed office and residential buildings. Down the street
is the existing Judson Manor apartment building (CPC-MDP).

And there could be lots of pedestrians in and around Circle Square which will essentially be a new downtown for University Circle. The new street layout will involve $7.9 million worth of public investment over the next four years.

"On behalf of all west-siders, I'm in favor of abolishing all crazy chaotic east-side intersections," said Ward 17 Councilman Charles Slife of West Park, a Planning Commission member.

A new Circle Square masterplan was also on Planning Commission's agenda for review. It features multiple mid- and high-rise buildings containing about 800 apartments, up to 100,000 square feet of retail, a future hotel and a proposed 13-story office/life sciences building. It would be the first for-lease Class A office building built in University Circle this century.

Numerous mixed uses, primarily cafes and retailers, are shown in Midwest's ground-floor uses plan. The desired uses include a grocery/pharmacy, restaurants, dry cleaner, beauty salon, pet store, cafes and building lobbies.

"It will bring a neighborhood to what has been an intersection with spaghetti infrastructure," Ronayne added. "It's great to see the west side of University Circle take shape and restore a neighborhood that has been taken over by cars in the past 100 years."


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