Thursday, November 26, 2020

30 Cleveland-area megaprojects that may benefit from a TMUD tax credit

Multiple megaprojects in Greater Cleveland may receive
Transformational Mixed Development tax credits in the
next two years if the Ohio House acts on pending legi-
slation as early as next week (AerialAgents).

UPDATED NOV. 28, 2020

After this Thanksgiving holiday week, state lawmakers say there's a pretty good chance that the Ohio General Assembly will finally pass the long-sought Transformational Mixed Use Development (TMUD) tax credit. And there's potentially dozens of so-called megaprojects that the TMUD credit could activate or take already active projects and push them across the finish line.

Those dozens of megaprojects are just in the Greater Cleveland area. There are many promising transformational projects in Ohio's six largest metro areas that accounted for all of Ohio's job growth in the past five years, as well as in smaller cities and rural areas that have been economically left behind.

If Substitute Senate Bill 39, the TMUD tax credit, passes the Ohio House of Representatives as a clean, unamended bill in one of up to seven House floor sessions between Dec. 1-17, it will become law. The only way it wouldn't is if Gov. Mike DeWine vetoes it. No one expects him to do that. Rather, they expect him to sign it. Even if he takes no action within 10 days of receiving Sub. SB 39, the bill becomes law without his signature.

Barring any surprises, chances of passage by the House are good said Rep. Mike Skindell (D-13) of Lakewood. He serves on the Ohio House's Economic and Workforce Development Committee that held eight hearings on the bill. The committee passed Sub. SB 39 on Nov. 18 for the House vote.

The House substantially amended it from what the Ohio Senate had passed 32-1 last year, but in the same two-year legislative session that ends Dec. 31. The Ohio Senate notified the Ohio House that it supports the House version, making a conference committee unecessary.

Ohio State House, Columbus, OH (NEOtrans file).

"It wouldn't be up for a floor vote if the House leaders didn't think they had the votes (to pass it)," Skindell said.

If it becomes law, there will be up to $100 million in tax credits available to insurance companies that invest in TMUDs in each of the next two years. By issuing a TMUD tax credit, the Ohio Tax Credit Authority would refund to insurance companies up to 10 percent of their investment in a TMUD. The credit would be capped at $40 million per project. Most projects would receive far less.

Up to $80 million will be available to urban projects statewide having at least a 15-story building or 350,000 square feet within 10 miles from a major city that has a population larger than 100,000 people. The development must cause a positive economic impact as measured by the net change in taxes produced by the development.

Another $20 million will be available to projects with buildings only four stories in height and a total size of 75,000 square feet in smaller towns and rural areas that are 10 miles or more from a major city.

Under those criteria, a large number of active and emerging projects could qualify statewide, not merely the project that hatched the TMUD concept in the first place -- nuCLEus. Between now and the end of 2022, Stark Enterprises' proposed 25-story office tower atop a pedestal of parking and retail would have to compete for $160 million in tax credits with potentially dozens of projects just in the Greater Cleveland area alone.

Listed alphabetically, local TMUDs could include:

Baseball Town site, east of Progressive Field (Google).

BASEBALL TOWN -- Major League Baseball wants to see the areas around ballparks developed with more mixed uses, not just restaurants and bars. Developers who wish to remain unidentified are proposing apartment buildings across East 9th Street from Progressive Field.

One of those projects, called the Sumner Avenue Apartments, appeared on a public record earlier this year. This and other buildings would transform an area of parking lots at the East 9th entry into downtown into a dense, vibrant urban neighborhood.

 Site plan for Belle Oaks at Richmond Road (DealPoint Merrill).

BELLE OAKS AT RICHMOND ROAD -- Redevelopment of Richmond Town Square (formerly Richmond Mall) into a $200 million mixed-use development will feature nearly 800 market-rate apartment, retail/commercial spaces and recreation areas.

The city of Richmond Heights recently approved a New Community Authority to oversee finances involving the proposed project. Additional public funding could come into play for a project that could measure 1.6 million square feet at full buildout.

Bridgeworks conceptual plan (MASS/RDL).

BRIDGEWORKS -- Developers of this multi-structure project at the west end of the Detroit-Superior Bridge may not need a TMUD credit to make their project happen. But they could seek tax credits to enhance their project and make it potentially transformative by creating a user-friendly access point to the streetcar subway deck of the bridge.

That access point is identified in Bridgeworks planning documents as a connection between Ohio City's Hingetown neighborhood and downtown, offering a more climate-protected route for pedestrians and cyclists, as well as a public realm for community events and programming.
Cumberland Development's lakefront plan (Dimit).

BROWNS LAKEFRONT -- Like the Baseball Town noted above, National Football League teams are also seeking to develop the areas around their stadiums with mixed uses. The Cleveland Browns and their principal owner, the Haslam Family, want to develop Cleveland's lakefront and connect it better with downtown. Mayor Frank Jackson's administration favored the Haslam plan over a prior plan by Cumberland Development LLC.

While possibly transformative, Haslam's plans are secret. There are rumors the plans could involve building a new football stadium off the lake before the Browns' lease with the city ends in 2029, then raze First Energy Stadium and develop the massive amount of lakefront land that would be made available.

The Centennial (The Millennia Companies).

THE CENTENNIAL -- As proposed by The Millennia Companies, a $450 million redevelopment of the 1.3-million-square-foot, former Union Trust Bank at 925 Euclid Ave. into The Centennial would be the largest building conversion attempted in downtown Cleveland. 

Millennia CEO Frank Sinito testified in 2019 that Centennial would be difficult to develop without with the TMUD tax credit. With it, he could convert the vacant, 21-story building into 860 affordable apartments, 95,000 square feet of offices, 20,000 square feet of retail, and convert the world's largest bank lobby into dining, event and museum spaces.

Circle Square, looking north on Stokes Boulevard (Bialosky).

CIRCLE SQUARE -- Although the first phase of the $300 million Circle Square development appears to be on track, there's much more planned and could benefit from the TMUD tax credit. The first phase has a 24-story apartment tower by Chicago-based White Oak Realty Partners, an 11-story apartment building by Midwest Development Partners, a large public parking garage and a new MLK Branch Library between Euclid and Chester avenues, along Stokes Boulevard.

Future phases would add another large apartment tower, an office building, hotel and up to 100,000 square feet of retail. Cleveland has high construction costs and low office rents despite the tight Class A office market, and few subsidies for office development. A TMUD tax credit could fill that void.

Columbus Road Peninsula (Google).

COLUMBUS ROAD PENINSULA -- Unnamed developers want to invest in the Columbus Road Peninsula, including mixed-use development where zoning allows new buildings up to 175 feet tall. Existing grain elevators on the peninsula are about 155 feet tall, equal to a 15-story building. Whether new buildings or a converted old structure are repurposed, they could meet the TMUD's physical requirements.

Also, much of the peninsula along the Cuyahoga River's Flats was recently designated as an historic district which could leverage historic credits for the renovation of its building stock, some of which dates to the 1850s. Combined with a TMUD tax credit, the entire peninsula could be reinvigorated with a mix of uses.

Dream Hotel, Cleveland (Bialosky).

DREAM HOTEL -- Pursuing the development of any hotel project during a global pandemic is a challenge. Trying to build a 19-story hotel for guests of live performances at the neighboring Masonic Temple, 3614 Euclid Ave, is even more problematic.

That's why the project has been put on hold for at least one year. A TMUD tax credit could give the hotel, featuring restaurants and event spaces, a fiscal stimulus and help restart Cleveland's hospitality industry. The project could also provide a significant boost the surrounding area of Midtown.

East 55th-Euclid conceptual master plan (Moody Nolan).

EAST 55TH-EUCLID -- Numerous projects in the heart of Midtown at East 55th Street and Euclid Avenue are coming to the fore and even could be candidates for a TMUD credit. But those projects are being sought by more than one developer, so individually each is not a megaproject but collectively they might be.

They include later phases of the Warner & Swasey redevelopment, an unidentified mixed-use development on Cleveland-Cuyahoga County Port Authority-owned land on the west side of East 55th, potential developments on land owned by the Cleveland Foundation on both sides of Euclid east of East 55th and additional proposals that are still in the early stages.

Geotech drilling rig, June 2019, 2177 E. 9th St. (Clifton Haworth).

EAST 9TH-BOLIVAR -- Five years ago, Downtown Investment Group LLC, a Geis Companies affiliate, bought the former New York Spaghetti House and razed it for future development. The city in 2015 gave Geis permission to use the property as a parking lot for up to five years.

When the city gave its blessing for the interim parking lot, a Geis official told the city that it already has a motivation to develop the land -- it paid $1.5 million for the 0.314-acre property. To recoup that investment, a significant vertical development is justified. A residential tower or a mixed-use tower has been rumored after a geotech drilling rig was spotted here gathering core samples in June 2019. A TMUD tax credit could make the numbers work for whatever Geis decides to build.

Fairmount mixed-use development site (Google).

FAIRMOUNT-CLEVELAND CLINIC -- Full details are unknown of what is ultimately planned by Fairmount Properties LLC southeast of the Cleveland Clinic's main campus. But, it may well be a transformative project for that area. Fairmount has site control of 3 acres of land bounded by East 105th Street, East 101st Street, Cedar Avenue and Wain Court.

The first phase alone is impressive in its scale. It includes 250-300 micro-unit apartments, several dozen townhouses, and several hundred parking spaces next to or above a 40,000-square-foot grocery store that reportedly will be a Meijer. The next phase could be of a similar scale, bringing the total development to a size comensurate with what Sub. SB 39 might call a TMUD.

Flats East Bank next phases (HSB).

FLATS EAST BANK -- Chicago-based Akara Partners and the Wolstein Group plan to proceed with Phase 3b of Flats East Bank in early 2021, featuring an 11-story mixed-use building. While that building may not have the square footage to qualify as a TMUD, the next five buildings might.

Wolstein plans five more towers along and north of Front Street, featuring up to 2,000 housing units, plus coworking spaces, neighborhood retail, restaurants and parking. In total, those would probably be large enough to be considered a TMUD.

Hough Bakery plant (Google).

HOUGH BAKERY PLANT -- Through a partnership, Knez Homes and Forest City Shuffleboard owner Jim Miketo acquired the 5-acre Hough Bakery plant on Lakeview Road at the Cleveland-East Cleveland line.

In addition to residential, it isn't known if any other land uses will be present such as retail or recreation. Nor is it known how many square feet of structures will be built to augment the 81,000 square feet of buildings already on the site. But given the size of the property involved, it's certainly possible that whatever is built here could achieve TMUD status.

CASTO Lakewood plan (Dimit).

LAKEWOOD HOSPITAL REDEVELOPMENT -- One of the suburban megaprojects is the redevelopment of the former site of the Lakewood Hospital, owned by the city. After Carnegie Management & Development withdrew from the project, Columbus-based CASTO reportedly is favored by the city to take over the project.

For the 5.6-acre site, CASTO in 2017 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. It isn't yet known if they would propose the same mix of uses today, however.

The red outline in the foreground is of the Lutheran Hospital
parking lot property. The yellow line is a property owned by a
partnership of the Weston Group and My Place Homes (Google).

LUTHERAN HOSPITAL PARKING LOT -- In Ohio City, a 5-acre parking lot on West 25th Street owned by Cleveland Clinic's Lutheran Hospital and used by its employees and visitors is reportedly targeted by a partnership of Weston Group and the Kertesz family. Developing it would remove a dead zone on West 25th between Hingetown to the north and the Market District to the south.

In 2017,the partnership acquired a half-acre of land at 1550 W. 25th that's surrounded by the hospital's parking lot. Developing the lot will be expensive, primarily because its 530 parking spaces (and possibly another 220 spaces south of the hospital) have to be moved somewhere, such as into a parking deck costing $20+ million that Cleveland Clinic doesn't need and from which no else would receive any private, long-term benefit.
Unofficial view of Magellan-Weston project (Ian McDaniel).

MAGELLAN-WESTON PROJECT -- Another Weston property is the site of a potential megaproject, this time west of West 3rd St. and north of St. Clair Avenue in downtown's Warehouse District. Three sources say the partner in this development is Chicago-based Magellan Development Group LLC.

Together, the Magellan-Weston partnership plans a roughly 30-story residential-hotel tower and a separate office building over a pedestal of parking and retail, according to sources. The project sounds eerily similar to nuCLEus. If so, it too might also need a TMUD tax credit to make the project financially feasible.

Construction continues on the Market Square apartment
building called Intro at left but the office building at right
remains unfunded and in limbo (HBRA).

MARKET SQUARE OFFICE BUILDING -- Another Chicago developer, Harbor Bay Realty Advisors, has started work on a 350,000-square-foot residential building with ground-floor commercial spaces and subterranean parking called Intro.

A second phase of the development would add a 150,000 to 200,000-square-foot office building. Harbor Bay was ready to build it last year but a proposed tax exemption by the state was blocked by the City of Cleveland. While the city has since granted tax abatement to the residential portion now underway, it would not provide tax abatement for the office building. A TMUD tax credit could provide the public assistance.

A massing of The Mews on East 90th Street that was
submitted to City Planning Commission (Hakki).

THE MEWS ON EAST 90TH STREET -- Inspirion Group, Structures Unlimited and possibly others are pursuing a significant development along and near East 90th Street, between Chester Avenue and Hough Avenue. Previously, Inspirion proposed Core 90, a mixed-use development of offices, labs and apartments. Then it shed the offices/labs for a residential-only project called East 90th Street Apartments.

The Mews On East 90th Street vision remains heavy on residential with a first-phase structure that is taller and more massive than those that still stand in the area. That brought some pushback from the neighborhood design review committee which tabled consideration of Inspirion's preliminary design last summer, saying the project dwarfed its surroundings.

Nautica Waterfront development (AoDK).

NAUTICA WATERFRONT -- A massive, multi-structure, mixed-use development was proposed on 22 acres of Flats West Bank land -- 5.6 acres of which now is for sale. The property has attracted interest from developers, including CASTO who has since walked away from buying land here.

But developing the Nautica Waterfront and a nearby property that's for sale at 1250 Riverbed St. may first require construction of a large parking deck costing more than $20 million. Parking decks usually don't make money so finding some public subsidy like the TMUD tax credit for the garage will likely be needed.

One nuCLEus Place (Bialosky).

NUCLEUS -- This is the project that got the ball rolling on creating the TMUD tax credit. Stark Enterprises tried other public financing ideas that failed to gain traction among the City of Cleveland as well as the Cleveland Metropolitan School District.

Stark's persistence is noteworthy. NuCLEus has been planned since 2014 and the TMUD tax credit proposal was drawn up nearly four years ago. It has worked its way through Ohio's General Assembly twice and could finally be weeks away from becoming law. But as we see here, nuCLEus could face some tough competition in winning a tax credit.
Ohio City Transit Oriented Development site (Google).

OHIO CITY TOD -- The Greater Cleveland Regional Transit Authority (GCRTA) will partner with MRN Ltd. to develop land next to and possibly above its Ohio City Red Line station as a Transit Oriented Development (TOD). GCRTA went with second-choice MRN after its first choice, Carnegie Management & Development, withdrew from the project.

While it is too early to say what form the development could take, if it is truly a TOD, more density and mixed use need to be added to the medium-density station area to produce meaningful ridership and revenue to RTA. For its part, RTA could use the revenue to update the aging station. It was GCRTA's first rail stop to be replaced with an ADA-compliant facility 30 years ago.

Richman Brothers building (LoopNet).

RICHMAN BROTHERS -- One of the largest vacant buildings, if not the largest on the east side of Cleveland is the old Richman Brothers warehouse and factory, 1600 E. 55th St. Several efforts to develop the massive structure have failed due to its scale, high cost and low rents in the surrounding neighborhood.

But redeveloping it with the right mix of uses would almost certainly transform the neighborhood. The building is for sale and could attract serious developers if there were more public subsidies available to projects of this scale.

Rockefeller Building (KJP).

ROCKEFELLER BUILDING -- Plans are moving forward to redevelop with mixed uses the 17-story, 115-year-old building at 614 W. Superior Ave. built by Cleveland native and Standard Oil Co. founder John D. Rockefeller.

Realty Dynamics Equity Partners and Wolfe Investments will redevelop the 261,264-square-foot building with 436 apartments including 273 micro units, plus ground-floor retail/restaurants. The 43,617-square-foot, 95-year-old garage behind is being split off as a separate, future project. Development of 1.1 acres of adjacent surface parking lots is also possible for the future.

Scranton Peninsula land for sale October 2020 (CBRE).

SCRANTON PENINSULA -- Although development of Scranton Peninsula, just across the Cuyahoga River from the Tower City complex, has stalled, it could be reinvigorated with a TMUD tax credit. Sherwin-Williams tried to build its new research facility here but reportedly couldn't get property owner Scranton-Averell Inc. to be responsive to its overtures.

Great Lakes Brewing Co. remains interested in developing on the peninsula as part of the Thunderbird master development plan but NRP Group has walked away from building 330 residential units here. Several parcels remain for sale. They could gain more interest if the TMUD tax credit was available.

Silverpoint conceptual plan (HSB).

SILVERPOINT -- Cannata Companies plans a 1-million-square-foot, mixed-use development called Silverpoint on 14.5 acres in Warrensville Heights, next to Interstate 271. Cannata acquired the land from Little Sisters of the Poor for $2.2 million and secured a $1 million county loan to remediate the site's environmental conditions.

Proposed are structures rising from four to 11 stories high for apartments, hotel, offices and ground-floor retail/restaurants. The project is estimated to have a construction price tag of $87 million, according to Cannata.

Tower City Riverview conceptual plan (Vocon).

TOWER CITY RIVERVIEW/CITYBLOCK -- Bedrock Real Estate Services' planned remake of The Avenue shopping mall at Tower City Center into a 350,000-square-foot entrepreneurship hub could add residential and office development on the Riverview phase overlooking the Cuyahoga River.

Bedrock will reportedly pursue the new Justice Center courthouse complex while the jail will likely move out of downtown. The courthouse will probably stay downtown and measure anywhere from 877,000 to 1.1 million square feet of usable space.

Van Aken District in Shaker Heights showing future/second-
 phase elements -- residential and office buildings (RMS).

VAN AKEN DISTRICT PHASE 2 -- RMS Corp. completed its first phase of the Van Aken District in early 2019, by quickly leasing 90 percent of its office, residential and retail components. Now, RMS is looking to develop the second phase which could continue to remake the area from a suburban strip shopping plaza in Shaker Heights' downtown. That could mean going vertical.

Two sources said RMS is considering building a 15-story residential building north of Farnsleigh Road plus a large office building with ground-floor retail/restaurants at the northwest corner of Chagrin Boulevard and Warrensville Center Road. The 15-story residential building would allow the development to meet TMUD status.

The Viaduct city-approved design (Dimit).

THE VIADUCT -- A 27-story apartment tower with ground-floor retail proposed to rise at 2208 Superior Viaduct was approved by City Planning Commission last summer. But there are rumors that United Community Developers is having difficulty securing financing for the skyscraper. A TMUD tax credit could give the project more credibility.

The developer, having no experience in developing major projects, is attempting to secure a loan from the Cleveland-Cuyahoga County Port Authority. It has an experienced general contractor in Geis Companies, but Geis has never built a skyscraper from the ground up. So it has joined with Osborne Group to assist it.

Westinghouse Corp. plant (LoopNet).

WESTINGHOUSE PLANT -- Redevelopment of the 303,000-square-foot vacant manufacturing complex at 1200 W. 58th St. has proven elusive to more than one prospective developer. Parts of the complex date to the 1800s and require significant environmental clean-up.

While conversion of the eight-story structure into apartments is a no-brainer, developers have been stymied with what to do with several low-level structures that may need to be at least partially demolished. That makes site preparation expensive before any development occurs. The scale of any protential development here would have to be significant to offset the site-prep costs.

Wolstein Center, Cleveland State University (DCA).

WOLSTEIN CENTER REDEVELOPMENT -- Two sources say that an unidentified developer seeks to build a large, mixed-use development on a 9.3-acre parcel now occupied by the three-decade-old Wolstein Center arena. The large arena is owned by Cleveland State University but needs a smaller facility. The developer's interest is reportedly why CSU is purusing a campus-wide master plan.

The master plan will "assess athletic and resident facilities and make recommendations for growth including a focus on the Wolstein Center Arena." Given the size of the arena property, it is possible that its redevelopment could be a candidate for a TMUD tax credit.


Not all of the above projects will get built but some will. More are likely if the TMUD tax credit is available to them. If Greater Cleveland gets its share of TMUD tax credits merely based on population, it should get about 20 percent or $32 million. If all of the above projects apply for and receive tax credits, that would be an average of $1.28 million per project.

Some projects might need as little as that to push them across the finish line. But other projects including the one that started it all (nuCLEus) will likely need much more than that. There will be some projects that get left out of the competition entirely.

But suffice it to say, if the TMUD credit becomes law, there's probably going to be some transformative real estate projects in Greater Cleveland in the coming years.


Sunday, November 22, 2020

More Bridgeworks planning details released

Additional details about the Bridgeworks development in
the Hingetown section of Cleveland's Ohio City neighbor-
hood were released in recent days. The new details include
more images, identification of zoning variances needed, and
progress in securing an operator for the hotel (MASS/LDA).

At the end of last week, more planning materials for the new Bridgeworks development in Ohio City's Hingetown section were submitted to Cleveland's Building Department and City Planning Commission. The submitted plans, albeit still preliminary, show further refinements to massings, floor plans, ground-floor elevations, materials usage and more.

Those details were added to the initial submission to the city, provided two weeks ago. Among all Northeast Ohio media, NEOtrans provided the first glimpses into those plans, along with information provided by sources close to the project. 

Bridgeworks is proposed to be a 233,000-square-foot, mixed-use development consisting of an 11-story apartment building with 167-170 mixed-income units, a seven-story hotel with 130 rooms, 2,000 square feet of ground floor commercial space and a 180-space parking garage, mostly below ground, plans show.

A southerly looking view of the Bridgeworks project. This is
a massing image to show the scale of the project rather than
provide details about the proposed design (MASS/LDA).

The project is planned to be built on about 2 acres of land that was used by the Cuyahoga County Engineers for offices, labs and a garage at the northeast corner of the intersection of West 25th Street and the Detroit-Superior Bridge. Bridgworks LLC, a partnership of Grammar Properties and M. Panzica Development, has an agreement with the county to acquire the land.

On Nov. 20, and as a matter of routine, Cleveland Zoning Administrator Richard M. Riccardi denied a building permit for Bridgeworks, citing its non-compliance with the city's outdated zoning and building codes. The non-compliance was due to the buildings' setbacks of more than 30 feet in some places exceeded the code's requirement of 6-8 feet on secondary and primary streets.

Also, the proposed development would have 63 percent of street frontage buildout where 80 percent is required by the building code. Frontage buildout on side streets of 100 percent is required, whereas Bridgeworks would have less than that. Also, the project's plans would have to go before Landmarks Commission for review and approval before a building permit could be issues, Riccardi ruled.

Looking generally east down Superior Viaduct from West 25th
Street with St. Malachi church at left, Bridgeworks in the center
 and right, and Superior Viaduct in between them (MASS/LDA).

The denial is a matter of routine for these and other developers to identify next steps in the development process, said Tom McNair, executive director of Ohio City Inc., a community development corporation.

"They want to get their hands around what variances might be required," McNair said. 

Representatives of the project's principals, Grammar Properties and M. Panzica Development, privately said they expected the application would be denied. But they had to submit it to learn from the city what zoning variances they might need before resubmitting the application.

A view from Superior Viaduct looking southwesterly
at the pedestrian entrance to the hotel (MASS/LDA).

On Nov. 12, a request for qualifications (RFQ) was issued by Newmark Valuation & Advisory for the hotel portion of Bridgeworks. Proposed is a branded lifestyle hotel. The deadline for prospective hotel operators to respond is Nov. 30.

"This RFQ is the pre-qualification stage of the procurement process. Only those applicants who successfully respond to the RFQ and meet the qualification criteria will be included in the subsequent Request for Proposals (RFP) solicitation process. Submissions will be reviewed and forwarded to the development firm. A copy the feasibility study will be provided to those firms deemed most qualified," the RFQ's introduction reads.

According to two sources close to the project who spoke off the record, the project's developers are reportedly hoping to start construction in the second quarter of 2021. Construction could take 18-24 months.
Heights of existing and proposed buildings, as well as what
maximum building heights are allowed in the area surround-
ing the Bridgeworks development (MASS/LDA).

Shortly after NEOtrans first reported on Bridgeworks earlier this month, the article was updated with more information about potential traffic impacts from this significant development. Scott Aylesworth, president of the Waterfront District Block Club, anticipated that the resulting impacts would be minor if two-way traffic on Washington Avenue was restored.

"The issue truly is Washington Avenue," he said. "The short one-way section next to St. Malachi has caused untold issues. I think that since the (proposed Bridgeworks) tower is mostly residential, the impact on traffic congestion will be nominal. If they can restore the two-way traffic (on Washington) and adjust the light timing, there should be no problems."

An historic designation was awarded for the Cuyahoga County Engineers' buildings in September that would make their renovation eligible for historic tax credits. But the amount of those credits is likely to be too small to make a significant contribution to the developers' capital stack, the sources said.

A preliminary ground floor site plan for the Bridgeworks
development. Additional plans for upper floors are
posted following this article (MASS/LDA).

The developers will retain the historic buildings because they will reduce construction costs. Also reducing construction costs is the desire to leave undeveloped an 11,100-square-foot plot of land at the eastern end of the Bridgeworks site. That piece of land may remain undeveloped as a public greenspace or it could be developed someday, the sources said.

The last NEOtrans article on Bridgeworks had only two available graphics of the proposed development -- one a birdseye massing and the other a basic site plan. The additional graphics now available, albeit still in the early stage and therefore subject to revision, are bringing the proposed project into a sharper focus.

But for more textual information on the Bridgeworks project, see the NEOtrans article published earlier this month. NEOtrans will certainly be following this project as it develops further. And be sure to click on the photos in this article to enlarge them and see more details.

Tyler Kapusta contributed to this article.

Preliminary plans for the possible use of materials in the
Bridgeworks development (MASS/LDA).

Second level floor plan (MASS/LDA).

Typical upper level floor plan (MASS/LDA).

Top floor of apartment building (MASS/LDA).


Friday, November 20, 2020

Amazon planning more Cleveland-area expansions

Amazon's next distribution center for the Greater Cleveland-
Akron-Canton area will be a 220,000-square-foot, nearly 60-
acre delivery station in Boston Heights. The station building
will be oriented north-south as shown on the above diagram
and surrounded by parking for customers, employees and
delivery vehicles. The site is next to State Route 8, the
Ohio Turnpike, a new Arhaus furniture distribution
center and a Costco Wholesale store (Google).

E-commerce giant Amazon continues to add distribution facilities to Northeast Ohio and is considering expanding its existing facilities. The result will be hundreds if not thousands of more jobs provided by Amazon as well as by transportation and delivery services, including independent ones.

That's according to two sources who spoke off the record this week to NEOtrans. The sources were not authorized to speak publicly about the expansions but are directly connected to them. And there's circumstantial evidence that confirms the projects are for Amazon which doesn't like to publicize its planned expansions.

The next new Amazon distribution facility will be a 220,780-square-foot delivery station planned near the interchange of the Ohio Route 8 and the Ohio Turnpike in Boston Heights, roughly midway between Cleveland and Akron. Specifically, the site will have its main entrance on Hines Hill Road, across the street from other new big-box structures -- an Arhaus furniture warehouse and a Costco Wholesale store.

Measuring 58 acres, the site is owned by Boston Hills Property Investment LLC which in turn is owned by Broadview Heights-based developer Sam Petros. The site wraps around the Paychex Inc. payroll services office and property. Developing the site will be Pure Development, Inc. of Indianapolis, IN, said Irving B. Sugerman, a partner at Akron-based Brouse McDowell’s real estate and litigation groups.

Sugerman, in representing the developer, made a presentation about the project Nov. 4 to Boston Heights' Board of Zoning Appeals and its Planning Commission. Three zoning variances and site plans were approved at those meetings.

"We're proposing a delivery station for an ultimate tenant that specializes in the transport of consumer goods." Sugerman said. "The project will create several hundred full- and part-time jobs in the village of Boston Heights. All of the employees and associates that we're going to have there are paid at least $15 an hour with a variety of benefit packages. At this time, about 85 percent of those jobs being full-time."

Screen capture of a meeting of Boston Heights' Board of
Zoning Appeals and Planning Commission at which the
proposed Amazon delivery station was approved. There,
developer representative Irving B. Sugerman held up a
site plan for the delivery station so that BZA members
could see which hard copy to look at from among their
paperwork about the planned project (YouTube).

He said the delivery station will also include what Amazon calls its Delivery Service Partners, which are independent contractors who will build their own businesses delivering packages for Amazon. Amazon will not own the facility but will instead be the tenant. It is paying about $40 million to develop the site, Sugerman said.

Most of the site will be developed with parking for customers, employees, trucks and delivery vans. The parking lots will surround the distribution center, with customer and employee parking along Hines Hill Road.

Offices for the delivery station will face Hines Hill. There will be landscaping screening, berms and other buffering around the perimeter of the property, except for the Hines Hill frontage. The buffering will block views of the parking and station from most outside perspectives, said architect Bill Lewis of Richard L. Bowen and Associates of Cleveland.

Although the tenant was never identified at the village's meetings, "delivery station" and "Delivery Service Partners" are terms Amazon uses to identify its mid-level distribution facilities and its shipper development program.

Amazon delivery stations will also be the tenants at several new facilities now being developed in Cleveland -- one at the Madison Industrial Park in the Cudell neighborhood on the city's West Side and another at the Cuyahoga Valley Industrial Center in Slavic Village on the city's East Side. NEOtrans broke the news on those developments earlier this year.

Architect Richard L. Bowen and Associates is the architect of the Boston Heights delivery station -- as it was for the other Amazon delivery stations in Greater Cleveland. And Pure Development develops many Amazon distribution centers in the Midwest.

In 2018, the 855,000-square-foot Amazon Fulfillment
Center in North Randall was nearing completion. It will
reportedly be expanded in the next year or two, adding to
the facility and the 2,000 jobs already there (AerialAgents).

"The (Boston Heights) site is perfect for this type of facility," said Sugerman, citing access to nearby State Route 8, Ohio Turnpike and other roads. "It's also in the vicinity of new and exciting projects that have developed over time in Boston Heights -- Costco, Arhaus among others."

Construction of the Amazon delivery station is due to start in the first quarter of 2021, Sugerman said. A source said that construction on the project will probably be completed in the third quarter of 2021.

The same sources say there are more expansions planned, including a possibly sigificant expansion of the North Randall Fulfillment Center. Fulfillment Centers are the largest type of Amazon's distribution center and the North Randall facility is the largest one in Greater Cleveland. It opened in 2018 on the site of the former Randall Park Mall.

One of the sources said the 855,000-square-foot North Randall Fulfillment Center, which has 2,000 full-time employees, would be expanded by a "large amount" but added that more details were scant at this time. There is some open space to the south of the existing facility where expansion of it could occur. The rest of the site is hemmed in by streets and parking for employees and delivery vehicles.

It is one of seven Amazon distribution centers existing or planned in the Greater Cleveland-Akron-Canton area, but is only one of two fulfillment centers in Cuyahoga County. The other is an 850,000-square-foot facility in Euclid built on the site of the former Euclid Square Mall for which NEOtrans broke the story in May 2017.


Friday, November 13, 2020

Ohio 'megaproject' tax credit regains life at 11th hour

For six years, Stark Enterprises has proposed different public
incentives to get its large nuCLEus mixed-use development
over the finish line. It might finally be close to getting one
passed -- the Transformational Mixed Use Development
tax credit. But passage doesn't guarantee Stark will win
a credit from the competitive program (Stark).

UPDATE: E&WD Committee passed Sub. SB 39 on Nov. 18

That rhythmic sound you're hearing again is a pulse after eight months of silence. It is coming from Substitute Senate Bill 39, also known as the Transformational Mixed Use Development (TMUD) tax credit, which could be passed by the Ohio General Assembly by the end of the year.

And it's not just a pulse heard from the legislation, but from big real estate projects that would compete for tax credits following its passage. In Cleveland, those could include Stark Enterprises' nuCLEus and Millennia Companies' The Centennial, plus other potential redevelopments like the Westinghouse plant or the Richman Brothers factory.

Sub. SB 39 is scheduled for a Nov. 18 vote to be referred out of the Ohio House of Representatives' Economic and Workforce Development (E&WD) Committee for a possible floor vote by the full House soon thereafter.

It is the first action by the committee on the TMUD bill since March, before the pandemic hit. This new pulse is coming in the so-called lame-duck session -- after the general election but before the end of the 133rd General Assembly, a two-year legislative session.

The bill could be passed in one of 13 House sessions scheduled including four tentative sessions, if needed, after Nov. 18 but before the end of the two-year assembly on Dec. 31. If the legislation isn't acted on by the end of the calendar year, a TMUD tax credit bill would die for the second time.

A new bill would have to be introduced and go through the entire legislative process again. That would make it the third time the TMUD tax credit has wound its way through the legislature. An earlier version of the legislation passed the Ohio Senate 32-1 in 2019. An even older version passed the House 91-0 in 2018.

The Millennia Companies' The Centennial remake of 925 Euclid
Avenue will feature a mix of opulence and affordability among
its mixed uses. They include a restoration of the world's largest
banking hall into a restaurant and transportation museum, with
basic retail below and 860 units of workforce housing above
in the 1.4 million-square-foot building (Millennia). 

But Rep. Mike Skindell (D-13) of Lakewood said that, barring any surprises, the amended legislation will probably pass the House again. He is a member of the E&WD Committee.

"It wouldn't be up for a floor vote if the House leaders didn't think they had the votes (to pass it)," said Skindell, who won re-election to his House seat Nov. 4.

The legislation has been amended several times since it was first introduced in the prior session in 2018. It was originally drafted by Cleveland law firm Thompson Hine LLP, working on behalf of Stark Enterprises, to aid its nuCLEus mixed-used development in downtown Cleveland.

The roughly $220+ million nuCLEus development offers a 25-story office tower atop a pedestal of retail and parking to be built on East 4th Street between Huron Road and Prospect Avenue. The project has twice been scaled back.

Ezra Stark, chief operating officer of Stark Enterprises, did not respond to an e-mail seeking comment for this article prior to publication. Valerie Jerome, director of marketing  and communications at The Millennia Companies, was unable to secure a comment from the firm's development team prior to NEOtrans' late-afternoon deadline Nov. 13.

If passed, Sub. SB 39 would encourage insurance companies to invest in Ohio real estate megaprojects by refunding to insurance companies up to 10 percent of their investments in TMUDs. The maximum credit for a TMUD would be $40 million. A total of $100 million worth of credits would be available in each state fiscal year ending June 30 in 2021 and 2022.

Like the other large-scale proposed developments shown here,
the redevelopment of the Westinghouse plant on West 58th
Street has eluded several developers seeking to make a
go of the massive, complicated project (LoopNet).

The House's E&WD Committee has held seven hearings thus far on Sub. SB 39 to make the tax credit more palatable to rural lawmakers who saw it as benefiting only urban projects, said Josh Ferdelman, legislative aide to State Rep. Paul Zeltwanger, chair of the committee.

Within 10 miles of a major city, a TMUD refers to projects whose new or to-be-renovated connected buildings are at least 10 stories tall, measure at least 250,000 square feet and contain any combination of retail, office, residential, recreation, structured parking or similar uses. In less populated areas, smaller projects can be considered TMUDs.

The legislation's sponsor is Sen. Kirk Schuring (R-29) of Canton. Skindell said he spoke with him on Nov. 13; Schuring said he was supportive of the House's changes as long as no further changes were made. But in the lame-duck session, lawmakers often attach language from other bills to legislation that they know is likely to pass.

"If the bill stays the way it is, the Senate will accept it," Skindell said.

If so, and if the Senate issues a statement of support during its session, then it is unlikely that differences in the Senate and House versions of the TMUD tax credit bill will need to be ironed out in a conference committee. In that case, the House version would go to Gov. Mike DeWine for his signature. 

Backers say the credits are justified in this state and especially in Greater Cleveland which is the 15th-most expensive metro to build an office building but has the nation's third-cheapest office rents, eclipsed only by Louisville and Albuquerque.

Another massive project whose redevelopment would transform
its surrounding neighborhood is the 660,000-square-foot Rich-
man Brothers factory on East 55th Street. It would take large
public incentives for its redevelopment to happen (LoopNet).

Skindell sought the addition of the $100 million cap on annual credit awards and the June 30, 2022 termination date of the TMUD tax credit program. He noted that, without the cap, the TMUD credits could incur as much as a $500 million hit to the state's budget per year and continue indefinitely. Skindell was the committee's lone vote Nov. 18 against referring the bill to the House floor.

The TMUD bill would set aside 20 percent (or $20 million) of the tax credits available each year for projects in less populous areas. Specifically, the new provision specifies projects further than 10 miles from a major city that has a population larger than 100,000 people, according to an analysis and comparison of recently proposed versions of Sub. SB 39 by the Ohio Legislative Service Commission.

And in such areas, qualifying projects must have buildings only four stories in height with a total size of 75,000 square feet. The buildings do not have to be connected. That compares to 15 stories or 350,000 square feet of connected buildings for projects within 10 miles of a major city.

The previous version of the bill considered TMUDs to be those whose new or to-be-renovated connected buildings are at least 15 stories tall, measure at least 350,000 square feet and contain any combination of retail, office, residential, recreation, structured parking or similar uses.

The new rural set-aside would replace a provision in the bill's previous version that would increase the existing historic renovation tax credit percentage from 25 to 35 percent for projects in rural areas. Thus, certain small-town new-construction developments, not just small-town renovation projects, would qualify for tax credits.

A new bill would have to be passed to continue the program beyond June 30, 2022. Administration and issuance of TMUD tax credits would be overseen by the Ohio Tax Credit Authority rather than the state's Director of Development Services, as previously proposed.


Tuesday, November 10, 2020

Bridgeworks plans revealed, will add to Hingetown's height

Conceptual plans for Bridgeworks in Ohio City show an 11-story
apartment building and a seven-story hotel alongside repurposed,
former Cuyahoga County Engineer structures. This view looks
generally north, with the West 25th Street-Detroit Avenue
intersection visible at the bottom  (LDA-B&H).

UPDATED NOV. 10, 2020

Conceptual plans were submitted to the city this week for a mixed-use development in the Hingetown section of Cleveland's Ohio City neighborhood. According to those plans, the tallest building would rise to 11 stories or about 127 feet high.

The project is Bridgeworks, a partnership of Grammar Properties LLC and M. Panzica Development, on the northeast corner of West 25th Street and the Detroit-Superior Bridge. The project's address is 2429 Superior Viaduct.

The 11-story apartment building at Bridgeworks will feature 167 market-rate and affordable units with a 2,000-square-foot ground-floor commercial space facing West 25th. The building will have tremendous views of downtown, Lake Erie and the Cuyahoga River. The site is across the street from the planned Irishtown Bend Park for which site work and hill stabilization has begun.

Wedged into the corner of the apartment tower will be a seven-story boutique hotel with 130 rooms, ground-floor coffee/commons bar, art gallery and an amenity space. The hotel will incorporate several historic Cuyahoga County Engineers' buildings into it, namely a three-story former office/laboratory building, Art Moderne-designed garage and an entry to the former streetcar subway below the Detroit-Superior Bridge.

The old subway entrance will be rehabilitated to accommodate non-public functions of the hotel, according to a project summary submitted to the city. There will also be a public plaza surrounding it. Below the site will be two levels of underground parking plus a first-floor, enclosed parking area. In total, 180 structured spaces will be provided, not including 30 unassigned spaces along the street, plans show.

Conceptual site plan for the Bridgeworks development (LDA-B&H).

The total size of the development measures about 233,734 square feet. Development cost estimates are not yet available but could be similar to the $60 million price tag of the previous project jointly undertaken by Grammar Properties and M. Panzica Development -- Church+State development located a couple of blocks west along Detroit Avenue.

Graham Veysey and Michael Panzica, principals of the development's partnering firms, did not respond to phone calls and text messages seeking comment prior to publication of this article.

Two sources close to the development who spoke off the record because they were not authorized to speak publicly about it said that enough financing has come together to allow Bridgeworks to proceed. However, the hotel brand hasn't been nailed down yet. Negotiations are continuing. The project's developers are reportedly hoping to start construction in the second quarter of 2021. Construction could take 18-24 months. 

An historic designation was awarded for the Cuyahoga County Engineers' buildings in September that would make their renovation eligible for historic tax credits. But the amount of those credits is likely to be too small to make a significant contribution to the developers' capital stack, the sources said.

The historic buildings will be retained in the development because they will reduce construction costs. Also reducing construction costs is the desire to leave undeveloped an 11,100-square-foot plot of land at the eastern end of the roughly 2-acre Bridgeworks site. That piece of land may remain undeveloped as a public greenspace or it could be developed someday, the sources said.

The developers, organized as Bridgeworks LLC, have an agreement to acquire the 2-acre site from the county after a recent property disposition process. NEOtrans broke the story nearly two years ago about the county engineers' property hitting the market and again six months later about Panzica et al acquiring the site.

Location of the Bridgeworks development is outline in white,
with downtown Cleveland in the background (Google).

Previous comments by Veysey and Panzica suggested the Bridgeworks development might top out in the 8-10 stories range. But a larger-scale project was desired based on leasing success at Church+State. That project's first residential tenants moved in several months ago with the smaller, six-story Church building nearly full and the larger State rapidly filling up.

Retail leasing at Church+State lagged due to the pandemic. But the sources said that one unidentified retail tenant has recently signed on and lease drafts are being worked on for at least two more potential restaurant-retail tenants.

It should be noted that while Bridgeworks is proposed to be 11 stories like Church+State, the latter tops out at just under 115 feet high to conform to its zoning code's height district. The height district in which Bridgeworks would rise allows 250-foot-tall buildings, so Bridgeworks could rise much taller if the developers wanted. In fact, across the street, a proposed 27-story apartment tower called The Viaduct is planned.

Bridgeworks will probably require a variance for the project's density, as the city's zoning code is antiquated and is being considered for replacement with a form-based code. The existing code allows a maximum gross floor area that's only six times the lot area. And the site is zoned for limited retail business albeit with an urban form overlay.

The extent of code variances that may need to be granted by the Board of Zoning Appeals is why Veysey and Panzica submitted the conceptual plans to the city this week, said Tom McNair, executive director of Ohio City Inc., a community development corporation.

"They want to get their hands around what variances might be required," he said. "Conceptually speaking, the project is fantastic for the neighborhood. We're approaching 1,000 units of housing along Detroit from West 25th to West 32nd. And Lower Detroit from 29th on in is even more dense. It  makes that scale (of Bridgeworks) feel appropriate. I think this is one of those areas in Cleveland where you can add that height."

Several fomer Cuyahoga County Engineers' buildings remain
on the site where Bridgeworks would rise. The buildings range
in age from 60-103 years old (Allegro).

But when plans for The Viaduct were being discussed at the Waterfront District Block Club, residents of the 11-story Stonebridge Condominiums complained that they are already facing traffic problems while trying to get out on to West 25th.

McNair called the West 25th-Detroit intersection one Cleveland's "Most important intersections." Although its traffic is far less than what it was before Interstate 90 was opened on the West Side in the 1970s, it still sees 14,000 vehicles per day.

He also noted that the intersection is the second-busiest bus stop in the Greater Cleveland Regional Transit Authority's system, trailing only downtown's Public Square. It is at the northern end of a planned bus rapid transit route called 25connects. And, there are multiple hike-bike trails in the area, including a protected bike lane across the Detroit-Superior Bridge into downtown.

"Places that have traffic congestion have a lot of good things going on," McNair said. "I'm sure there are some people who will worry about traffic congestion. But the people in Northeast Ohio who worry about traffic congestion probably haven't spent much time outside Northeast Ohio."

The block club has been working with the city's Division of Streets to re-examine traffic flow on Washington Avenue, including taking traffic surveys. But the traffic count study was hampered by lower car volume due to the pandemic.

"The issue truly is Washington Avenue," said Scott Aylesworth, president of the Waterfront District Block Club. "The short one-way section next to St. Malachi has caused untold issues. I think that since the (proposed) tower is mostly residential, the impact on traffic congestion will be nominal. If they can restore the two-way traffic (on Washington) and adjust the light timing, there should be no problems."

Tyler Kapusta contributed to this article.