Ohio mega-project bill gets more complex, more backers

A law firm hired by Stark Enterprises drafted the first Transfor-
mational Mixed Use Development (TMUD) tax credit bill two
years ago to aid its $350 million nuCLEus development planned
in downtown Cleveland. A variant of that original bill could be
moving closer to passage in Ohio's General Assembly (Stark).
CLICK IMAGES TO ENLARGE THEM

The Ohio House of Representatives' Economic and Workforce Development Committee today could accept major changes to a bill designed to create a Transformational Mixed Use Development (TMUD) tax credit to kick-start real estate mega-projects.

If accepted, the committee could take testimony on Substitute Senate Bill 39 at the following hearing, tentatively scheduled for Feb. 12 before moving the bill to the House floor for a vote by the 99-member legislative body.

As reported here last month, if the House passes the bill, it would set up a conference committee to iron out differences from an earlier version of the legislation that passed the Ohio Senate 32-1 last summer.

To offset the cost of "transformational" developments in Ohio, the proposed tax credit would refund to insurance companies up to 10 percent of their investment in TMUDs, as defined by the bill. State Sen. Kirk Schuring (R-29, Canton) is the bill's primary sponsor. He submitted the latest proposed changes to the House committee.

Business and civic leaders throughout the state sought the tax credit because major developments in Ohio's larger downtowns cost nearly as much to build as those in larger cities like New York and Chicago. However, Ohio developments command rents that are one-half to two-thirds less.

Thompson Hine LLP, drafted the first TMUD legislation two years ago at the request of Cleveland-based Stark Enterprises. It did so after Stark had tried and failed at producing other methods public-sector capital funding for its $350 million mixed-use nuCLEus development project in downtown Cleveland.

Significant changes were made to the TMUD tax credit bill to
benefit Ohio's small towns that are bleeding jobs and younger
residents to large cities in Ohio and elsewhere (State of Ohio).

Another version of the same basic legislation unanimously passed the House in the previous legislative session in 2018 but that session expired before the Senate could pass it. The bill was re-introduced into the Senate in early 2019 at the start of the current two-year session.

More changes to the bill were desired this time around in order to garner more political support and move it out of committee to a vote in the full House, said Josh Ferdelman, legislative aide to State Rep. Paul Zeltwanger, chair of the House's Workforce & Economic Development Committee.

Support for the bill was lagging among representatives of rural and small-town Ohio districts that have been losing jobs, opportunity and young people to larger cities during the so-called "Fifth Migration."

In the past five years, Ohio's largest metropolitan areas have been carrying the state's economy, according to the U.S. Bureau of Labor Statistics. Ohio gained 227,000 jobs since the start of 2015. The metros of Cincinnati, Cleveland and Columbus accounted for 216,000 of those new jobs.

Adding in the next-largest metros of Akron, Dayton and Toledo, Ohio's six largest urbanized areas gained 245,000 jobs. Without them, Ohio would have lost 18,000 jobs since 2015.

So new provisions to the TMUD bill are proposed to 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 10 stories and 250,000 square feet for projects within 10 miles of a major city.

This artist's rendering of part of the massive bank lobby in the
former Union Commerce Bank in downtown Cleveland belies
its appearance today -- an empty space waiting for an infusion
of capital to bring it back to life as The Centennial. The TMUD
tax credit could offer that infusion of capital (Millennia).

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.

Some other major proposed changes to the bill would terminate authority for approval of credits on June 30, 2022. Thus a new bill would have to be passed to continue the program into the next fiscal year. 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.

Under the prior version of the bill, an awarded credit can equal 10 percent of documented development costs or, if the applicant is an insurance company contributing capital to the project, 10 percent of the capital contribution. That would remain, but the tax credit for any one project would be limited to $40 million.

While there would be no limit on the number of projects that may be certified as eligible for the tax credit, the total amount of tax credits would be limited to $100 million in each of fiscal year 2020 (which ends June 30, 2020), FY 2021 and FY 2022.

Unlike before, unused certifications would not carry over to later years. While projects would be ranked on their economic value and transformational impact, the ranking would be done separately for projects within 10 miles of a major city and those outside such a radius.

END

Sherwin-Williams' HQ search is over (& probably its R&D search, too)

Sherwin-Williams global headquarters is based substantially
in the Landmark Buidling at the center of this photo. More
offices spill over into the smaller Skylight Office Tower to
the left of it, as well as to several other sites in Northeast
Ohio (Iryna Tkachenko). CLICK PHOTOS TO ENLARGE

More signs are pointing to Sherwin-Williams (SHW) getting close to announcing the sites for its new headquarters plus research and development facilities (HQ+R&D). At stake are up to 6,000 jobs in direct employment and many thousands more in spin-off/support jobs.

Two sources say the sites could be announced this week. Other sources, some of them high-level, have gone into shut-down mode in the past week, either refusing to say anything because SHW is clamping down on leaks to this blog or because their flow of information has stopped.

Unfortunately, SHW still isn't saying much publicly. CEO John Morikis briefly addressed the HQ+R&D subject during his company's fourth-quarter 2019 earnings conference call with Wall Street analysts Jan. 30.

"We expect capital expenditures to be approximately $320 million, which is about 1.7 percent of anticipated sales. Note that this estimate does not include any expenditure related to our previously announced headquarters and R&D center project. We expect to provide you with an update on this project in the near future," he said.

Morikis participated in that conference call after waking up that morning in his $10 million mansion that he and his wife built just one year ago in the Cleveland suburb of Bay Village after moving from their Brecksville home of 19 years.

SHW's CEO John Morikis' new $10 million, 22,000-square-
foot mansion on Bay Village's lakefront (Mark Carlson).

His brand-new 22,000-square-foot mansion isn't the only sign that SHW's new HQ+R&D facilities aren't going anywhere but up in Greater Cleveland.

To put a finer point on it, there are multiple signs -- and documents and records -- that SHW will build its HQ on the 6.82 acres of parking lots owned by the Jacobs Group and the Weston Group, on the west side of Public Square.

And before sources were shut down in recent days, three of them said that SHW's favored location for its new, consolidated R&D facilities was on the Riverview phase of CityBlock. The Riverview phase is Bedrock Cleveland's redevelopment and expansion of Tower City Center along and below Huron Road to the banks of the Cuyahoga River.

Developing this site would realize a century-old vision of the Van Sweringen brothers who built the Terminal Tower complex. That includes the Landmark Building, SHW's HQ of the last 90 years. SHW is well aware of that history and vision, including failed efforts by Forest City Enterprises in the 1980s, 90s and 00s to complete the Van Sweringens' dreams.

Bedrock's vision for this land is to connect two of downtown's prime public spaces -- Public Square and the river -- at the location where they are closest to each other. And it could connect Bedrock's riverfront development site anchored by SHW's 1,000-employee, 350,000-square-foot R&D facility anchoring it, to SHW's chosen site for its new 5,000-employee, 1.45-million-square-foot HQ.

Bedrock Cleveland's conceptual plans for the riverfront
phase of its CityBlock development could include new,
consolidate R&D facility for SHW (Vocon).

For nearly a year before SHW made its search public on Sept. 12, 2019, this blog has followed the search progress of the global coatings giant. In that time, I've written about many insights and facts which point to SHW building its HQ on the Jacobs/Weston lots.

But I've never put all of the facts in one blog before. So, on this eve of SHW's big announcement, here they are in chronological order....

Let's put aside for a moment that I've heard from multiple sources who were in the rooms when decisions were made or instructions were issued to proceed with researching and acquiring the Jacobs and Weston lots.

Understand that no other company as big as SHW is looking for so much new office space in Greater Cleveland. Not even close. No one else is looking for so much space that it would fill a nearly 7-acre footprint in Greater Cleveland's central business district with multiple vertical structures, including one or two towers. Northeast Ohio's real estate community is like a small town. There are very few big secrets here.

Perhaps by the end of this year city and county officials may decide to pursue building a new courthouse tower downtown. But that's not a given. Any decision is still months away.

SHW HQ+R&D sites in downtown Cleveland
(Google/sources/KJP).

In the fall of 2018, sources said SHW had hired Korhman Jackson Krantz LLP to draft a number of legal documents related to SHW's HQ+R&D search. Sources said SHW's facilities consultant Welty Building Co. hired CBRE Group as its real estate brokerage to pursue and secure properties. Sources also said Welty hired Vocon Partners LLC as its architectural firm for the HQ+R&D facilities.

When asked about all of this activity, SHW's spokesman wouldn't even issue an on-the-record denial because he didn't want anything publicly reported. That didn't prevent me from writing about the resumption of SHW's HQ project post-Valspar deal.

In early spring 2019, sources said SHW reached a purchase agreement with the Weston Group and, presumably with the Jacobs Group for the sale of their properties. While SHW began its due diligence on all aspects of the property, SHW reached out to other downtown property owners to consider alternatives. In the fall of 2019. SHW chose the Jacobs/Weston lots for its HQ.

Throughout my coverage of these developments in the spring and summer of 2019, neither SHW nor any of their contractors that I had publicly named ever asked me to issue a correction, clarification or tell me to remove their company's name from my articles. Instead, and on two occasions, SHW sent intra-company e-mails to its executives and managers urging them to not talk with the media.

First page of an amended parking lease between
Weston's affiliate companies. The amendment ex-
cluded from the lease the parcels identified by red
stars on the parcel map below (Cuyahoga County).

The lease was consolidated to a property Weston owns at the
top of the image below (Cuyahoga County/Google).

SHW finally and publicly announced its HQ+R&D search on Sept. 12. But the search was actually wrapping up by that point.

Then, on Oct. 8, sources said Welty hired Gilbane Building Co. in a joint venture to provide construction management services for SHW's HQ. I was informed about it before many Gilbane employees were, including those asked to comment on it. One of them responded "Are you sure about this?"

The joint venture was incorporated as Welty/Gilbane JV, LLC on Oct. 24, according to public records from the Ohio Secretary of State's office. October is when SHW's HQ project began showing up in public records.

On Oct. 21, as part of the due diligence set forth months earlier, the Weston Group cleared a parking lease dating from 2016 off its 5.65-acre Superblock bounded by Superior and St. Clair avenues plus West 3rd and West 6th streets (see images, above). Weston moved the lease it had with its own Warehouse District properties, under title to separate affiliates, to a parking lot Weston owns at the northwest corner of West 3rd and St. Clair.

That lease amendment was recorded with Cuyahoga County on Oct. 23. The amendment reduced the number of guaranteed residential parking spaces for Weston's Standard Building from 370 to 281. But most importantly, it removed all 23 parcels in Weston's Superblock from the lease, clearing the way for the eventual sale of those parcels.

On Nov. 18, more than two weeks after geotech-
nical survey crews began working in the Weston
lots, DRS Enterprises drilled groundwater test
wells in the Jacobs lot, above. DRS crews then
made repairs to city sewers beneath streets in the
surrounding area, below (Pete Marek, KJP).

No similar clearances were necessary for the Jacobs lot as the Jacobs Group, through its affiliate Public Square West Limited Partnership, was shown in multiple county records as recently as 2016 to have fee simple title to the property. That means the property is legally clean and free of any encumbrances to its sale.

Then came evidence of potential development. Beginning on Nov. 2 and continuing for the rest of the month, drilling rigs from geotechnical survey firms descended first on the Weston lots and then on the Jacobs lot to take soil and groundwater samples from below them.

Enviroprobe Integrated Solutions Inc. and Environmental Works Inc. worked the Weston lots. DRS Enterprises and Strategic Environmental Services Inc. worked the Jacobs lot, including drilling wells to test groundwater there.

Trucks belonging to DRS then proceeded to cut up streets in and around the Jacobs and Weston lots and conduct repairs to city-owned sanitary and storm sewer collectors in late-November and into December (see images above).

One of 12 certificates of disclosure filed with
the City of Cleveland's Building Department
on Nov. 14-15, 2019 (City of Cleveland).

Northeast Ohio Regional Sewer District officials confirmed it was city-owned sewers being repaired. The Cleveland Department of Public Utilities referred inquiries to the mayor's office which didn't return the calls to provide any detail about the repairs.

Then came the best evidence yet. On Nov. 11, a trusted source contacted me to say that SHW would be filing city permits later in the week for buying properties west of Public Square. Sure enough, at the end of that week, a title company named First American Title Insurance's subsidiary, Commercial Due Diligence Services, filed 12 certificates of disclosure regarding the purchase of the Weston lots (see image above).

Those certificates are sometimes filed by prospective commercial property buyers. On the other hand, for residential purchases, certificates of disclosure must be filed to get violation/condemnation and legal use information from the city. But they aren't required for commercial developments. It's possible that First American Title, based in Oklahoma, wasn't aware of that.

Interestingly, no similar certificates were filed for the Jacobs lot, possibly because SHW had already done this research in 2014-15 when it pursued a new HQ on the Jacobs lots, only to be shelved during the Valspar acquisition. But public records of the certificates of disclosure could be located only for the Weston lots, not the Jacobs lot.

In 2017, Cleveland City Council voted to vacate an unused
alley called Broome Court, N.W. It did so at the request of
Weston Group which had planned a major development on
its land but later withdrew it. The ordinance brief is above.
The alley is circled in red below. (City of Cleveland). 

First American found some anomalies with the Weston lots that had to be cleaned up, including the vacating of an unused alley, Broome Ct. N.W., from the county's plats maps. Cleveland City Council authorized the vacation by ordinance in 2017 but it was yet to be removed by the county. The plat map was updated by the county on Dec. 2, public records show.

By the way, First American has a prior connection to SHW. It was the title company associated with a mortgage that 4780 Hinckley Cleveland LLC, an affiliate of IRG Dayton I LLC, was released from on Dec. 10, Cuyahoga County records show. IRG owns a property at 4780 Hinckley Industrial Parkway leased by SHW since 2016 as an overflow office space.

Since then, most of SHW's HQ+R&D efforts have focused on programming for the HQ site, nailing down the R&D site, and finalizing public incentives for each. Complications involving the R&D site have delayed the public announcement.

At the end of this journey, I appreciate hearing from many of the 40,000 readers of this blog. I've met many of you who are SHW employees or their families who are eager to know where you will be working and living three years from now when construction on the HQ+R&D facilities is complete. I hope that I've helped you. You deserved to know what was going on behind the scenes.

END

Up to 1,000 HQ jobs may come to downtown Cleveland

UPDATED Feb. 3, 2020

Four buildings facing Superior Avenue, between East 21st and
22nd streets, on the east side of downtown Cleveland could be-
come the new headquarters for CrossCountry Mortgage with up
to 1,000 office jobs in the coming years (Google).
CLICK IMAGES TO ENLARGE THEM

More than 650 headquarters jobs could be on track to move to downtown Cleveland with hundreds more possible resulting from future growth. But in this instance, it's not from the paint/coatings firm that's known for covering the Earth. Instead, this news is about another fast-growing Greater Cleveland business that has outgrown its existing HQ.

According to two sources who spoke off the record, Brecksville-based CrossCountry Mortgage Inc. is taking some of the first steps necessary to renovate a handful of historic buildings along Superior Avenue between East 21st and 22nd streets on the east side of downtown.

Those properties, previously owned by the Chilcote Co., were bought Dec. 28, 2018 for $849,500 by an investment team, incorporated as CC Superior Holding, LLC and led by CrossCountry CEO Ron Leonhardt and Kohrman Jackson Krantz LLP's Managing Partner Jon Pinney.

BEK Developers LLC of Beachwood is also part of the partnership and serves as the group's real estate developer. BEK is the initials for three members of the Risman family, Bob, his wife Eleanore and their daughter Kathy. The Risman family reportedly is one of Cleveland's wealthiest.

Chuck Andes, BEK's vice president of operations and director of development, confirmed that the group is potentially looking at both offices and residential, given the size of the historic buildings and the amount of property involved. A mix of renovation and/or new construction is also possible,

There are four buildings facing Superior and the project could possibly involve the buildings farther south along East 21st and 22nd toward Payne Avenue. Some of the smaller buildings south of those facing Superior could be demolished for parking or future residential development.

An investor team has reportedly gone out to
bid and is seeking historic tax credits for the
old buildings facing Superior (KJP).

"We're possibly looking at offices but we've done some analysis for residential as apartments," Andes said. "Some of the buildings are not at the density we would need to make it (residential) profitable."

The partnership could decide the office/residential mix in about 3-6 months, Andes said.

"We're still in pre-development," he said. "Nothing is written in stone."

CC Superior Holding is initiating steps to pursue historic tax credits from the state to renovate the Superior-facing buildings. They total about 160,000 square feet and were built in the 1910s. Andes said a single-story warehouse built in the 1990s south of the Superior-facing buildings could be retained.

The Superior Arts District, from East 18th Street to the Inner Belt, was designated as an historic area nearly 20 years ago to aid in the renovation of the Tower Press Building, 1900 Superior.

In an article last month in Smart Business Network, Leonhardt said his investment team hadn't decided if it would be for his firm's HQ or for housing.

“I’m looking for a new headquarters,” Leonhardt said in the article. “Brecksville has been great, allowing me to park across the street. So we’re looking at maybe building across the street on the VA site or doing something between Superior and Payne. The idea is to figure out which one’s going to work out best long term. But we plan on developing the Superior and Payne property. It’s either going to be our new headquarters or some type of housing.”

CrossCountry's existing headquarters on Miller Road in Brecks-
ville is overcrowded and the mortgage firm continues to experi-
ence rapid growth as it has for the past decade (Google).

The two sources said Leonhardt leaning toward putting his headquarters on Superior to capitalize on the urban location and attract more and younger talent to his company. When contacted last week by e-mail that included several questions, Leonhardt acknowledged receipt of the e-mail but didn't comment on it.

CrossCountry, founded in 2003, is currently located in a 1969-built, 50,400-square-foot building at 6850 Miller Road. County records show the building was remodeled in 1997. CrossCountry bought the property in 2010 for $2.1 million.

Ten years ago, the company issued a half-billion dollars in mortgages and had $10 million in revenue. In 2019, it funded more than $15 billion in mortgages and had revenues approaching $600 million for the year. Today, the firm has nearly 3,000 employees nationwide.

“When we moved into this building, we had 40 people,” Leonhardt says of the Brecksville location in the Smart Business Network article. “Now, in Northeast Ohio, we have like 650. So we’ve outgrown the building.”

On the same day that CC Superior Holding acquired 16 properties between Superior, Payne, East 21st and 22nd, five of those properties on the east side of East 22nd were then transferred over to another company, 2130 Superior Avenue, LLC, that lists to GBX. It owns multiple buildings in the Superior Arts District and is a buyer and seller of historic tax credits.

Andes couldn't comment on the December 2018 property acquisitions and CC Superior Holding's property trading with GBX as he didn't start working with BEK until February 2019.

END

CWRU plans $72+ million dorm expansion, more coming

Development of new residential halls could start next year on
Case Western Reserve University-owned parking lots at the
intersection of Murray Hill and Adelbert roads. Renovation
of Fribley Hall is due to start this year. The addition of 600
beds will help the university cope with a growing enroll-
ment (Google). CLICK IMAGES TO ENLARGE THEM

In most years, Case Western Reserve University's (CWRU) freshman classes get bigger. And each year, CWRU looks for ways to accommodate the growth of its enrollment that has surpassed 12,000, compared to 9,600 students in 2000. Their expansion options have involved building new dormitories as well as making it easier for more upperclassmen to live off campus.

But it's been five years since CWRU built a new dorm. That's due to change soon in the South Residential Village where Murray Hill and Adelbert roads intersect. There, two new dorms totaling 600 beds are due to see construction start next year and be completed in 2023, according to administrators and architects who made an on-campus presentation to students this week.

The construction will follow completion of renovations to the neighboring Fribley Hall and surrounding commons which are scheduled to start this year, said Christopher Panichi, director of planning, design and construction at CWRU, at Tuesday's presentation.

In June 2018, CWRU hired the Albert M. Higley Co. as its general contractor for the renovations to 1964-built Fribley Hall and commons, according to a notice of commencement filed by CWRU on Oct. 31, 2019. Higley's project commission expires Sept. 1, 2021, the notice shows. Fribley Hall was last renovated in 2000 but that was limited to the cafeteria.

The north side of Fribley Hall will be opened up with more
glass, facing a renovated commons and where the planned
South Village residence halls will rise. Murray Hill Road is
at right, seen from the Adelbert Road intersection (CWRU).

Then, on CWRU parking lot No. 5 next door to Fribley Hall, the university plans to construct two residence halls costing $72.46 million. They represent phases one and two of the South Residential Village expansion and total up to 185,000 square feet of new facilities, according to CWRU planning documents. These two new buildings will be for second-year students.

Plans for the new residence halls show one-bed rooms would measure 105 square feet and two bed rooms would measure 170 to 171 square feet. Furnishings are proposed to include one or two bed/dressers, wardrobes and desks per room. Students provided input on the layout, decorations and furnishings at Tuesday's meeting.

Between Fribley Hall and the new residence halls will be a new outdoor dining area and expanded Fribley Commons. A loading area for Fribley Hall will be demolished to make way for the expanded commons and to open up the north side of the hall with more glass.

A third phase proposed across the street could follow the construction of the first and second phases. Conceptual plans for the third phase show two connected residential buildings on CWRU parking lot No. 44 between Fribley Hall and the Greater Cleveland Regional Transit Authority's Cedar-University Red Line rail station that was renovated in 2014. There is no estimated cost yet for the third phase.

This photo taken of a display board at the student input
meeting this week shows the site of a renovated Fribley
Hall, phases one and two of the proposed new residence
halls at right, and the third-phase residence halls at the
top of the image (CWRU/contributed photo).

The timeline for phase three could be accelerated based on enrollment growth, said Panichi and CWRU Director of University Housing John White. The university's long-range plans suggest that construction of new buildings for the South Residential Village could allow CWRU to demolish dorms at the top of the hill in Cleveland Heights.

The land at the top of the hill could then be used for recreation or sold for redevelopment, according to the long-range plan. But given the university's growing enrollment, that plan may be delayed.

The architect for the new South Residential Village dorms is William Rawn Associates of Boston. The firm's portfolio has one local project -- Cleveland Clinic's Taussig Cancer Center, 10201 Carnegie Ave. No other housing expansions are planned by CWRU even though additional off-campus leasing of apartments is difficult to secure absent new inventory.

Construction of additional off-campus housing could happen soon with the start of Midwest Development Partners' four-block-large Circle Square development. Although technically the project began with the recent renovation of Fenway Hall at Euclid Avenue and East 105th Street.

Midwest Development Partners' proposed Library Lofts
apartment building at 10553 Euclid Ave. is due to start
construction later this year. It will include a two-story
MLK Branch Library at the building's base (Bialosky).

The first new-build phase of Circle Square is Library Lofts, a planned seven- to 10-story apartment building at 10553 Euclid Ave. above Cleveland Public Library's planned two-story $10 million MLK Branch. That project could see a groundbreaking toward the end of this year.

Under an affiliate Library Lofts LLC, Midwest Development Partners purchased two parcels Jan. 2 from University Circle Inc. for $325,000, according to county records.

The MLK branch library would relocate from a neighboring parcel to avail that site for a future phase of the Center Square development. The old Third District Police Station on Chester Avenue was recently demolished for another, as yet unannounced phase of Circle Square.

Minutes from a recent meeting of the Cleveland Public Library's board of trustees noted that the library has received a letter of credit from Midwest Development Partners. It states that the developer is able to fund the entire Library Lofts project. Most of the funding for the apartments portion is from equity partners, according to the minutes.

Construction is nearly complete on 1609 Hazel Apartments
that will add 110 apartments to the University Circle area for
all interested renters, including CWRU students (CIM).

The last dorm that CWRU constructed was the Stephanie Tubbs Jones Residence Hall, located in the campus' North Residential Village at 1576 E. 115th St., just south of Wade Park Avenue. The upperclassmen hall houses 290 students in 106 apartments.

That doesn't include residential buildings constructed by two other University Circle-area institutions -- the Cleveland Institute of Art (CIA) and Cleveland Institute of Music (CIM). CIA opened the 191-bed Euclid 117 Residence Hall in 2018 exclusively for CIA students.

And, CIM and NewBrook Partners are nearly finished building 1609 Hazel Apartments, which are due to open this year. Although instigated by CIM, anyone can rent one of the 110 apartments there, including CWRU students.

END

Sherwin-Williams seeks Bedrock site for R&D

A conceptual massing of Bedrock's CityBlock riverfront
site, viewed from the vicinity of Sherwin-William's (SHW)
Breen Technology Center along Canal Road. This is where
SHW is now focusing its efforts to secure land for its new
research center. Also proposed to be in CityBlock's river
front is a hotel, apartments and a significant amount of
public greenspace along the Cuyahoga River, aided by
the removal of part of Canal Road (Vocon/3rd party).
CLICK IMAGES TO ENLARGE THEM

It seems that Sherwin-Williams' (SHW) new research and development (R&D) facility may not wander far from home after all, according to three high-level sources who asked not to be identified.

In light of SHW executives wanting the new R&D facility to be built as close as possible to their company's new headquarters (HQ), the global coatings giant is reportedly in negotiations with Bedrock Cleveland and its lawyers at Taft Stettinius & Hollister LLP to secure land for its R&D site.

That site, which SHW had previously considered as the runner-up for its expanded and consolidated HQ facilities, is located between Tower City Center and the Cuyahoga River. It was previously considered for Bedrock's phase two casino but Bedrock has since been exiting the casino business.

There, on 19.6 acres of land it owns, Bedrock plans to build the riverfront phase of its CityBlock development featuring a mix of offices, a hotel, apartment towers and possibly SHW's R&D facility.

The first phase of CityBlock is due to start construction this year with a $110 million re-purposing of the existing Avenue portion of Tower City Center as a business incubator. Vocon was hired as Bedrock's architect for CityBlock. It's the same firm that SHW hired for its HQ+R&D project.

The proposed R&D site is next to SHW's existing, primary Cleveland R&D facility, the John G. Breen Technology Center, 601 Canal Rd. Breen, comprised of a 1948-built lab and a 1993-built addition, measures 140,000 square feet and houses about 400 jobs, according to SHW.

SHW has already chosen its HQ site. It has a purchase agreement with the Jacobs Group to acquire the 1.17-acre parking lot on the west side of Public Square for its new HQ office tower. And SHW has a purchase agreement with the Weston Group to acquire the 5.65 acres of parking lots west of the Jacobs lot for potentially shorter office buildings and hundreds of thousand of square feet of parking structures. SHW has spent a great deal of money on the Jacobs/Weston lots in recent months.

The office component of SHW's new HQ would total up to 1.45 million square feet, consolidating as many as 5,000 jobs compared to 3,500 SHW HQ jobs downtown currently. Construction could start early next year.

An overview of various HQ+R&D downtown
Cleveland sites for SHW, be they current, pro-
posed or discarded (Google-KJP).

Compared to the new HQ, finding a site for the R&D facilities has been more problematic for SHW. Sources said the R&D search has delayed the public announcement for both the HQ+R&D.

A public announcement by SHW may be made in mid-February, assuming the company secures the site for its R&D facilities by then. Those facilities would measure 350,000 square feet and consolidate about 1,000 research jobs from several locations in Greater Cleveland and Minneapolis.

A joint venture of the Welty and Gilbane building companies, incorporated last October, could not secure for SHW approximately 9.4 acres of apparently polluted land on Scranton Peninsula owned by Scranton Averell Inc. Welty/Gilbane JV, LLC is leading SHW's efforts to build its new HQ+R&D facilities. Welty/Gilbane previously joined forces in building Goodyear's world HQ in Akron.

The Scranton Peninsula site had been favored by SHW because it was near the new HQ site, offered SHW the opportunity to build the R&D horizontally in a campus-like setting and provide less expensive surface parking (vs. structured parking).

Those efforts shifted to the other side of the river, next to where SHW was founded in 1866. For a large, global, Fortune 500 corporation, SHW is surprisingly sentimental about its history. That includes where SHW was founded and the business principals of its founders that guide the firm to this day.

But while a vertical headquarters might easily fit onto Bedrock's riverfront site, a horizontal R&D "campus" might not. The reason is that Canal Road divides the SHW and Bedrock properties, giving them less elbow room.

So discussions have reportedly been underway for weeks between city, state and Bedrock officials about vacating a portion of Canal Road to provide more depth to the site and potentially integrate the riverfront with a public park, boardwalk and/or walkway, two sources said. The discussions also involve utilizing the existing, 9.2-acre Breen site and whether Bedrock and/or SHW can expand onto that property.

In 2007, prior to Bedrock Cleveland buying Tower City
Center, or planning CityBlock or the phase two casino
before it, Forest City Enterprises offered to build the new
convention center as the Riverview Phase of Tower City
Center. It included building the center over Canal Road
and a station for the Cuyahoga Valley Scenic Railroad.
The convention center was rebuilt below the malls (KA).

The reason why city and state officials are involved in the discussions go beyond deciding whether to vacate Canal. There's an increased cost due to the topography and logistics of the Bedrock site that city and state funding would need to defray to make this location economically competitive with less costly yet less-connected alternatives.

Unlike the rejected Scranton Peninsula site that is open and flat, the Bedrock site involves a nearly 50-foot descent from the Tower City parking lot between Huron and Canal roads to the Bedrock parking lot between Canal and the river.

But if SHW chose that site for development of its 1,000-employee R&D facility, it would bolster Bedrock's CityBlock plans for the rest of the riverfront. And Bedrock has significant capital -- potentially $843 million -- to deploy from the recent sale and leaseback of its Cleveland-area casino properties.

CityBlock would also greatly enhance physical interaction between two of downtown's prime public spaces -- the riverfront and Public Square, as well as between SHW's HQ+R&D. Employees could walk between them using outdoor sidewalks or mostly indoor passageways via Tower City Center.

CityBlock was originally proposed as an incubator for digitally based technology start-up firms. Now, its purpose is being broadened to all start-ups. But the original purpose is ironic in light of SHW's R&D facility possibly being part of the riverfront phase. Why is it ironic?

Market research firm Frost & Sullivan recently issued a report showing how the use of digital technologies is transforming the coatings industry, including R&D, sourcing, marketing and even using digital itself as an alternative to traditional paints and coatings.

Lastly, SHW apparently is no longer giving serious consideration to locating its R&D facility in Brecksville. Breckville Mayor Jerry Hruby informed Crain's Cleveland Business reporter Stan Bullard that he hasn't had any conversations with SHW or anyone working on its behalf about locating a SHW facility in his suburb.

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Ohio's largest metros are carrying the state's economy

Rays of employment hope shine brightest on Ohio's largest
cities. Without them, Ohio would have lost 18,000 jobs in
the past five years. With them, Ohio gained 227,000 jobs.
And the job growth momentum in Ohio's largest cities,
especially the 3Cs, appears to be increasing (KJP file).
CLICK IMAGES TO ENLARGE THEM

When it comes to describing Ohio's economy, there's the 3Cs and then there's everyone else. With a few exceptions, if you want to find a job in Ohio, the best place to look is Ohio's three largest metropolitan areas -- Columbus, Cincinnati and Cleveland.

Consider that, since the start of 2015, Ohio has gained 227,000 jobs, according to the U.S. Bureau of Labor Statistics. The 3Cs accounted for 216,000 of those new jobs.

But it gets more compelling than that. If you add in the employment data from Ohio's next three largest metro areas -- Dayton, Toledo and Akron -- the employment in the state's six largest metro areas grew by 245,000 jobs.

In other words, Ohio would have lost 18,000 jobs in the last five years if it wasn't for Ohio's largest metro areas. It's safe to say that Ohio's six largest metro areas and especially its three largest are carrying the state's economy.

And the 3Cs are sustaining their near-decade-long momentum based on the job growth numbers displayed in the charts posted at the bottom of this article. I began to research that momentum when I wrote an article last month about Cleveland's documented $1.25 billion growth in individual taxable incomes since 2016.

But Cleveland's newfound job growth (after the prior decade's job losses) was doubled by that of Columbus and Cincinnati. All three cities are seeing billions of dollars of real estate investment pouring into their urban centers.

And it's not limited to their downtowns. Long-neglected neighborhoods like Cleveland's Hough, Cincinnati's Over-The-Rhine and Columbus' Olde Towne East are seeing investment unlike any era since the 19th century.

Billions of dollars in new investment are pouring
into Ohio cities from local, national and interna-
tional investors. Cleveland has been no exception
as more than a dozen new high-rises are planned
downtown. Plus, numerous mid-rises and single-
family homes and rapidly expanding businesses
are enjoying new investment (APhotoshopman).

In contrast, Ohio's smaller metro areas, smaller cities and rural areas aren't doing as well as their big brothers. Their job growth has slowed, stopped or reversed course in recent years.

While demographers have coined the term "Fifth Migration" to describe the flood of Millennials and, to a lesser extent empty-nesters into America's larger urban centers since before the 2010s, it appears there is another demographic contributing to this ongoing migration pattern more recently.

The new urban migrant is the former small-town and rural resident who is fleeing conditions ranging from stagnant or declining job prospects, to the agglomeration of agribusiness, to the closing of small-town/rural hospitals, to the relatively poorer quality of Internet connections.

The Fifth Migration was detailed in a 2016 report by The Center for Population Dynamics at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University (CSU).

To put this migration into context, the CSU report said the First Migration was the pioneers that settled North America; the Second Migration from farms to the factory towns; the Third Migration to the great metropolitan centers like Cleveland; and the Fourth Migration to the suburbs of these centers.

With the apparent movement of rural Ohioans to its larger cities (and to other cities nationwide), this migration pattern has much in common with the second and third migrations from the mid-1800s to the early 1900s.

Another factor in this migration pattern that has not been seen in past decades (at least, not since the early 1800s) is the movement of employers and residents from more expensive coastal cities to large, albeit less expensive cities in Ohio. NEOtrans documented this in articles in early 2018 and again in late 2018.

Large and small employers are moving into Ohio's biggest
cities to attract more talent, especially the young, creative
kind. Among those desiring to move in is Cross Country
Mortgage, currently in suburban Brecksville. This fast-
growing employer will reportedly renovate and move
into historic buildings in the Superior Arts District
on the east side of Downtown Cleveland (KJP).

Ohio's 3Cs have big-city amenities without the expense of the coastal cities. As a visitor to Ohio once remarked, "Cleveland is the smallest big city I've ever visited and Cincinnati is the biggest small town I've ever visited."

Ohio's declining small-city, small-town and rural employment situation along with its growing larger metro areas has some important political considerations locally, statewide and nationally as well.

While Cleveland has always been a center of strength for the Democratic Party, Columbus and Cincinnati were not. That is changing. Today, more Democrats are getting elected to municipal and county positions in Greater Columbus and Cincinnati.

But, as more rural residents move to Ohio larger cities, will these cities change the views of these new arrivals or will these migrants change the electorate's voting patterns in Ohio's larger cities? And it remains to be seen how these changes will affect statewide issues like gerrymandering, education and transportation investments or national matters like future presidential races.

Here is a summary of Ohio's employment situation, shown first in numbers and then in charts. Here is the change in employment in Ohio's metro areas over the past five years when Ohio's largest metros increased their employment momentum and all other parts of Ohio either stagnated or declined:

CHANGE IN EMPLOYMENT IN PAST 5 YEARS

STATEWIDE
Ohio +227k

OHIO'S SIX LARGEST METROS
Columbus +88k
Cincinnati +85k
Cleveland +43k
Dayton +17k
Toledo +7k
Akron +5k

EVERYONE ELSE
Wheeling +3k
Canton +2k
Lima +1K
Mansfield 0
Springfield -1k
Huntington -3k
Steubenville -3k
Youngstown -9k

Here are charts showing the changes in employment in Ohio's metro areas in the past decade:

END

New downtown courthouse tower, nearby jail campus comes into focus

Planning is advancing on four options for rebuilding and/or
replacing downtown Cleveland's massive, undersized and
decaying Justice Center complex. A steering committee
overseeing the planning voted for the four options with
a new courthouse tower downtown plus a new jail
campus somewhere in Cleveland gaining unani-
mous support from the committee (Google).
CLICK IMAGES TO ENLARGE THEM

One of Greater Cleveland's largest real estate development projects is coming into focus. And no, it's not just the Sherwin-Williams headquarters and research facilities. But both are what real estate professionals call "whales."

The other whale is the new 1.7-million-square-foot-plus Justice Center. And based on votes this week by a steering committee of Justice Center stakeholders on how to address the poorly built, crumbling and overcrowded jail, courthouse tower and sheriff's offices, there's going to be a new jail and probably will be a new courthouse tower.

Among nine conceptual options for addressing the inadequate Justice Center which saw its construction begin 46 year ago, only one option received unanimous support from among the 12-person committee. That vote was to build a new downtown courthouse tower and a new, low-rise jail campus probably somewhere in the city of Cleveland.

But three other alternatives also won enough support, albeit not unanimous, for advancing into more detailed study to refine programming as well as operating and construction cost estimates for comparative purposes. These are the options that will be subjected to further refinement, listed from most popular at the top to least popular:

• New low-rise jail campus and new high-rise urban courthouse;
• New low-rise jail campus and expand/renovate existing courthouse;
• New low-rise jail and new mid-rise court on campus site;
• New Jail 1 next to renovated Jail 2, expand/renovate existing courthouse.

These are the four primary structures at the existing Justice
Center campus, with north to the left (Cuyahoga County).

The existing 2.3-million-square-foot Justice Center opened in 1977 on 7 acres of land between Ontario and West 3rd streets, Lakeside and St. Clair avenues. The planning team that's studying its renovation, expansion or replacement is led by Cleveland-based Project Management Consultants LLC managed by Jeff Appelbaum.

One of the most notable findings by the Justice Center planning team is that a new, more modern and efficient jail combined with central booking and diversion/treatment programs for drug abusers could save the county about $27 million per year in operating costs.

That savings, if used to help service the issuance of construction bonds for the new 800,000-square-foot jail, could pay for 56 to 68 percent of the jail's construction costs, planners said. A new jail campus is projected to cost anywhere from $700 million to $800 million to build. The operating cost savings from a new jail could pay for $392 million to $544 million of the jail's construction costs.

A new Cuyahoga County Sherriff's Department headquarters is estimated to measure just shy of 100,000 square feet, the planning team said.

The Justice Center's 25-story, 420-foot-tall, 600,000-square-foot courthouse tower is in very poor condition. It will cost hundreds of millions of dollars to renovate it, and by the time that work is done, it will still be a 50-year-old, poorly-built building, planners said. And that cost doesn't take into account expanding it for the domestic relations and housing courts plus other county court-related offices located in other buildings.

Planners said that the courthouse tower needs to measure 877,000 square feet to address overcrowding. A new courthouse could grow by roughly 200,000 square feet if the Eighth District Court of Appeals and the Cuyahoga County Probate Court are also relocated into a new courthouse tower, pending further study.

For those wondering if there is 15 acres available near down-
town Cleveland for a campus-style jail complex, the answer
is a definite "yes" as the vacant land shown in red is owned
by the Ohio Department of Transportation. The blue parcel
is owned by Cleveland Black Oxide Inc. and the narrow,
green parcel is a trench owned by the Greater Cleveland
Regional Transit Authority for its rapid transit rail lines.
If combined, that site alone would suffice for a new jail
campus beyond the edge of downtown (Google/KJP).

If a new courthouse tower were built downtown with its parking in a neighboring structure and the courthouse's floorplates averaging about 25,000 square feet (they're about 29,000 square feet currently), it could be a 35-story building.

If the appellate and probate courts were included, the courthouse tower could rise to about 43 stories tall. If less square footage per floor is planned, the tower could easily eclipse 50 stories.

Cost of a new courthouse tower wasn't provided. But based on the Carl B. Stokes Federal Courthouse Tower built in 2002 and adjusted for inflation, it could range from $400 million to $600 million, depending on the site. No site has been identified, but steering committee members said they want a new courthouse tower to stay as close to the existing Justice Center as possible.

Because the planning team was asked by the steering committee to further study renovating and expanding the existing jails and courthouse, it will add another 60 days to provide detailed cost answers.

Further study of that planning option came at the urging of committee member Brendan Sheehan, administrative judge at the Common Pleas Court. He said the other judges wanted to know the costs involved with that renovation option to compare with the new-build options.

And because all steering committee members acknowledge that the existing Jail 1, built in 1977, is completely inadequate and the Jail 2 at least needs to be renovated, the planning team hoped to begin searching for sites for a new jail campus. That will have to wait until after the refined programming and cost data is developed for the renovation option, perhaps in August.

END