Edgewater Hill project: signs of sudden growth

The West 73rd Apartments is the second large development proposed
by United Community Developers. The other, a 27-story apartment
tower called The Viaduct above Flats West Bank, also was on City
Planning Commission's docket yesterday. Combined, these two
projects may cost about $120 million to develop (Dimit/CPC).
CLICK IMAGES TO ENLARGE THEM

UPDATED AUG. 24 WITH COMMENTS BY WAYNE JATSEK

For those watching the City Planning Commission's virtual meeting yesterday, two examples of sudden growth were apparent. Both centered around a new apartment building project in the Edgewater Hill section of Cleveland's Detroit-Shoreway neighborhood.

The examples of sudden growth raises a couple of tangential questions: Where did this apartment building development suddenly come from? And where did its developer, Brecksville-based United Community Developers, suddenly come from too?

The development is a 75-unit apartment building at 1351 W. 73rd St. whose design won final approval at yesterday's City Planning Commission meeting. Commission members were unanimous in their support of the final design. The project has the working title "West 73rd Street Apartments."

A prior plan for the site called Edgewater Hill Luxury Townhomes had 21 townhouses. It cleared all of the planning and development hurdles and was days away from a groundbreaking ceremony scheduled for May 9, 2019. But the groundbreaking never happened.

The 0.725-acre townhouse development site continues to be owned by the developer that sought to build the townhouses -- an affiliate of Cleveland Custom Homes located in Westlake. The rest of the apartment building site is owned by Columbus-based Wickford Holdings LLC run by developer Michael Casey.

Proposed site plan and location of the West 73rd Apartments in the
Edgewater Hill section of the Detroit-Shoreway neighborhood.
Detroit Avenue is just out of view at the bottom (Dimit/CPC).

Those two properties will be acquired as neither Cleveland Custom Homes or Wickford Holdings will be involved in the West 73rd Apartments, said United Community Developers' principal Wayne Jatsek in an Aug. 24 e-mail. Total area of the development site is 1.14 acres.

"Neither Wickford nor Cleveland Homes are affiliated with the new development," Jatsek said.

As fast as the Edgewater Hill townhouse development plan disappeared, the apartment building project took its place. It isn't unusual for apartment bulding projects of this size in Cleveland to linger for a few years before they get final approval from Planning Commission. Not this one.

The site for the project isn't a surprise, however. West 73rd has become a principal thoroughfare since December 2016 when it was punched through to Edgewater Park with the aid of $34 million in local and state funds. It was part of a concerted effort to increase this neighborhood's access to the lakefront by improving pedestrian, bike and vehicular routes under the busy Norfolk Southern railroad tracks and the Shoreway.

Two small warehouse buildings on the site will be razed and replaced by a long, four-story, 95,000-square-foot apartment building that "steps down" in the middle of the structure to account for the land sloping down northward toward the lake, said Maggie Young, an architect at Lakewood-based Dimit Architects LLC.

The West 73rd Street Apartments' final design has 91 parking spaces which exceeds that which is required by the building code. Most of the parking spaces will be below the apartment building with access via a driveway near the intersection of West 73rd and Herman Avenue. Also proposed are internal and external bike racks.

With West 73rd Street in the foreground and downtown Cleveland
along with Lake Erie in the distance, United Community Deve-
lopers is banking that its development's proximity to those
and other assets will be a draw to tenants (Dimit/CPC).

On the east side of the building facing the Our Lady of Mt. Carmel School's athletic field will be a swimming pool that has a sun shelf with lounge chairs in water that is 6-9 inches deep. Surrounding the building will be plantings that were changed to be more pet-friendly as a result of input from the Near-West Design-Review Committee.

Also planned are numerous rooftop amenities including a putting green, bocce court, sitting area, hammocks, wood deck, rooftop bar and grill area with TVs, said Peggy Brown, a landscape architect based in Cleveland Heights.

Planning Commission member Diane Downing said she has a daughter who lives across West 73rd from the development site. She noted that traffic on the street already backs up on the street. She asked how this West 73rd Street Apartments project as well as two more buildings offering another 250 apartments planned farther north will affect traffic.

Young said there is no traffic study yet for the West 73rd Apartments and said United Community Developers is working with the Edgewater Hill Block Club on its members' concerns and ideas.

City planner Adam Davenport said the city is considering some traffic-calming features for West 73rd which was completely rebuilt two years ago from Detroit Avenue north to Father Frascati Drive. A stop sign at the intersection of West 73rd and Herman could be added, he said.

"Design-Review supported this (apartment building) project more than the previous plan which was townhouses," Davenport said.

In the wake of the townhouse project, United Community Developers led by Jatsek stepped in. He and his development firm are somewhat enigmatic. Few in local development circles had heard of either until this past spring when Jatsek and his firm announced a 27-story apartment tower called The Viaduct to rise above the Flats West Bank at 2208 Superior Viaduct. That project won schematic approval from Planning Commission yesterday.

The east side of the proposed West 73rd Apartments complex
features a swimming pool above a subterranean parking
deck. Out of view to the right is Our Lady of Mt.
Carmel School's athletic field. (Dimit/CPC).

"Ideally, we would like to perform both projects in tandem," Jatsek said. "However, we understand the approval process for The Viaduct may take some additional time due to the complexity of the building and the challenges of the site. Project overlap may be a best-case scenario."

Although no cost estimate for The Viaduct has been publicly released, it may approach $100 million. Similarly, the cost of the West 73rd Apartments is not officially known either, but could carry a price tag in the neighborhood of $20 million.

Those are a couple of big projects for a developer without a long track record constructing big buildings -- or at least delivering increasingly larger buildings over many years. Jatsek and several in his family do have a track record, but mostly with numerous smaller projects including home renovations and additions as well as heavy-highway construction projects.

Jatsek was the frontman for a 24-unit luxury townhouse development in Westlake called Hillsborough Point on Center Ridge Road. Despite winning over voters in 2017 to change the zoning for the site from general business to multi-family, the project was ultimately shot down by Westlake's Planning Commission. Last spring, Jatsek said the design was probably too urban for Westlake. So he headed to the city to try his luck there.

According to sources, Jatsek is a frontman for others including unidentified Opportunity Zone fund investors. Jatsek said he intends to secure additional financing from the Cleveland-Cuyahoga County Port Authority and other partners. Most recently, United Community Developers has joined forces with two giants in local development circles -- Geis Companies and the Osborne Group to build The Viaduct.

Jatsek acknowledges that United Community Developers is taking big steps forward with these projects but didn't respond to questions about his funders and partners or how his firm's sudden rise might be perceived by others. But suffice it to say, the real work for United Community Developers is about to begin.

END

City Club Apartments tower may rise in November

 

A groundbreaking for the 23-story City Club Apartments tower on
Euclid Avenue could occur as early as November. Although the
global pandemic slowed the start of the project, the delay was
not as much as feared just a few months ago (Vocon/CPC).

UPDATED AUG. 21, 2020

If you missed seeing construction cranes over downtown Cleveland, you may not have to wait long for their return. With the city's approval of final designs tomorrow for the City Club Apartments, the first of several cranes likely in 2021 could sprout in the spring.

A member of the development team for City Club Apartments said the project is on track to break ground in November for the firm's first project in Cleveland. The comments were made this week at City Planning Commission and at the city's Downtown/Flats Design Review Committee. Both panels unanimously approved final designs for the project.

"The developer is doing everything they can to start construction in November," said Denver Brooker, a principal at Vocon Partners LLC, the project's architect. "A lot has changed in the world since February (when Planning Commission last reviewed City Club Apartments) but this project has stayed the course."

Last winter, before the pandemic swept the globe, project backers hoped to start construction this summer. By spring, as financial markets and supply chains took pandemic-related hits, Michigan-based City Club Apartments realized they may have to push the start date back to early-2021.

Standing between the City Club Building (no affiliation) and The
Residences at 668, the City Club Apartments tower would provide
a much-needed boost to shops and restaurants on Lower Euclid
Avenue. Downtown is only now recovering from the global pan-
demic and May's nationwide riots (Vocon/CPC).

But sources said that City Club Apartments was able to nail down financing for its proposed 23-story Cleveland tower at 720 Euclid Ave. Part of that financing involved refinancing City Club's Cincinnati property through the issuance of $68.5 million in debt by Asia Capital Real Estate.

City Club said in a press release this week it has $750 million worth of projects under development/construction in Cincinnati, Detroit, Chicago, Pittsburgh, Minneapolis, Kansas City, Louisville and Cleveland with expansion planned for the East Coast.

The 250,000-square-foot Cleveland tower has a projected construction cost in the $85 million to $100 million range. That's based on the construction costs of two other Euclid Avenue apartment towers built in the last two years -- the 28-story Beacon and the 34-story Lumen. The latter is Ohio's tallest residential building at 396 feet. City Club's tower is proposed to reach to 241 feet in structural height but a rooftop decorative element could bring that to about 250 feet.

Although this tower will be shorter than the two latest apartment towers, it promises a dynamic street presence featuring a glassy, two-level retail/lobby base and extensive landscaping, including "four season" vegetation that would incorporate fake plants above the building's lobby. The owner will maintain the real and fake vegetation. Proposed retail includes a cafe, restaurant and a doggy day care business. On the rooftop amenity deck would be an indoor/outdoor terrace and swimming pool.

Extensive vegetation is planned along the City Club Apartments' Euclid
Avenue sidewalk as is a canopied entryway that's reminiscent of a
movie theater's entrance. It's a nod to the Hippodrome Building
and theater that stood here from 1907-1981 (Vocon/CPC).

In between, City Club and its design team at Cleveland-based Vocon proposed about 313 market-rate apartments, roughly half of which will be 400-square-foot studio apartments. The smaller units will be marketed to younger residents who have been priced out of the downtown market. There will also be one-, two- and three-bedroom units measuring up to 1,400 square feet, according to schematic plans approved by Planning Commission Feb. 21. That housing mix hasn't changed in this final plan.

"The design is exhuberant and iconic," said design-review committee member Jack Bialosky. "But it is a fashion statement in some ways. I look forward to a conversation about it (the design) in 20 years."

The City Club Apartments, named after the development and management company, has no connection to the Cleveland City Club meeting and event venue located next door at 850 Euclid. The site for the apartment building was chosen because it is currently one of the last surface parking lots left on Euclid downtown.

Prior to 1981, the Hippodrome Building stood here and contained an ornate theater by the same name. But owner Judge Alvin Krenzler started demolishing the building in the middle of night to get ahead of preservationists' appeals to save the building.

Among the features the city's design review committee members
said they liked most about the City Club Apartments was its
street presence. That presence features a landscaped, two-
level retail/lobby base (Vocon/CPC).

An entrance canopy above Euclid's sidewalk was designed to look like a theater's entrance, said Jodi Vanderwiel, design director at Vocon. That won praise from the design-review committee, especially from Tom Yablonksy, executive director of the Historic Gateway Neighborhood Corp.

"This is a win," he said. "It respects the heritage of the site."

After the Hippodrome was razed, a six-story, 540-space parking garage was built in the middle of the David Goldberg-owned property which extends south to Prospect Avenue. The new apartment building will utilize the existing garage which is mostly empty at night.

A future phase two could rise on the Prospect side if the proposed tower on Euclid leases quickly. That could also depend on the amount of new residential units in development or under construction in downtown Cleveland over the next year or two.

If construction starts in November on the City Club Apartments tower, a construction crane might follow in May or June. And by then, the new Sherwin-Williams headquarters complex featuring at least one tower west of Public Square could be under way. The last construction crane over downtown was for The Lumen and was taken down in February.

END

LockKeepers, Marble Room, Il Venetian face uncertain futures

 

Almost always booked well in advance, the Marble Room Steaks
and Raw Bar on Euclid Avenue has been a popular fine-dining
venue. Located in the former National City Bank lobby in down-
town Cleveland since 2017, the Marble Room's clientele reveled
in the establishment's Gilded Age extravagance (KJP).
CLICK IMAGES TO ENLARGE THEM

UPDATED AUG. 20 WITH QUOTE BY CINCINNATI INSURANCE SPOKESPERSON

Six of Greater Cleveland's swankiest establishments that share the same owner have not reopened from the Coronavirus shutdown. Several sources with direct knowledge of the businesses' operations and finances said they doubted all of the establishments would reopen under their current ownership. 

Valley View's LockKeepers plus downtown Cleveland's Marble Room Steaks and Raw Bar, Il Venetian, Il Venetian Doughnuts and Gelato, Marble Sushi Room, and St. Clair Ballroom closed back in mid-March along with all other Ohio restaurants and bars under health orders by Gov. Mike DeWine.

But none of those six restaurants, all owned by the Millennia Hospitality Group, LLC, reopened starting in mid-May during the partial relaxing of the COVID-19 pandemic-induced shutdown or after the wider reopening two months later.

Millennia sued its insurance carrier, Cincinnati Insurance Co. of Fairfield, OH, claiming it failed to honor its policy coverages, including for loss of business income and extra expense due to the actions of a civil authority. Millennia said the civil authority orders issued by Gov. DeWine and the Ohio Department of Health in response to the pandemic should trigger payments under its policy coverage.

Several other businesses in Cuyahoga County also individually sued Cincinnati Insurance for the same reason. Those businesses were Mitchell Brothers Ice Cream Inc. based in Cleveland's Ohio City neighborhood, Nighttown, Inc. located in Cleveland Heights, and iAthlete & Fitness, LLC doing business as Results Fitness in Mayfield Heights.

At Cincinnati Insurance's request, these individual cases were consolidated as a class-action lawsuit on July 15 and assigned to Cuyahoga County Common Pleas Court Judge Nancy A. Fuerst. The reason they were consolidated was because the terms of the business income and civil authority coverages in each policy were identical and because Ohio law will apply to each of these claims, court documents showed.

"We respect the rights of all parties to have their issues heard and resolved in a court of law. For that reason, we generally do not comment on pending litigation," said Betsy Ertel, media relations director for Cincinnati Insurance, which is the main insurance subsidiary of Cincinnati Financial Corp.

LockKeepers has been located in Thornburg Station, a mixed-use
development including offices and restaurants at Rockside and
Canal roads in Valley View, since 2001. Its previous location
nearby was much smaller and dated to 1992 (Google).

"What I can say," Ertel continued, "is that commercial property insurance policies require direct physical loss or damage to property to trigger coverage for claims for business interruption, including business interruption due to civil authority. Cincinnati Insurance remains committed to doing our part to support the families and businesses in our agents’ communities, helping them to proactively manage risks and promptly paying covered claims."

There have been multiple lawsuits filed against Cincinnati Insurance from businesses located around the country in response to non-payment on civil authority coverages, as noted in recent articles in the Cincinnati Business Courier.

“Global pandemic risks are uninsurable,” said Sean Kevelighan, CEO of a national trade group the Insurance Information Institute in another article published by the Cincinnati Business Courier. “Given the unpredictability and unimaginable potential for worldwide losses, insurance is simply unable to cover a global pandemic.”

Today, Fuerst notified the case parties that Cincinnati Insurance will file a Rule 12 motion by Aug. 27 to determine the presentation of its defense and/or the responsiveness of Millennia. Per the notice, Millennia has until Sept. 17 to respond and Cincinnati Insurance has until Oct. 8 to reply, according to the court docket.

If the Common Pleas' overall court docket is any indication, Millennia is either having difficulty paying its contractors or it has hired difficult contractors. Millennia currently has four active lawsuits pending against it for allegedly failing to honor its agreements with those contractors.

The contractors include WCCV Floor Coverings, Inc. of Peninsula, OH which seeks contract payment plus interest of at least $78,012.30; private utility locator Blood Hound LLC of Brownsburg, IN that says it is owed $109,066 on a contract plus interest; radon mitigation firm ATC Group Services, LLC of Gahanna, OH which seeks $867,482.42 plus reasonable attorneys’ fees and collection costs; temporary staffing firm Express Services, Inc. DBA Express Employment Professionals of Mobile, AL that it has not been paid $69,771.88 on a contract with Millennia.

Il Venetian, Il Venetian Doughnuts and Gelato, Marble Sushi Room
plus the St. Clair Ballroom are all located at Key Plaza. The plaza
includes Key Tower, the Cleveland Marriott Downtown at Key
Tower and the historic Society For Savings Bank (Millennia).

Fuerst is the judge for all of the cases except the one brought by ATC which is being heard by Cuyahoga County Common Pleas Judge Shannon M. Gallagher.

Millennia has responded to each allegation in each case, denying nearly all of the allegations. For counts it hasn't denied, Millennia said that the complaints lacked sufficient information. In one case, brought by Express Services, Millennia's only unqualified admission to the complaint was that Millennia was located in Cleveland, Ohio. Millennia also "generally admits that an 'agreement' or contract existed between the parties, but otherwise denies the remaining allegations," claiming a lack of sufficient knowledge.

Because of these cases and the ongoing closure of Millennia-owned restaurants, rumors have swirled about Millennia possibly being in financial trouble and whether some of its properties are at risk of foreclosure. 

"Frank (Sinito, Millennia's CEO) says all of it is untrue," said Valerie Jerome, Millennia's media relations director. "He's in good standing financially."

Millennia has a controlling interest in multiple, highly visible downtown properties for which it has paid large sums -- Key Tower (Ohio's tallest skyscraper), Statler Arms apartments, Garfield Building apartments, 925 Euclid/The Centennial (planned mixed-use redevelopment) and 75 Public Square (housing conversion underway).

Millennia also owns 274 housing complexes, most of them affordable apartments, nationwide. The company has built 23,000 residential units in 23 states, according to an official biography about Sinito.

Millennia Hospitality Group's restaurants serve up some of the
fanciest establishments in town. They offer elegant settings,
fine food and drinks, and are places to be seen (KJP).

Jerome said that Millennia's high-end restaurants in downtown Cleveland and in Valley View would remain closed until further notice.

"There is no reopening date at this time," she said.

Visitors to the LockKeepers Web site are greeted with a hopeful message about the restaurant's future:

"Dear friend of LockKeepers, Although the state of Ohio is relaxing some coronavirus restrictures, we are not reopening yet. We are spending this time deep cleaning the restaurant and refreshing our dining spaces as we look forward to serving you soon again. At this time, we do not have an opening date established but we will be sure to keep you advised of our status. We will begin accepting reservations as soon as this date is determined."

Similar messages greet visitors to the Web sites of the Marble Room Steaks and Raw Bar, Il Venetian, Il Venetian Doughnuts and Gelato, Marble Sushi Room, and St. Clair Ballroom.

Meanwhile, other high-end restaurants in Greater Cleveland have reopened. They include Adega, Crop Bistro & Bar, Dante, L'Albatros Brasserie, Lola, Luca (downtown and Westlake), Morton's The Steakhouse, Pier W,  Red the steakhouse (downtown and Pinecrest) and Salmon Dave's Pacific Grille.

Other fine dining establishments have shown signs of activity, like Urban Farmer Steakhouse which is hosting private events, or Hyde Park Prime Steakhouse which has reopened its Beachwood and Westlake locations but not downtown as yet. On the other hand, Cowell & Hubbard has no timetable for reopening with the indefinite shutdown of all Playhouse Square theaters.

END

A new housing crisis is hitting Cleveland, anonymously

 

Anonymous buyers, hidden even more during the pandemic
by social distancing requirements, are snapping up houses
in Cleveland and some of its suburbs at a growing rate.
That has many community development officials worri-
ed about a repeat of the housing crisis of a dozen years
ago that devastated some neighborhoods (file photo).

At first blush, it sounded like such a rosy story.

The headline in the June 8 Wall Street Journal read "Cleveland Is a House-Flipping Hot Spot, and Covid Adds Fuel." Its central theme was that Greater Cleveland has become one of the most profitable places in the country to flip houses and own rentals. Investors have been redirecting their dollars from pricey coastal real estate markets and investing them in Cleveland. A happy story, right?

Not at all, say city officials and those at Community Development Corporations (CDCs -- which serve as neighborhood-level city halls).

Many CDC officials are worried about a potential repeat of the housing crisis that preceded the Great Recession of 2008-10. While the concern isn't so much about subprime lending, collateralized debt obligations and a collapse of international credit markets, there is a concern about a return of absentee landlords milking properties for rent income and leaving hundreds of houses rotting in city neighborhoods that just emerged from the worst of the last housing crisis.

That concern is the result of research by Cleveland Neighborhood Progress Inc. which compiled data on real estate transfers from May 1 to July 15 in the City of Cleveland. Of 451 arms-length residential sales/transfers at $50,000 or less during that period, 60.5 percent were to Limited Liability Corporations (LLCs). Approximately 280 were out-of-state LLCs although a hard number is difficult to know for certain because the actual owners are sometimes hidden.

An arms-length transaction is when a seller and buyer have no pre-existing relationship and negotiate a deal. Those deals, when done with an LLC buyer, often put properties in voids of information and accountability. But Cleveland Neighborhood Progress is trying to at least fill some of the information gap.

"We are keeping a close eye on it," said Joel Ratner, president and CEO of Cleveland Neighborhood Progress.

The pandemic, the health-related dangers of travel and social-distancing requirements have made the situation even more dire, local officials say.

The reason is that many buyers are acquiring properties without ever visiting them and, in some cases, they are relying only on photographs before making their purchases. The photographs may be old or don't show the correct property. So the property may need significant maintenance, which assumes the new homeowner has the resources or desire to make major repairs.

Vacant houses and vacant lots are the results of unscrupulous
landlords whose only desire is to milk properties for all of their
worth. Many are out-of-state buyers who remain anonymous
behind limited liability corporations and their lawyers (Google). 

And once more, Cleveland's most vulnerable neighborhoods are again in the crosshairs, including Slavic Village which was devastated by the housing crisis a dozen years ago.

"My team here has been troubled by the increase in out-of-state investment," said Chris Alvarado, executive director of Slavic Village Development. "While we welcome legitimate investment from actors who make substantial improvements to properties, we aren’t seeing the same level of property improvements that local investors are willing to make."

Worse, he said he is seeing evidence that some of the transactions by LLCs are for suspected money-laundering activities. He noted one buyer in particular that was extremely active in Greater Cleveland, using shell companies to sell properties to other shell companies.

"I can't name the companies due to an investigation that's underway," he said. "But they take their names from Caribbean names. All of those entities purchased and sold 300 parcels in Cleveland and nearby suburbs. The money laundering is not something we saw in the late-2000s."

Even without the possibility that some LLC's activities are masking money-laundering or other criminal activities, there is great concern.

"This is a very worrisome trend and I fear it will get worse as tax sales and others move to online formats due to the pandemic," said Jamar Doyle, executive director at Greater Collinwood Development Corp.

For example, Cuyahoga County Sheriff David G. Schilling Jr. will reportedly begin offering online auctions in response to the pandemic.

When houses and other assets are seized by court orders due to criminal activity, tax delinquencies, foreclosures or other defaults, the sheriff's department sells them through regular auctions. The foreclosure auctions are held weekly.

Until the pandemic hit, the sheriff's department required potential buyers or their representatives to meet in a conference room at the Justice Center, show a driver license or other government-issued idenitification, pay a deposit and the sheriff's department would follow up with the buyer. Social distancing makes that undesirable, however.

Many Cleveland neighborhoods, especially on the East Side, are
riddled with empty lots and boarded-up houses. They are remind-
ers of different types of neighborhood-killing real estate abuses
over the decades, including block-busting, red-lining, no-growth
sprawl, sub-prime lending and absentee landlords (Google).

A state law, House Bill 390 that took effect Sept. 28, 2016, makes it easier and faster to get foreclosed, AKA "zombie" properties out of the courts and back into the hands of private owners. On the down side, it allows properties to be sold for as little as $1, creating opportunities for unscrupulous buyers to scoop up properties and not take care of them.

The 2016 law also stipulates the creation of a public sheriff’s sale Web site to allow the online sale of properties. It too was intended to get foreclosed properties out of the crowded court dockets, yet it also aids unscrupulous buyers, allowing them to operate with greater anonymity and less accountability. 

Cuyahoga County spokesperson Marie Louise Madigan said she would provide to NEOtrans an answer regarding the concerns surrounding online sheriff sales but hadn't as of publication. When an answer is provided, this part of the article will be updated.

The Vacant and Abandoned Property Action Council (VAPAC), chaired by Cleveland Neighborhood Progress, has been urging Schilling and other county officials to reconsider the online property sales.

In contrast, some counties have suspended their sheriff sales, including Summit County which includes Akron. It has suspended all sheriff sales during the pandemic until at least Oct. 1, 2020. Other counties are continuing their sheriff sales through a third-party vendor that lists Cuyahoga County properties.The procedure for buying properties through the third-party vendor is very easy.

"There is a huge concern of these out-of-state buyers right now," said Cleveland's Ward 12 Councilman Tony Brancatelli whose ward includes Slavic Village. He served on council for 15 years, during the foreclosure crisis more than a decade ago. "The numbers have skyrocketed beyond reason. Out-of-state owners buying scattered-site homes at what appears to be above market-rate acquisitions given the conditions of the homes scares me."

He said he has been dealing with a number of out-of-state owners who don't know how to manage a property in Cleveland's market. The owners, he said, end up hiring property management companies that don't do a good job of oversight and contractors who disappear and don't finish repair work.

"Then when tenants move in there is very little oversight," Brancatelli said. "I suspect there will be a point where they divest and it devolves down to the lowest denominator property owner, which then goes to foreclosure."

While most Cleveland neighborhoods and inner-ring suburbs are targeted by out-of-state LLC home-buyers, downtown Cleveland, Ohio City and University Circle have been largely untouched. Officials at their CDCs speculate that a lack of available for-sale housing inventory is restraining out-of-state buying in those areas.

This is the fate of all real estate abuses -- demolition. Reduced
population density reduces tax bases, making it more difficult
for cities to afford the same level of services to the remaining
population. Property values fall which makes the surviving
housing stock vulnerable to future scam artists looking to
make a quick buck when the market improves (KJP). 

And, those neighborhoods also have the highest real estate prices in the city, reducing the profitability of renting. According to the Wall Street Journal article mentioned earlier, monthly rents collected need to meet the landlord's ideal of at least 1 percent of the purchase price. That's often not possible when a house sells for upwards of $300,000 -- a common price in downtown, Ohio City and University Circle.

That's not the case in the less-pricey area covered by the Westown Community Development Corp. That CDC covers everything from Cudell south to near Brooklyn, an area popular with many new immigrants including Latinos, Middle Easterners and Eastern Europeans who aren't familiar with American laws, may not trust the authorities and might be taken advantage of by unscrupulous landlords.

"Having a boatload of out-of-state landlords is a community development nightmare," said Rose Zitiello, executive director of the Westown CDC. 

The reason, according to Peggy Kearsey, real estate and housing manager at Greater Collinwood Development Corp., is because CDCs don't have the time, staff or money to track down the true identities of all the out-of-state buyers and follow-up with them on maintenance issues and building code violations.

"We're seeing buyers in our area (Collinwood, Glenville, East Cleveland) coming from Wyoming, Nevada, Flordia, North Carolina, Maryland, California, Massachusetts, to name a few," Kearsey said. "They could be very lovely and nice people but they're all LLCs. We also have some local buyers but, in theory, I can go find them and beat up on them if they don't maintain their properties. When they're out of state, none of us have the time or resources to track down all of them."

Most hide behind law firms as their LLC's statutory agents of record. Notices of code violations are sent to their agents of record which can be changed from one attorney to another. Taxpayer identification information can also be hidden with third-party accounting firms which may ultimately be affiliated with the lawyers or have taxes paid through funds set up by lawyers. That's assuming that taxes are even being paid. Many times they aren't.

Some LLC home buyers aren't even renting out the houses to residents. Instead, they're using them as AirBnB-type short-term rentals such as for vacations, temporary housing or worse, for wild parties. That happened in October 2019 in which a Bay Village mansion hosted a 400-person party through AirBnB.

"Over the past five years there has been a proliferation of full-time investor-owned short-term rentals in the city," said Mark Raymond, owner of The Cleveland Hostel in Ohio City. "I have learned that quite a few of them are owned by out-of-state entities."

He said almost all of them are not in compliance with the ordinance regulating short-term rentals and they have not gone through the neighborhood's block club, the local CDC, the city's Board of Zoning Appeals or another local approval process before opening up. They also do not have any licensing or inspection requirements.

"Competition is great as long as it is legal and fair," Raymond said.

The goal for every densely developed urban neighborhood is to
have well-kept housing stock with a high-percentage of owner-
occupied homes. For homes that aren't owner-occupied, com-
munities need to know where to contact the owners to address
emergencies, nuisances and code violations. But that's easier
said than done in a nation where an individual's privacy is
often valued more than the health of a community (KJP).

The city is working on updating its short-term rental ordinance that would help track the owners of these properties. Brancatelli is working on it along with Ward 3 Councilman Kerry McCormack whose ward includes Ohio City, Downtown and Tremont.

"These LLCs have been a problem for a long time," McCormack said. "Our limited lodging amendments are not directly intended to address" the disclosure of ownership of the LLCs in residential property ownership.

In fact, the city may not have the legal authority to compel disclosure of ownership due to private property rights protected by the Constitution. The state government has also protected LLC property owners and ignored Home Rule by blocking municipal efforts to compel the disclosure of more detailed ownership information. But there are some potential solutions out there according to officials interviewed for this article.

The first solution is to make sellers aware that LLCs are buying properties and to urge sellers to avoid them if possible. If sellers negotiate with them, they could demand more information about the potential buyer and include that information in the title transfer documents if for no other reason than to protect the seller.

Another is to limit online sales. Not only does that protect neighborhoods, it protects sellers and buyers. Some people buying "flips" from LLCs may be getting wrong information about the properties and don't realize that they're buying a troubled property. In some rare cases, the LLC seller doesn't actually have clear title to the property in the first place. Buyers need to do their research.

CDCs are also going after signs on poles saying "we buy houses." Officials point out that signs on poles are illegal without permits.

"We call them and tell them they (the signs) are illegal and to remove them or we'll prosecute them," Kearsey said.

With a supportive councilperson behind them, CDCs can have much input in who buys city or county land bank properties but that's not the case on the open market. CDCs will work with trusted third-party investors to acquire properties on the land bank and state forfeiture lists. Or the CDCs will reach out to buyers they can identify to see if they intend to be owner-occupants.

Under current laws, however, there's only so much CDCs and the cities can do to force disclosure of anonymous out-of-state buyers so they can be compelled to maintain their properties according to building codes. Until that happens, Greater Cleveland may not be able to escape what leaves it most vulnerable to unscrupulous landlords -- a feedback loop that begins and ends with its low real estate prices.

"It takes years before a property becomes tax delinquent, then it spends years in court, then it's sold through a sheriff's sale," Kearsey said. "We're going to have a court backlog from this latest problem (of out-of-state buyers). It will take five years to get a property productive again. It's sad because we pretty much just got things cleaned up from 2008 and now this is happening." 

END

Cleveland's next 'whale' may eat more land than first thought

 

The Justice Center in downtown Cleveland is a 2.3 million square
foot behemoth, devouring what was a four-block area which be-
came a single superblock. Each of the site's five basic uses --
courthouse, jail, Cuyahoga County Sheriff's office and Cleve-
land Police Department headquarters are going their separate
ways in the coming years. The shapes and sites for each faci-
lity will soon be coming into sharper focus with the imminent
release of consultants' recommendations (Google).
CLICK IMAGES TO ENLARGE THEM

While the steering committee is away, the consultants will play. But the consultants are getting ready to give a report on their findings about a new Justice Center. And what they have to say will bring into sharper focus the realistic sites for a new downtown courthouse as well as a new jail.

The committee is the 12-person panel of Justice Center stakeholders overseeing the planning for more than 2.5 million square feet of new or renovated county jail and courthouse facilities. The consultants are being directed by the committee. They include Project Management Consultants LLC and DLR Group.

They will soon present their findings on an upcoming Cleveland "whale" -- a term reserved for a large real estate project. The first whale on downtown's to-do list is Sherwin-Williams' 1 million square foot headquarters. The Justice Center facilities will follow.

When the Justice Center steering committee last met, it was Jan. 23. Back then, the coronavirus was still just an overseas problem. And the Justice Center consulting team was given its marching orders to come back near the end of summer with more detailed design options, harder cost data and potential sites to consider.

Armed with conceptual-level cost estimates, committee members asked the consulting team to deliver detailed cost data on these four options, ranked from most popular 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 courthouse on campus site;
• New Jail 1 next to renovated Jail 2, expand/renovate existing courthouse.

The layout of the existing, aging Justice Center complex in
downtown Cleveland (Cuyahoga County).

The most pressing need right now for the committee is to move forward on building a new county jail, committee members agreed. The reason is that conditions are dire in the current jail facilities which fail to comply with 84 separate standards set by Ohio Department of Rehabilitation and Correction.

Last winter, the Justice Center planning team discovered that the existing jail is so inefficient 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. Those savings, if used to service construction bonds for a new 800,000-square-foot jail, could pay for 56 to 68 percent of the jail's construction costs.

With the jail facilities addressed by a new low-rise jail campus at a new location, likely just outside of downtown but still within the city of Cleveland, efforts would then focus on providing a new courthouse. The existing courthouse, approaching 50 years old, is crowded, poorly built and falling apart.

Ideally, a new facility would consolidate under one roof scattered services, offices and court functions in a single site where cramped offices are no longer located in hallways and closets. And, courts are safely designed so that case parties, such as in emotionally charged domestic relations cases, no longer intermingle. The committee said a new courthouse would need anywhere from 877,000 to 1.1 million square feet of usable space. 

According to sources connected to the steering committee, the option that reportedly has the edge isn't even on the above list -- new low-rise jail campus and a new mid-rise urban courthouse on separate sites. The reason? A mid-rise courthouse appears to be the cheapest option.

But favoring a mid-rise courthouse reduces the number of potential sites where it can be built in the central business district. The reason is that it will require a much larger footprint. It should be noted that the only locations being considered are downtown.

Presented in no particular order are seven sites in downtown
Cleveland that might reasonably accommodate a new, mid-rise
courthouse complex without demolishing existing structures.
The exception is #5, the Wolstein Center, which may be demo-
lished anyway. The sites are #1 Existing Justice Center site;
#2 Bedrock/Tower City Riverview Parking; #3 Stark Enter-
prises-owned Warehouse District parking lots; #4 Kassouf-
 owned The Pit parking lots; #5 State-owned Wolstein Cen-
ter; #6 City-owned former Central Police Station; #7 City-
owned municipal parking lots (Google).

A high-rise courthouse with floorplates averaging 25,000 square feet might need 35 to 44 floors to accommodate 877,000 to 1.1 million square feet of courthouse-related space. A parking deck measuring about 500,000 to 600,000 square feet is assumed to be adjacent to the courthouse tower in the high-rise alternative. Thus, a high-rise courthouse might need a footprint of only 1.5 to 1.75 acres.

A mid-rise building in this situation, according to sources, means a structure that's about 15 stories tall. If the entire courthouse/parking mass was the same 15-story height throughout, it could require land measuring 2.6 acres. That doesn't include any ground-level public spaces or accessways between structures.

The committee wants a new courthouse built as close to the existing one as possible. The reason is that its support infrastructure is nearby. There are many law firms within an easy walk of the existing Justice Center and the hub of the region's public transportation system is only one block away at Public Square. Plus there are many restaurants within a few blocks of Public Square for courthouse employees, jurors and visitors.

After a few blocks, the farther away from Public Square you go, the supportive infrastructure diminishes. But there is more land available for a mid-rise courthouse complex with structured parking. Land gets less expensive too -- with one exception.

That exception is the existing Justice Center site. Once the jail facilities are gone from the 7-acre site, along with the 100,000-square-foot sheriff's department's administrative offices and the 330,000-square-foot Cleveland Police Department headquarters (all of which are moving elsewhere), about 4.6 acres of county land will become available.

That's more than enough room to accommodate a 1.7-million-square-foot courthouse complex with structured parking -- even if all structures are kept to about 15 stories. But they would have to be built around the existing and active 25-story, 420-foot-tall, 600,000-square-foot courthouse tower.

In 2011, Franklin County Court of Common Pleas was put into
its own $105 million building (at left), having been pulled out
of the 27-story Franklin County Government Center (at right)
built in 1991 at the south side of downtown Columbus. But
many other court functions remain in the tower. In Cleveland,
most if not all all city/county court functions would be re-
located into a new courthouse building (Google).

Construction of a new courthouse at the existing Justice Center would have to wait for the jail, sheriff's offices and police HQ to get their own facilities, move their employees, equipment and furnishings, remediate and demolish the structures, then prepare the site for construction. Such staging will only delay construction of the courthouse tower and increase its costs by tens of millions of dollars.

Consider that any reuse of the existing site would worsen construction inflation, which planners termed as "cost escalation." Construction costs are escalating at 4-6 percent per year, so they also compound. Construction costs rising at 4 percent annually would therefore increase by 23 percent over five years. Also, reusing the existing site limits design efficiency and construction schedules.

So a new courthouse costing $400 million to $600 million could soon cost $492 million to $738 million if it had to wait for enough developable land to be made available at the existing Justice Center site. That influences the committee to look at sites that could be ready much earlier.

One site that may be seriously considered is Bedrock's Tower City Center Riverview Parking lot below Huron Road and above Canal Road. Although the roughly 6 acres of land is privately owned, Bedrock could do for the county and its courthouse what Geis Companies did for the county and its administration building. That is -- build a building for the county, lease it to the county for a few decades and, at the end of the lease, give the county the option to buy it for virtually nothing.

In the case of the county administration building, the county is leasing it from Geis for $6.5 million per year over 26 years and can buy it at the end of the lease for $1.

Until earlier this year, Bedrock pursued the other whale -- Sherwin-Williams' headquarters and its research facilities. During that competition, sources close to Bedrock said that the Detroit-based company would pursue the new county's new courthouse if it could not catch Sherwin-Williams. The same sources said they believed that is still the case.

Up to 1.7 million square feet of courthouse facilities, parking decks and public spaces, possibly extending down to the banks of the Cuyahoga River, would remake the entire south side of downtown. The county/municipal courthouse would be very different than the 22-story Stokes Federal Courthouse Tower, standing between Huron and Canal since 2002, which is a more insular, secure structure.

One possible site for a new courthouse in Cleveland could be the
Bedrock/Tower City Center Riverview Parking lot below Huron
Road. Depending on its design, it could public spaces along
the Cuyahoga River waterfront. The rendering shows a variety
of uses that could be developed here by Bedrock (Vocon).

Locating a county/municipal courthouse here might turn Tower City Center into Cleveland's version of Judiciary Square, referring to a section of Washington DC filled with courts and office buildings. And it could pump new life into Tower City whose retail offerings were already severely wounded before the pandemic hit. A proposal to turn the facility into a business incubator has yet to take off.

If that site doesn't suit the county's palate, then a Warehouse District parking crater -- smaller than the one Sherwin-Williams' HQ will develop -- could be in play. The mostly Stark Enterprises-owned site has more than 3 acres of land between West 9th Street, St. Clair Avenue and Frankfort Avenue. Much of it is for sale including a small parcel south of Frankfort. But any Warehouse District land will not come cheaply. Sherwin Williams paid $7 million per acre for its HQ site.

A larger, likely less expensive, but less accessible site is a parking lot dubbed The Pit. Nearly 170 years ago, the city's first principal railroad station was built here. It remained a railroad station until the 1950s when the former Union Depot was demolished for a parking lot. It has remained a parking lot ever since.

Combined with more parking lots above The Pit, the entire area could offer more than 7 acres for development of a county courthouse and structured parking. But it is not the most accessible site. Yes, it is next to the Shoreway and the light-rail Waterfront Line. However, both are secondary routes among Cleveland's freeway and rail transit assets. No one has found a better use for the site in the past 65 years even though it is at the edge of the central business district.

Other multi-acre sites may be considered, but are even more "fringe" than The Pit. One could include the current 9-acre site of the Wolstein Center which is likely to be a major focus of Cleveland State University's latest masterplan. Another could be 4.3 acres of city-owned land along Payne Avenue, near the old Central Police Station at East 19th Street. Yet another could be the municipal parking lots northeast of downtown, measuring dozens of acres.

The moral of the story is, potential sites for the courthouse are inherently limited by the reported interest in holding the height of the new courthouse to a mid-rise. But it also brings into sharper focus where the future courthouse might land.

END

Seeds & Sprouts IX - Early intel on real estate projects

This is the Ninth edition of Seeds & Sprouts - Early intelligence on Cleveland-area real estate projects. Because these projects are very early in their process of development or just a long-range plan, a lot can and probably will change their final shape, use and outcome.

Fathom's new headquarters featuring a contempary design will
soon be added to the 1870-built Stonebridge Plaza, Suite 100,
located at 2020 Center St., Flats' West Bank, in Cleveland. The
 company is relocating from Valley View (Bialosky Cleveland).
CLICK IMAGES TO ENLARGE THEM

Digital marketer Fathom moving HQ from suburbs to Flats

UPDATED AUG. 11 WITH STELLA MARIS PROJECT INFO

In the first quarter of 2021, about 100 employees of Fathom, a digital marketing and analytics firm, will move with its headquarters from Valley View to Cleveland's Flats West Bank. The move follows the company's June purchase and planned renovation of a property at 2020 Center St., called Stonebridge Plaza, Suite 100.

Plans for the renovation work were submitted to the city's Building & Housing Department last week for a building permit and are due to appear before Planning Commission this month. The submission follows Fathom's June 17th acquisition of the property through an affiliate called PromiseONE Properties LLC for $1.35 million, county records show.

The property features an 1870-built, 15,452-square-foot machine shop that briefly was used as a Cantina Del Rio restaurant in the 1990s before it was converted to offices in 2006 by the K&D Group as part of the Stonebridge development. The property was acquired from Stanley Zona, LTD, owned by Roger Zona.

Zona also owned TPI Efficiency, a procurement consulting firm which had its offices at 2020 Center. TPI's Efficiency's offices moved across the street to 2019 Center after Zona and another investor, Chad Kertesz, acquired the six-story Stonebridge Center office building in April for $1.7 million and renamed it The Hive My Place.

In late June when it acquired Stonebridge Plaza Suite 100, PromiseONE Properties also received a construction loan in the amount of $1,920,000 from First Federal Savings & Loan Association of Lakewood, public records show.

With those funds, PromiseONE Properties intends to renovate the properties for its own office needs. That includes 7,984 square feet for up to 79 workers on the first floor and 5,519 square feet for up to 55 employees on the second floor. Thus the total occupancy is 134 workers, according to planning documents Fathom and its architect Bialosky Cleveland submitted to the city.

On the opposite street corner, Stella Maris will join the renovation parade. It will be making renovations to its Gallagher Center including a coffee shop with a bar and dining area offering booth and table seating. Stella Maris and Hengst Streff Bajko Architects and Engineers submitted plans to the city for the renovations in July. Their property is located at 1320 Washington Ave.

Fathom began in 2006 as Fathom SEO LLC, a search engine optimization firm. Today, it has roughly 175 employees with gross revenues of $20 million to $30 million per year depending on which business data firm you believe. In addition to its current headquarters at 8200 Sweet Valley Dr. in Valley View, Fathom has offices in Columbus, Detroit and San Diego.

Jim Kohl, executive vice president of sales and marketing at Fathom, acknowledged receiving an e-mail from NEOtrans seeking more information but didn't respond to it.

The Brooklyn Heights Business Park, also known as Safeguard
Plaza, will soon have a new tenant -- AmeriGas' customer ser-
vice offices relocated from Westlake. However, the company's
corporate office will apparently remain in Westlake (Google).

AmeriGas' Cleveland-area expansion plan deflates

A corporate restructuring that seemed like a potential jobs boon for Greater Cleveland less than two months ago appears to merely be a tease now. And yes, we can "thank" the coronavirus pandemic for the scaling back of plans.

Those plans were by AmeriGas Partners L.P., the nation's largest propane marketer. In late June, it looked like it would dramatically grow its Greater Cleveland presence from 125 jobs to several hundred jobs by next year. Instead, a modest reshuffling is apparently planned.

AmeriGas' local office is at the King James Office Park, 24650 Center Ridge Rd. According to a source, the firm will reportedly extend its lease there, which is due to expire next year. In addition to retaining its corporate office in Westlake, the firm will add a customer service location at Safeguard Plaza on West Resource Dr. in Brooklyn Heights. The site is off Granger Road next to Interstate 480.

The change is the result of a corporate realignment following UGI's 2019 acquisition of AmeriGas. UGI pledged "to align its liquefied petroleum gas distribution operations across the U.S. and Europe to drive efficiencies and accelerate growth."

MetroHealth System's new family health center on Lorain Avenue
was built without a retail pharmacy, an oversight that will soon be
remedied, according to plans submitted to the city (Google).

New MetroHealth neighborhood clinic to add pharmacy

When MetroHealth System's new Cletus Jeckering Family Health Center opened June 1, it brought a wide variety of services to the Detroit-Shoreway and Ohio City neighborhoods. But one thing was still missing -- an in-house pharmacy. That will soon be added, according to plans submitted last week to the city's Building & Housing Department.

The Urban Community School, owner of the health center at 4757 Lorain Ave., and MetroHealth will renovate the center's lobby with the retail pharmacy. Measuring about 652 square feet, the pharmacy will cost about $95,000 to build, public records show.

Construction of the 32,000-square-foot family health center cost about $10 million. MetroHealth officials said the new facility offers primary care, pediatrics, behavioral health, obstetrics and gynecology services as well as MetroExpressCare to provide non-emergency room treatment for urgent health issues. This will be the fifth MetroExpressCare site and MetroHealth's first on Cleveland’s near-West Side.

END

Downtown residents support new way to fund transit, downtown's growth

 

Financially supporting public transportation with a land value tax
creates a foundation for expansion as transit begets density which
produces higher land values which generates more revenue for
more public transportation services (KJP).
CLICK IMAGES TO ENLARGE THEM

Downtown Cleveland Residents (DCR), a community relations board, recently voted to support a rising need for more investment in public transportation, but in an innovative way that boosts economic growth and access to opportunity. Greater Cleveland needs more of both yet funding for public transportation from riders and from all levels of government has been in decline.

To that end, at DCR's latest community forum conducted virtually, members of the group voted unanimously to support a resolution calling for more transit investment. The demand for transit is growing as downtown's population nears 20,000. Employers large and small are expanding downtown like Sherwin-Williams, Cleveland Cliffs, Benesch and more. And, before COVID, traffic from rideshare services clogged downtown streets.

Meanwhile, according to the Federal Transit Administration's National Transit Database, the Greater Cleveland Regional Transit Authority's (GCRTA) bus and rail services were cut 29 percent since 2006 and the cost of fares doubled over the same period, sending ridership downward. Meanwhile, GCRTA's backlog of unfunded state-of-good-repair needs such as replacing aging trains, buses, infrastructure and maintenance facilities exceeds a half-billion dollars.

“They (GCRTA) are really up against a wall in terms of funding,” said DCR President Alan O’Connell. “Public transit is a very efficient way for people to move around a city, but the geometry of dense urban environments requires transit to function well, or risk gridlock.”

The resolution echoed this sentiment, referencing two recent studies. One is a 2019 study commissioned by the Greater Cleveland Partnership (GCP) that said “additional non-federal funds will be necessary to meet the existing and future needs of the [GCRTA] system, if heavy rail and light rail are to be maintained as viable transportation options.”

Dense urban centers and public transportation go hand-in-hand,
as each sustains the other. But Cleveland has lacked the ability to
financially capture the value from that synergistic relationship.
That may change if a vote by the Downtown Cleveland Residents
board to endorse new funding for transit wins more supporters in
Cleveland's business and political communities (Matt Quinn).

DCR also viewed an increase in resources for public transit as a way to promote neighborhood equity and affordability. The resolution cited a study by Cleveland State University’s Center for Economic Development which found that GCRTA services, where available, results in a 12.3 percnet reduction in poverty and a growth of 3 percent in employment.The other study noted was the Ohio Department of Transportation's Ohio Statewide Transit Needs Study, which found that statewide “investment [in public transit] needs to double by 2025” and that “all stakeholders should be working towards” that funding goal.

The same study also noted the high costs to build structured parking which averages approximately $25,000 per parking space in downtown Cleveland. The high cost produces a low return on investment to developers on newly-built resident parking. It also results in residential rental prices that are higher than both residents and property owners would prefer.

“We spoke to a couple developers who are active in the (downtown) area," O'Connell said. "They told us that parking is a constant annoyance. They would prefer to dedicate more financial resources toward additional residences and amenities instead of these soon-to-be-obsolete parking garages."

But how should GCRTA be funded in a way that fosters more economic growth and access to opportunity?

The growth in car share services like Lyft and Uber are worsening
traffic congestion in downtown Cleveland. With downtown's popu-
lation and employment growing, it underscores that downtown's
growing transportation needs are demanding high-capacity modes
of transportation, namely buses and trains (Chris Stocking).

The GCP study says increased funding for GCRTA via a property tax levy would be a more equitable option than by increasing the sales tax. Instead of a traditional property tax, however, DCR recommended a land value tax or a split-rate tax.

“Residents want surface parking lots downtown to be replaced by mixed-use buildings and public greenspace," O'Connell added. "Current property taxes effectively penalize and discourage development on valuable land. This is completely backwards. There needs to be an incentive to build something that actually contributes to our community instead of encouraging parking lots to continue detracting from it.”

A levy could be placed on the ballot by Cuyahoga County Council or directly by GCRTA's Board of Trustees, as GCRTA is a taxing authority. Other government entities are also able to introduce bond measures and send the proceeds to GCRTA.

Although GCRTA spokeperson Linda Scardilli Krecic didn't respond to an e-mail seeking comment on DCR's recommendations, local and statewide transit advocacy groups did offer their thoughts.

"Clevelanders for Public Transit (CPT) has called on the GCRTA's board to place a levy on the ballot for years to reverse the death spiral of endless service cuts, fare increases and lower ridership," said CPT spokesman Christopher Stocking.

Transit provides access to opportunity, but not when reduced
funding reduces the availability of services and increases the
cost of fares. That creates a death spiral for transit services
and makes educational and employment opportunities less
accessible to those who need it most. Further, more traffic
and pollution makes cities less livable for everyone (KJP).

In 2018, CPT urged GCRTA to place a levy on the ballot. GCRTA Board President Mayor Dennis Clough responded that a levy would instead be likely be sometime in 2019. Nothing happened, however.

"Well it's now 2020 and we have seen no action from the GCRTA board," Stocking said. "CPT agrees funding transit equitably is important. Owners of surface parking lots should be taxed out of existence. This may require action at the county level. In 2017, CPT helped create a standing County Council Committee that is focused on public transit. We look forward to working with Cleveland residents in building support for equitable local transit funding in the future." 

"Other than riders' fares, no revenue source could be closer to being called a user fee than a land value tax," said Stu Nicholson, executive director of All Aboard Ohio, a statewide nonprofit group. "We've seen the growth in transit-oriented developments around Cleveland's rail and bus rapid transit stations. Not only do these improve the links between jobs and job-seekers, but if there was a way to capture the land values from future developments, it could support new bus and rail expansions." 

"Transit use and land use density go together, and neighborhoods with the greatest densities have the highest land values," Nicholson added. "The most valuable land in Cuyahoga County is in downtown Cleveland. Even the wealthiest suburb can't match the land value per acre of Lakewood, the most densely populated city in Ohio. A land value tax should capture that for the mode of transportation that sustains that density."

END