CLEVELAND HEIGHTS, Ohio – By recouping a potential $ 9 million in projected revenue over the next 30 years, the city is expected to save an additional $ 180,000 per year by paying off its existing parking garage debt, under the terms of a proposed $ 50 million development agreement for the Cedar-Lee-Meadowbrook site.
This is almost two-thirds of the $ 300,000 that the city would otherwise continue to pay in annual debt service for the 377-space parking lot built in 2007. F&C Development is proposing to pay 225 of these spaces (60%) for the tenant parking, leaving 152 public parking spaces in the garage.
The potential savings would be even more than that, given that the city currently pays about $ 460,000 in debt service on the garage through tax-exempt bonds. These would be converted into taxable bonds, with added developer help.
These are just a few of the terms of the yet-to-be-approved deal that city council was due to introduce on Monday (November 22) for the largely residential “mixed-use catalytic development” proposed for the 4.8 acre site. . Approximately 3 acres of this land are considered buildable.
The project would include 200 to 225 market-priced apartments in “one or more buildings of varying height”, as well as 5,000 to 9,000 square feet of commercial, retail or restaurant space on the ground floor. pavement. Detailed design plans must follow if the development agreement obtains approval.
“The city’s parking lot can be ‘wrapped’ in multi-family housing developed by F&C as part of the project,” says the proposed deal.
But most of the apartments would go to the city’s 189-space surface parking lot, located north of the parking garage and behind (east) of the shopping area that includes the Cedar-Lee Theater and Boss Dog Brewery.
Additional public parking could also be provided on part of the remaining project site. This remains to be determined through the F&C land lease with the city, which allows developers to purchase the property for a nominal fee over 40 years.
In an accompaniment note to council On Friday, November 19, city officials explained that out of a total investment of $ 50 million, the developer’s contribution would be $ 35 million, including a construction loan.
“The rest of the structure should be tax increase funding (‘TIF – $ 15 million, 30 years, 100%),” the note said.
The city’s economic development director, Tim Boland, noted earlier that under state law any proposed TIF deal would have to get approval from the Cleveland Heights-University Heights City School District, which does not had not yet officially submitted an offer last week.
On the Ledger City side, current projections for the economic impact of the project include:
• New income tax and property tax revenues of approximately $ 240,000 per year, or $ 8.7 million over 30 years
• A one-time influx of income taxes from construction work of $ 310,000
• Estimated annual revenue from public parking for the city: $ 84,000
As for the refinancing of the parking garage, “the city plans to convert the existing tax-exempt debt on the garage into taxable debt”, which would represent approximately $ 300,000 per year.
This in itself would constitute a sizable dent in the $ 460,000 the city is currently repaying in the form of “tax-exempt” bonds, as outlined in the proposed development agreement.
From this, “the annual payment of the parking fee by the developer until the debt is repaid should be 60% of that amount, or $ 180,000”, which means that the costs of servicing the debt of the city will be reduced from $ 460,000 to $ 300,000 to $ 120,000 per year. , indicates the city memo.
At this rate, the remaining debt on the garage would be repaid by the end of 2033.
No figures are yet available for what could be offered to the CH-UH school district, here is a brief comparison of the city’s development agreement with F&C affiliate Flaherty & Collins Properties on the Top of the Hill for $ 83 million.
There, TIF bonds account for 29% of the project cost, with the city expecting to receive $ 14.3 million in net new revenue over 32 years and the CH-UH school district raising $ 12.3 million over 30 years thanks to this program.
By accepting “Payments in Lieu of Taxes” or “PILOTS” at the top of the hill, the school district will not receive the same money it would receive in regular taxes.
However, at the top of the hill, schools receive about $ 400,000 more per year than the $ 21,000 the district received from the old # 9 municipal parking lot. A similar formula is expected for the Cedar-Lee site. Meadowbrook.
As the proposed development agreement is still pending, the city and F&C remain in their second overtime a non-binding memorandum of understanding to allow negotiations to continue.
The non-binding agreement is due to expire on December 9, with a second reading and a final council vote expected before that date.
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