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Cleveland: Ohio City: INTRO (Market Square / Harbor Bay Development)

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5 minutes ago, WindyBuckeye said:

And why do you say this? Just curious.

 

The mention of a potential lawsuit from the city to block the project is what did it for me

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Part of the backdrop (which I know won't illicit any tears) is that the Port has become much harder to use for sales tax exemption when they went full on with prevailing wage requirements. Some would also argue that the City requirements that are associated with abatement are onerous (I am not arguing this at all - just stating what I think others would say) -- and that this OADQA is a work around that is only being looked at because of the above.

 

My own thought:  Home Rule above all else.  It is why I disagreed when the state got involved in our minimum wage or plastic bag ban.

 

OTOH - the state gives out tax credits/awards of tax dollars all the time without City approval.

 

 

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I've been sitting on this story for more than a week because I've heard (on Friday) that the developer, the city, the school district and the Metroparks have had positive meetings over the previous week. The last word from the developer was that the project is "on track" -- a very different sense of things after Harbor Bay had felt that the project was in serious jeopardy. So now I'll write the article now that Cleveland.com has reported on it.

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15 minutes ago, KJP said:

I've been sitting on this story for more than a week because I've heard (on Friday) that the developer, the city, the school district and the Metroparks have had positive meetings over the previous week. The last word from the developer was that the project is "on track" -- a very different sense of things after Harbor Bay had felt that the project was in serious jeopardy. So now I'll write the article now that Cleveland.com has reported on it.

 

I'm very glad to hear that.  Thanks for the information.

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1 hour ago, KJP said:

I've been sitting on this story for more than a week because I've heard (on Friday) that the developer, the city, the school district and the Metroparks have had positive meetings over the previous week. The last word from the developer was that the project is "on track" -- a very different sense of things after Harbor Bay had felt that the project was in serious jeopardy. So now I'll write the article now that Cleveland.com has reported on it.

 

Heard from someone that could pretty much be considered the "horse's mouth" that this thing is running on steroids after these meetings. 

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However....the city planted that story after meeting with Harbor Bay yesterday. The developer is PISSED. The developer thought things were moving in a positive direction. Seems everyone was willing to make concessions--except for the city, apparently. 

Edited by KJP
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Market+Square-Harbor+Bay-M.jpg

 

WEDNESDAY, AUGUST 28, 2019

Market Square tax abatement isn't the issue; it's about control

 

With just 35 minutes to go before an Aug. 13 meeting of the Ohio Air Quality Development Authority's (OAQDA) board of trustees, representatives of Harbor Bay Real Estate Advisors thought their request for $150 million in 30-year bonds and a property tax exemption would be approved.

The bonds would finance most of the $200 million Market Square development, including a 10-story office building and seven-story apartment building, at Lorain Avenue and West 25th Street in Ohio City. The innovative project, using timber framing, would reduce emissions by 40 percent mostly from reduced heating and cooling, but also from avoiding the manufacture of steel and concrete.
 

MORE:

https://neo-trans.blogspot.com/2019/08/market-square-tax-abatement-isnt-issue.html

Edited by KJP
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^If the city is able to get better terms on the abatements, I’ll be happy they pushed for it.  That’s money that can be invested in the city. But if the way the city is going about it results in this project falling through, I’ll be beyond apoplectic. Talk about shooting yourself in the foot. It’s important for everyone to keep in mind that the discussion is over tax money that does not exist yet and will not exist without this project happening. Right now it looks like Metroparks and city schools are being reasonable. 

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And just like the city's 15-year, 100 percent tax abatement which it routinely awards to similar developments, the state's exemption wouldn't apply to land -- only to buildings.

 

This isn't quite right. The 15 year 100% abatement is only for the residential part of the development. The TIF, which we've now seen reguarly, would be for the non-school portion of the remainder (in this case office and retail).

 

Harbor Bay's empty retail plaza is solely their fault for putting the cart before the horse. Those letters of support are mostly worthless. Except for Councilman McCormack, the rest are trades and non-profits.

 

I didn't get a chance to read the Aug 13 measure yet. Did it include any contingincies or drawbacks if the office workers are simply relocated from somewhere else in Cleveland? Otherwise their promises of "new jobs" is empty.

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50 minutes ago, Mendo said:

Harbor Bay's empty retail plaza is solely their fault for putting the cart before the horse.

 

What is the city's approval of a demolition permit regarding the retail plaza?

 

The rest is opinion.


"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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The argument this project deserves a 30 year 100% tax abatement is unacceptable. Cleveland has one of the worst poverty rates in the country. These tax dollars will go on to be invested in poorer neighborhoods and schools. I feel as though everyone sees a flashy design that can't work without large tax exemptions and argue the neighborhood needs THAT project. If this project cannot survive without a substantially lower tax abatement, it simply shouldn't be built.

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9 minutes ago, KJP said:

 

What is the city's approval of a demolition permit regarding the retail plaza?

 

The rest is opinion.

 

Its not the city's responsibility to make sure they have financing in place before approving demolition permits.

 

My comment about the residential abatement is fact. Your statement compares apples to oranges.

 

As for the rest of comment yes its opinion. That's what we do here.

 

Edited by Mendo
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2 minutes ago, Mendo said:

 

Its not the city's responsibility to make sure they have financing in place before allowing demolition.

 

My comment about the residential abatement is fact. Your statement compares apples to oranges.

 

As for the rest of comment yes its opinion. That's what we do here.

 

If the city didn't want another vacant lot, let alone across street from the West Side Market, then why shouldn't it check to see if financing is in place first?

 

Abatements are often awarded for commercial projects.

 

@Metz44 The city doesn't exist in a vacuum. The city is competing with others that are vying for residents and employers, and all of them use tax abatements. This project will add 1,000+ jobs, all located at a busy transit hub, which will help address the city's poverty situation.

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I love love love this project, but I'm firmly in agreement with the city.  If the state wants to write a check, fine, but it needs to do it with its own checkbook. Home rule is too precious, especially the way politics in the cruddy state is bifurcating.

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Acknowledging that I don't know all the discussions that might have taken place being the scenes, the developer seems pretty naive here.  They tried an approach that hasn't been used for this sort of development before (certainly in Cleveland, maybe in the state) and that would create a much larger abatement than is typically awarded and didn't seem to get their ducks in a row with the affected parties beforehand.  While the specifics are different, if they followed the Nucleus discussions they would have known that this would be contentious.  I really like this development and want to see it move forward, but feel like the developer has made some pretty obvious mistakes in how they went about this.

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The developer overreached with the 30-year tax exemption but the city overreacted to someone other than them possibly awarding an abatement. If the city were to offer a income tax TIF to the schools, Metroparks etc, I'm this could be worked out with a 15-year exemption.

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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^Why should anyone other than the city be allowed to offer an exemption from city taxes?  It's an astonishing and hypocritical overreach from the state government to make this program available for these kinds of projects without explicit city support.

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12 minutes ago, StapHanger said:

^Why should anyone other than the city be allowed to offer an exemption from city taxes?  It's an astonishing and hypocritical overreach from the state government to make this program available for these kinds of projects without explicit city support.

Does the State even talk to the City?

 

It seems absolutely ridiculous that the state would offer anything before talking to the city.

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10 minutes ago, Frmr CLEder said:

Does the State even talk to the City?

 

It seems absolutely ridiculous that the state would offer anything before talking to the city.

OADQA won't approve the financing without city approval. This is such a clear case of overstep that the city can just threaten a lawsuit. Everyone knows how the case would play out.

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4 minutes ago, Metz44 said:

OADQA won't approve the financing without city approval. This is such a clear case of overstep that the city can just threaten a lawsuit. Everyone knows how the case would play out.

"Won't" approve or "shouldn't" approve.

Where's the communication breakdown?

Edited by Frmr CLEder
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I’m a big supporter of this project. It’s very important that it happens, but I see the city’s perspective. I don’t even think their big issue is this particular project. It’s the fact that if they let this developer get this one off, whats stopping the next developer and the next one and the next one from doing the same damn thing? It sets a precedent. I’m a firm believer of giving projects whatever they need to make it happen. I understand that subsidies and abatements are critical in making the developments that we want a reality in the city. But I think the city should be firmly in charge of that process unless they work WITH the state to make that kind of abatement happen. Letting this developer get away with doing an end run around the city (especially when all accounts are that the city was supportive of the project) sets a bad precedent. 

Edited by inlovewithCLE
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1 minute ago, Frmr CLEder said:

"Won't" approve or "shouldn't" approve.

Where's the communication breakdown?


Obviously some sort of communication breakdown.  According to @KJP blog the ward councilman had sent a letter of support (among others) but the administration apparently did not even know the hearing was going forward until just before it happen.  Very strange or somebody was dropping the ball.

 

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21 minutes ago, KJP said:

If the city didn't want another vacant lot, let alone across street from the West Side Market, then why shouldn't it check to see if financing is in place first?

 

Financing is usually contingent on the developer getting city approval, like certs of appropriateness and demo permits, not the other way around. Besides that, financing falls apart all the time. Nothing is official until loans are closed and that won't happen until a few weeks before ground breaking long after demo permits have been issued.

 

Quote

Abatements are often awarded for commercial projects.

 

For example?

 

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3 minutes ago, marty15 said:

If this gets approved, watch Stark scramble to OADQA with a timber framed NuCLEus. 🙃

Slightly revised as a 4 bedroom duplex with a hot dog stand on the sidewalk

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12 minutes ago, bumsquare said:

Slightly revised as a 4 bedroom duplex with a hot dog stand on the sidewalk

 

I see it as a three story boutique motel with a BW3 on the corner

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HaHa you gotta know Stark is on his way to Home Depot/Menard's as we speak. He is in line at the service desk with new renderings in hand looking for tax breaks on bulk Timber...

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53 minutes ago, Mendo said:

 

Financing is usually contingent on the developer getting city approval, like certs of appropriateness and demo permits, not the other way around. Besides that, financing falls apart all the time. Nothing is official until loans are closed and that won't happen until a few weeks before ground breaking long after demo permits have been issued.

 

 

For example?

 

 

NuCLEus. Flats East Bank and while, not an abatement, the Hilton hotel doesn't pay any real estate taxes (building AND land) because it is a county-owned building.

 

49 minutes ago, marty15 said:

If this gets approved, watch Stark scramble to OADQA with a timber framed NuCLEus. 🙃

 

As well they should. Hopefully with a 15-year state tax exemption and a TIF to give some income tax to the schools/metroparks/etc. Set the bar with Market Square. Other applicants will then follow. No big project can happen in low-rent/high-cost Cleveland without tax abatement and other public incentives. The city needs to look at this from 30,000 feet, not from 601 Lakeside Ave.

 

BTW -- yes, the developer and the state needed to do a better job of developing a consensus before the Aug. 13 OAQDA meeting. Since then, the developer has had productive discussions with all parties EXCEPT the city which is clinging to its narrow "only we should be allowed to grant tax abatements." Yes, the city's support should be secured first. But who cares who ultimately does the abating??

Edited by KJP
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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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Just now, KJP said:

NuCLEus. Flats East Bank and while, not an abatement, the Hilton hotel doesn't pay any real estate taxes (building AND land) because it is a county-owned building.

 

No. NuCLEus and FEB didn't get a 100% abatement for the commercial parts of the development. Stark asked for a TIF for the full amount of the non-residential portion and was denied. What he got was the "standard" TIF which excludes the share that goes to CMSD. What Harbor Bay requested was unprecedented and the city was smart to step in. If they negotiate something more inline with the typical subsidy, fine at least they aren't continually moving the bar.

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I recall that numerous projects over the years to attract employers to Cleveland involved tax abatements. And if these aren't including downtown, then no wonder we have so little new construction downtown. It's easily the most expensive development type and location in the region. If the city isn't doing this, then it's probably time the city revisit this policy. We have so much catching up to with our peer cities, let alone the likes of Chicago, New York, etc. The city needs to change or this project, Voss rehab, Carnegie TOD, and at least two unannounced projects on West 25th are all dead.

Edited by KJP
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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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1 hour ago, KJP said:

 

BTW -- yes, the developer and the state needed to do a better job of developing a consensus before the Aug. 13 OAQDA meeting. Since then, the developer has had productive discussions with all parties EXCEPT the city which is clinging to its narrow "only we should be allowed to grant tax abatements." Yes, the city's support should be secured first. But who cares who ultimately does the abating??

 

Would you support a state law that aimed to reinvigorate City of Cleveland retail by making all sales exempt from RTA's sales tax?  Should the state have the power to pass such a law?  There are big questions at stake here.

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5 minutes ago, StapHanger said:

 

Would you support a state law that aimed to reinvigorate City of Cleveland retail by making all sales exempt from RTA's sales tax?  Should the state have the power to pass such a law?  There are big questions at stake here.

 

No one is taking any property tax revenues away from anyone. These buildings do not exist.

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I am curious about Kerry McCormack's (a fan favorite on this forum) position regarding the state financing.  According to @KJP he sent a letter in support to the board (along with many others in prominent positions).  In doing so is he in favor of the loss of local control and/or the length of the tax abatement (which seems to be a of concern many here) or was he simply ill informed (and/or did not do his homework).

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I believe the response to this is from the post above from KJP.  The buildings do not exist, hence to tax income.  Build the buildings, increase land value, add income tax from new employers, add increased tax from new people living in the area.  If this project is not built it is a negative for the area and Cleveland as a whole. If someones feelings are hurt because developer found another route then the said person needs to not be so thinned skinned. 

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A lot of the disagreement in this thread is between doing whatever it takes to get this awesome project done vs possible unintended long term consequences.  I wonder if there's the same sort of split between McCormack and other city leaders. 

 

[And the idea that the city is objecting because its "feelings are hurt" is annoyingly obtuse.] 

Edited by StapHanger
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