$175 million Market Square development gets new life

Although Harbor Bay’s Market Square development may not be as big as it would have been with the financing that was minutes away from being OK’d by the State of Ohio, it will still be a big improvement for Cleveland’s Ohio City neigh- borhood. This old rendering of Market Square shows a plaza off Lorain Avenue (HPA). CLICK IMAGES TO ENLARGE

Like a tree at risk of getting chopped down, a $175 million development in the heart of Cleveland’s Ohio City neighborhood was in danger of being felled. But instead of hearing the cry “Timber!” Clevelanders should soon see a new plan released for the construction of buildings here.

The large mixed-use development combining residential, retail and offices in two connected, uniquely timber-framed buildings at Lorain Avenue and West 25th Street was in danger of being axed by an impasse between the city and Chicago-based developer Harbor Bay Real Estate Advisors.

On one side, Harbor Bay sought a source of non-conventional financing that included an unusually long (30 years) and expansive (affecting not just residential but commercial uses, too) property tax abatement without civic and public input.

And while the school district and Cleveland Metroparks were willing to consider a shorter abatement term, the City of Cleveland refused to concede its abatement powers to a state entity — in this case the Ohio Air Quality Development Authority (OAQDA).

But the impasse was addressed at a Sept. 11 meeting between city officials and the developer. The project could go forward with city incentives rather than state help, although the development probably won’t be in the same form as before, according to Harbor Bay Project Director Dan Whalen.

“We likely will have to revamp” the project, he said. “But we are moving quickly.”

With West 25th Street in the foreground and West Side Market’s tower at far left,?Market Plaza will be a significant addition to Ohio City’s Market District and its urban vibrancy (HPA).

Part of the reason for the expedited development timetable is because Harbor Bay had to commit to contractors and suppliers by the end of September on whether it would proceed with construction.

“The project is 70 percent bid and we can hold those prices for only a limited time,” he said.

Harbor Bay has invested nearly $10 million in the project so far, including buying a retail strip for which it has city permits in hand to demolish. City officials acknowledged the renewed positive dialogue and a shared willingness to move the project forward.

“Yes, there are productive conversations with Harbor Bay,” said Ward 3 Councilman Kerry McCormack confirmed. “The (city’s) normal economic development tools are on the table.”

Those typically include a 15-year, 100 percent tax abatement on new-construction residential, with a tax-increment financing arrangement so the city can share the increased income taxes with the school district during the abatement period.

The existing Market Plaza retail strip has more in common with auto-oriented suburban areas rather than an urban neighborhood with a busy rail station and three 24-hour bus lines that get more than 700,000 boardings at this site per year. Harbor Bay hopes to increase that synergy by demolishing this retail strip and constructing a transit-oriented development here (Google).

Harbor Bay had hoped to get $150 million in bond financing and the 30-year tax abatement approved at OAQDA’s Aug. 13 board meeting. But last-minute letters of of opposition from the city, school district and metroparks nixed the financing and abatement.

OAQDA was approached because Market Square’s timber framing would reduce emissions by 40 percent mostly from reduced heating and cooling, but also from avoiding the manufacture of steel and concrete. The most recent plan was for a 10-story office building and seven-story apartment building connected by a pedestal of ground-floor retail.

While Whalen wasn’t prepared to say how the project would be changed, he said the timber framing for the buildings would remain.

“Timber will still be the focal point,” he said.

Whalen also noted that all of Market Square’s office and retail tenants will be new to Greater Cleveland, bringing more than 1,000 jobs and nearly $11.8 million per year in new sales and incomes taxes to the city and county.

END