When Pennrose LLC won a $1 million tax credit allocation this week from the Ohio Housing Finance Agency for the redevelopment of the Warner & Swasey factory, it not only boosted the project’s development prospects, it also boosted Midtown’s.
Warner & Swasey’s tool-making manufacturing plant and offices at 5701 Carnegie Ave. were active from 1880 to 1990. The property has sat vacant and rotting away for 30 years under the ownership of the city of Cleveland, which has been seeking a buyer and developer to make a go of the property.
Pennrose won a 2018 bid to acquire the property that includes buildings totaling 220,000 square feet. The city committed $250,000 for structural stabilization and exploratory assessments and $3.75 million in other funding, according to project documents made available by Philadelphia-based Pennrose.
The derelict plant, windowless, tagged with graffiti and vegetation sprouting up here and there, is a ball and chain to efforts to redevelop Cleveland’s Midtown district. Located midway between downtown and University Circle, Ohio’s largest and fourth-largest employment hubs respectively, Midtown has been relegated to pass-through status for decades.
That started to change in the 2010s for the east-west thoroughfares like Euclid, Chester and Carnegie avenues where vacant lands and underutilized buildings have found new life. But that’s not been the case for its main north-south corridor — East 55th Street.
“Redeveloping the Warner & Swasey building will be incredibly catalytic for Midtown and have ripple effects for development on Carnegie, Euclid, Chester and East 55th,” said Jeff Epstein, executive director of MidTown Cleveland Inc., a nonprofit community development corporation.
|A conceptual land use plan for the area along East 55th Street
between Chester, Euclid and Carnegie is shown here (Pennrose).
“The building is a highly visible vacant and blighted structure on one of the busiest commercial corridors in Northeast Ohio and its redevelopment will be a highly symbolic way of preserving an important piece of Cleveland history,” Epstein added. “We expect the Warner & Swasey redevelopment to stimulate future residential, retail and office development in the area.”
He considered the project to be the newest critical anchor development for the neighborhood, joining the connective community fabric being formed by assets like the Dave’s Market and eatery, UH Rainbow Center, Dunham Tavern, Agora Theater, DigitalC’s MidTown Tech Hive, Tru hotel by Hilton and the future Cleveland Foundation headquarters.
“These projects all reinforce one another and bring important elements of a strong and connected neighborhood,” Epstein said.
Another one of Midtown’s most visible properties is at the corner of Euclid and East 55th where a gas station stood until last year. That property was acquired by Euclid 55 Partners LLC in July 2019 and then sold to the Cleveland-Cuyahoga County Port Authority in December, county records show. Euclid 55 Partners is a combination of MidTown Cleveland Inc. and Berusch Development Partners.
That transaction put five vacant parcels of land totaling 2.6 acres bounded by Euclid, East 55th and Prospect Avenue under the ownership of the port authority for land assembly and environmental remediation. While 2.6 acres doesn’t sound like much, in an urban setting it’s a large, blank canvas for developers to pursue their vision.
“The vision for the East 55th site isn’t yet clear as the focus is on environmental clean-up for the time being,” said Russell Berusch, president of Berusch Development Partners.
|Site plans for the Warner & Swasey redevelopment (Pennrose).
He said the coronavirus pandemic has slowed his development efforts in general. But progress on the Warner & Swasey redevelopment will help his efforts to secure end-users and financing in the long run, however.
“Certainly its redevelopment would be a big shot in the arm for the area,” Berusch said.
That applies to another big piece of land, this one assembled by the Cleveland Foundation. In March, the Greater Cleveland Regional Transit Authority’s board approved the sale of 2.38 acres of land at 5508-5510 Euclid for $550,000. The title transferred on April 22 to Civic Property Development LLC, an affiliate of the Cleveland Foundation.
“As part of our collaborative vision to create a new civic district in Midtown that connects downtown with University Circle, our board of directors approved strategic land acquisition to help steward thoughtful, inclusive development in the short- and long-term that will benefit our community,” said a Cleveland Foundation spokesperson.
The foundation also is moving its headquarters from the Hanna Building in downtown to alongside the Dunham Tavern, 6709 Euclid. The foundation acquired property in December for a three-story, 50,500-square-foot headquarters building on the northeast corner of of Euclid and East 66th. On the northwest corner, the foundation proposes a future Center For Innovation measuring 100,000 square feet.
The Warner & Swasey redevelopment is a $53 million project that will add 140 senior and workforce housing units, plus 30,000 square feet of office space for job readiness, workforce development and employment training organizations. A small amenity retail component will also be included for residential and office tenants, Pennrose planning documents show.
|View of the machine shop portion of the Warner & Swasey
plant, to be used mostly for covered parking, with down-
town Cleveland visible in the distance (Scene).
The Ohio Housing Finance Agency’s award this week will be directed at converting a portion of the Warner & Swasey property to 56 units of affordable senior housing. That portion is estimated to cost about $15.6 million. The Ohio Housing Finance Agency’s 9 percent tax credit was the most competitive part of its proposed public funding package. Pennrose requested and won $1 million.
“Affordable housing development, preservation and rehabilitation is critically needed in our state, and we are proud to support these efforts by awarding these credits,” said Ohio Housing Finance Agency Executive Director Sean Thomas in a written statement.
Additionally, Pennrose is seeking $15 million in New Market Tax Credits,?Low Income Housing Tax Credits and historic tax credits but those elements are less competitive. Indeed, as long as a project meets the requirements for some programs, such as the Ohio Housing Finance Agency’s 4 percent housing tax credit, it will receive them.
Pennrose also has $1.25 million in hard debt plus $1.5 million in Opportunity Zone funding but is seeking another $8.5 million in O-Zone equity, according to the project’s pro-forma that Pennrose submitted to the state. At this pace of capital assembly, Pennrose could start construction on the project as soon as title to the property transfers from the city of Cleveland, expected in early 2021.
This is the second project Pennrose has pursued in Cleveland. Six years ago, Pennrose completed a $63 million renovation of the 1927-built St. Luke’s Hospital, closed in 1998, into 139 senior apartments. The project, located at 11311 Shaker Blvd., involved $36.7 million in various tax credits, according to the National Trust for Historic Preservation.
The redevelopment of St. Luke’s was spearheaded by Neighborhood Progress Inc. whose senior vice president of real estate at the time was Berusch. Pennrose- and Berusch-led projects will be across the street from each other at East 55th, if their latest efforts prove successful.