The 15- and 18-story Farnsleigh Apartments are due to see construction start as early as next month thanks to city incentives that were approved this week. The high-rises next to the Van Aken District, seen at bottom, will be the tallest buildings in Shaker Heights when completed sometime in late 2023 or early 2024 (SCB). CLICK IMAGES TO ENLARGE THEM
City OKs incentives for phases 2 and 3
In a sudden development, a major real estate construction project that was rejected for state financial incentives earlier this year has found its salvation from its host city Shaker Heights. And not only were the planned high-rises in phase two of the Van Aken District blessed with city incentives, a proposed office building in phase three was also a beneficiary of the city’s generosity. The approvals came earlier this week during a City Council meeting as an emergency measure, meaning it would not go through the usual readings at three separate council meetings and thus without public input.
Located at the east end of Van Aken Boulevard, at the intersection of Chagrin Boulevard and Warrensville Center Road, the Van Aken District is designed with density and mixed-use. It will serve as a ridership anchor at the eastern terminus of the Greater Cleveland Regional Transit Authority’s (GCRTA) light-rail Blue Line. The first phase of the Van Aken District was a $102 million investment completed in 2019. It features 103 apartments, 64,000 square feet of offices and nearly 100,000 square feet of retail including a 21,000-square-foot food hall.
Phase two is the 228-unit Farnsleigh Apartments, a pair of high-rise buildings 15 and 18 stories tall proposed on 2.5 acres of land in the 20200 block of Farnsleigh Road. On July 11, City Council approved a $4 million forgivable loan to the developer The Max Collaborative, an affiliate of the RMS Investment Corp. At Monday’s meeting, the developer indicated that this would help fill a gap in their financing for the project and allow them to start construction on the high rises next month.
The high-rise Farnsleigh Apartments are represented here as “Phase 02” as shown in the upper-left portion of this 2021 site plan. The third phase including offices and parking over retail are shown at the bottom-center portion of the site plan. The city-owned former Qua Buick-Pontiac development site is the light-green area at the southeast corner of Farnsleigh and Warrensville Center roads. North is at the top (RMS).
Additionally, council approved a change in the project’s tax increment financing (TIF) formula from the first phase that will allow the developer to generate approximately $3 million per year for the development — including the third phase. That phase would have a roughly 100,000-square-foot office building and parking garage built over ground-level retail on land at the northwest corner of Chagrin and Warrensville Center. The city-owned land on which both phases two and three would be built are currently vacant. They generate no property or income taxes for the schools, libraries, parks or city.
In the first phase, the 30-year TIF formula was 75-25 meaning the developer is using the 75 percent of property taxes as payments in lieu of taxes to retire a construction loan, as Thomas Jewell explained in his article. That was amended by City Council for all phases to an 88-12 split, meaning the TIF will generate PILOTs of 88 percent. However, because of the project’s growing scale, the new buildings and improved lands will generate $374,000 in new projected revenue to the school district, according to city documents referenced in Jewell’s article.
“The administration (of Mayor David Weiss) is recommending that the $4 million request for Van Aken Phase 2 come from two reserves, the Economic Development and Housing Reserve Fund and the general fund in equal amounts,” said city Finance Director John Potts in a June 30 memo to the mayor and Chief Administrative Officer Jeri Chaikin.
Van Aken District conceptual rendering of phase three including an office building and parking over ground-floor retail at the northwest corner of Chagrin Boulevard at lower left and Warrensville Center Road. Phase one of the Van Aken District is at the top-center of the image (RMS).
Potts said the project is expected to generate $1 million in new withholding income taxes from construction workers along with future income taxes as a result of the new residents living in the high-rise Farnsleigh Apartments. As those tax revenues come in, he said the city would first replenish the general fund reserve and then the Economic Development and Housing Fund whose current balance is $4.8 million. It is anticipated that the payback period will be less than eight years.
“The administration is making this recommendation to utilize these funds as an alternative to borrowing,” Potts said. “This project represents an income-producing investment and our intent is to reimburse the city’s reserves to the full amount. While that process will take a number of years, it is important to point out that we are not permanently reducing the reserve but rather proposing a short-term ‘borrowing from ourselves’.”
Weiss said, due in part to the Van Aken District, the city is receiving “robust” interest in the 2.3-acre former Qua Buick-Pontiac site at the southeast corner of Warrensville Center and Farnsleigh. The city has owned the vacated property since early 2014 but didn’t issue a request for proposals until earlier this year from developers and other potential end users on redeveloping the site. Some of the proposals are for a mid-rise residential building; some have ground-floor commercial uses and parking in different locations.
Public funding was also awarded late last year for the Van Aken District Public Realm Plan, a partnership of the city, GCRTA and Cleveland Electric Illuminating Co. (CEI), a division of FirstEnergy. GCRTA will install new relocated train tracks to better integrate the Blue Line trains and busway, new waiting shelters to protect passengers from the elements, and a new waiting area with a comfort station with restrooms.
A close-up of a conceptual plan for the public realm improvements at the bus-rail station at the Van Aken District in Shaker Heights. The different phases of surrounding Van Aken District development are shown here (WSP).
Last September, the Ohio Department of Transportation’s Transportation Review Advisory Council approved $4.2 million for light-rail improvements on GCRTA’s Blue Line, including the relocation of tracks at the Warrensville station. In 2023, the city will receive $1.8 million in Transportation Alternative Program funds from the Northeast Ohio Areawide Coordinating Agency to fund streetscape and plaza improvements in and around the station. Public realm construction is planned for next year.
“This is unique for GCRTA,” says City Planning Director Joyce Braverman in a written statement. “CEI will upgrade electrical service and we will add lighting and improved walkways, so as you approach the busway, it looks polished and of the same quality as the rest of Shaker.”
The 18-story Farnsleigh Apartments tower will be 6 inches shy of 200 feet tall according to an RMS presentation to secure variances from the city’s board of zoning appeals for the project. The 15-story tower will be 165 feet 6 inches tall. Shaker Heights’ tallest building currently is the 11-story, 164-foot-tall Tower East office building, 20600 Chagrin Blvd., built in 1968. However, Tower East set on land that is about 25 feet higher than where the Farnsleigh Apartments will rise, the RMS presentation shows.
Last year, RMS Investments sought $11 million from Ohio’s Transformational Mixed Use Development (TMUD) tax credit program to help fund phases two and three, plus public realm improvements. However, its application was not approved when the Ohio Department of Development announced its award winners in March. The second round of TMUD applications were submitted last week but it is not known if RMS will make a second try at a tax credit.
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