Rendering of the planned Bridgeworks mixed-use development in the Hingetown section of Cleveland’s Ohio City neighborhood. The development was turned down a second time by the state for a so-called Megaprojects tax credit (Mass/LDA). CLICK IMAGES TO ENLARGE THEM
High-rise Ohio City project in limbo
The development team that has sought to build the high-rise Bridgeworks development, 2429 West Superior Viaduct, in the Hingetown section of Ohio City is left with more questions than answers today after being left off the awards list for Ohio Transformational Mixed Use Development (TMUD) tax credits the second time. The Ohio Tax Credit Authority passed over Bridgeworks in awarding TMUD credits to other projects statewide.
Bridgeworks LLC, a partnership comprised of M Panzica Development and Grammar Properties, sought $9,299,608.90 in tax credits in round two of the TMUD program. Last year it sought $7,944,817.92. The higher amount this year takes into account rising costs of construction and higher interest rates resulting from the Federal Reserve raising the key rate in recent months.
The 15-story project at the northeast corner of West 25th Street and the Detroit-Superior Bridge would provide 130 hotel rooms managed by an undisclosed hotelier, 140 market-rate apartments, an 11th-floor restaurant, 12,000-square-foot class-A office space, ground-floor retail space, outdoor plazas and 210-space parking garage. Total cost of the project is estimated at $100 million including for property acquisition, design and legal work, plus demolition with $73 million just for construction.
Bridgeworks development team leader Michael Panzica told NEOtrans today his project was left off the TMUD award list and said it’s “too early to say” what their recourse will be in the absence of a TMUD credit. To be eligible for a TMUD credit, a major city development must meet several minimum requirements — represent an investment of at least $50 million and be either 350,000 square feet in mass or 15 stories in height. While Bridgeworks’ 289,429 square feet is too small, per its building permit application to the city, its 15 stories allows Bridgeworks to compete for subsidies from the state’s so-called megaprojects program.
Site plan for the Bridgeworks development at the northeast corner of West 25th Street and the Detroit-Superior Bridge (Mass/LDA).
However, NEOtrans has learned that, before today’s announcement, the developers began looking at other public funding options in case they didn’t get a TMUD credit to help offset rising costs of construction and interest rates. Among the options are an Ohio Brownfield Remediation Program grant to raze, clear and clean vacant Cuyahoga County Engineer buildings on the 2-acre site. A city source who asked to not be identified said that the city will not allow the developers to demolish the buildings until the financing is in place because it doesn’t want a vacant lot on the high-profile corner.
Also, last month, the developers began seeking a 30-year tax increment financing (TIF) agreement with the city for non-school taxes. The TIF diverts the increase in future property taxes based on the proposed improvements for up to 30 years though it does not exempt the developer from payment in lieu of taxes (PILOTS) to ensure the Cleveland Metropolitan School District receives what it would have otherwise received if not for the TIF.
In return, the city is requesting the developers to reach various city goals or other objectives in construction of the building for Minority Business Enterprise/Female Business Enterprise/Cleveland Area Small Business participation, Fannie Lewis Cleveland Residential Employment participation, a Workforce Development Agreement for all new jobs and a Community Benefits Agreement.
Another financing option is a New Market Tax Credit (NMTC) passed through two local entities from the federal government. In October, the U.S. Treasurer Chief Lynn Malerba awarded $80 million in NMTCs to the Northeast Ohio Development Fund, LLC (NEODF), an arm of the Cleveland-Cuyahoga County Port Authority and the Cleveland Development Advisors (CDA), the real estate affiliate of the Greater Cleveland Partnership. NEODF was awarded $45 million and CDA received $35 million. Those two organizations will redistribute the credits to project sponsors who apply for them in the near future.
Bridgeworks has secured all of its legal entitlements from the City Planning Commission, Landmarks Commission and Board of Zoning Appeals and is ready for construction. After the state declined to support the project for a TMUD credit last year, the building’s height was reduced by 24 feet to 162 feet to save money and a more robust offering of public realm amenities at a plaza at West 25th and Detroit-Superior was included. Despite the changes, Bridgeworks retained the same number of apartments, hotel rooms and square footage but in a slightly wider structure.