Architect's rendering of the nuCLEus project.
The Plain Dealer's Michelle Jarboe published one of the more important news updates of the year
yesterday. A unique Tax Increment Financing proposal for the the theoretical nuCLEus skyscraper complex is no longer being considered by the Cleveland Metropolitan School District.
Jarboe reported that Eric Gordon, CMSD's CEO, said that the TIF package was no longer on the table — the school board will not vote on it — due to "changing circumstances" which made the deal "less compelling."
"There's the very real issue of why would we be giving tax relief to this builder or any builder ... when taxes are going up," Gordon told Jarboe.
The TIF proposal would have allowed Stark Enterprises, the nuCLEus developer, to pay CMSD a one-time upfront payment of $18 million in lieu of 30 years of property tax gains, estimated at $120 million. Like other TIF dollars, that portion of the increased taxes, (which arise from increased property value), would help finance the debt on the skyscraper's construction. The disparity in Stark dollars ($18 million vs. $120 million) is extreme, but the $18 million was sold as a good deal because CMSD could have immediately applied the funds to school construction and been eligible for matching state funding: up to two dollars for every dollar spent, supposedly. Gordon, for his part, said that he believed Stark has made a good-faith effort to treat the district well.
But with rising tax values, the $120 million estimate may be low. And Jarboe reported that CMSD is currently mired in intense disputes with the Ohio Facilities Construction Commission about school construction costs and which funds may be eligible for additional state money.
If it had gone forward, it would have been the first such TIF arrangement locally. Cleveland Mayor Frank Jackson has always insisted that the schools, which receive about 60 percent of property taxes, not be short-changed, so current TIFs only apply to the non-school portion of property tax increases.
After Gordon hosted a series of meetings with parents and community members last summer, the board was slated to vote on the proposal. But it stagnated.
Then, in March of this year, a bill was drafted by a Stark Enterprises financial advisor that would give investors into nuCLEus and other potential "transformational mixed-use development" projects an automatic 1o-percent rebate. The bill was championed on the merits of nuCLEus' business-attraction potential and its icon-status aspirations.
"Can you imagine if the Terminal Tower Complex was never built, what the Cleveland skyline would look like?" Stark VP Steve Coven asked a statehouse committee in March. "You can’t, because it is forever associated with our skyline. It is our goal that our great-grandchildren will be saying the same things about the nuCLEus project 100-plus years from now."
Jarboe reported in June
that the bill had been broadened considerably. Though it was tailored specifically for nuCLEus at the start, much smaller projects, including the Flats East Bank, are considered "transformational" in the bill's new language. The bill has passed the Ohio House and is pending in the Senate.
But evidently the market just isn't hot enough to build nuCLEus without additional subsidies. The project was initially pegged at 54 stories and $500 million, but plans have now changed.
"Revised plans are more modest," Jarboe wrote, "with shorter buildings, fewer apartments, more office space, no hotel — and a smaller budget. Stark also has broken the development into phases, spreading out the investment over time."
But can you imagine a nuCLEus that's not a 54-story downtown icon?