Ohio's Tax-Credit Program for 'Transformational' Deals Sees $318 Million in Requests

Michelle Jarboe, Crain's

Property owners and developers are pursuing more than $318 million worth of awards from a new state tax-credit program aimed at landscape-altering projects.

The Ohio Department of Development is vetting 36 applications for the second round of its Transformational Mixed-Use Development Program. Officials have $100 million to give out — up to $80 million for projects in or near major cities, with the rest set for smaller communities.

Applications were due July 8. Development officials have not announced a timeline for making the awards, which must be approved by the Ohio Tax Credit Authority.

The Northeast Ohio suitors include many repeat applicants, plus a few newcomers.

The DiGeronimo Cos. submitted a $16.2 million request — the largest in the region — for a roughly 25-acre slice of Valor Acres in Brecksville. That's the sprawling development planned around the Sherwin-Williams Co.'s future research and development hub, off Brecksville Road.

Plans for the southern end of the property include more offices, apartments, a hotel, a grocery store, a parking garage and a small amount of retail space. The project, making its first run at state tax credits, will rise on a former U.S. Department of Veterans Affairs hospital site.

Sherwin-Williams broke ground for its R&D center last year. The global coatings giant, based in downtown Cleveland, expects to move 900 workers to Brecksville in late 2024.

In downtown Cleveland, the Kassouf family is making a second attempt to secure tax credits for the Tower at Erieview. A $13 million award would help them remake empty office space with a W hotel, high-end apartments and a restaurant on the 38th floor.

On the east bank of the Flats, developer Bobby George is seeking just over $2.9 million in credits to transform Old River Road, where he and Cleveland-based GBX Group have teamed up to revitalize historic buildings on both sides of the street.

Their portfolio includes the Samsel Supply Co. complex, which George hopes to convert into a "wellness hotel" — with short-term rental apartments, a Roman-inspired bathhouse, fitness facilities and other amenities.

The riverfront district, between Main Avenue and Settler's Landing, could include a mix of new construction and preservation, with offices, entertainment, dining and a reimagined streetscape. Early renderings also show opportunities for boat tie-ups and pedestrian access.

Across the river, the developers of the Bridgeworks apartment-and-hotel project asked for almost $9.3 million in their second quest for credits. Graham Veysey, Marika Shioiri-Clark and Michael Panzica are behind the proposal, to replace a parking lot and former county buildings at the western end of the Detroit-Superior Bridge.

In University Circle, the development team behind Circle Square hopes to land $8 million to finish off the first block of their project, which will create a new gateway to the city's educational, medical and arts district.

The Circle Square application spans land southwest of Chester Avenue and Stokes Boulevard, where construction on the Artisan apartment tower is well under way. The rest of the block will include a new Cleveland Public Library branch, topped off by apartments called Library Lofts; a parking garage; retail; and, potentially, a hotel.

At the Van Aken District in Shaker Heights, the Max Collaborative applied for $7 million to help finance a high-rise apartment building north of Farnsleigh Road. The project is the second phase of a plan to create a downtown for the inner-ring suburb.

The Max Collaborative and Uplands Real Estate Partners have been trying to move the deal forward this year, despite rising interest rates and increased construction costs. This is the second time they've applied for state tax credits.

In Lakewood, the developers behind Studio West 117 also fielded a repeat application. Daniel Budish and Betsy Figgie asked for $6.2 million for their multi-building vision of a gathering place for local lesbian, gay, bisexual, transgender and queer communities.

In June, the pair won $5 million in state historic tax credits for the centerpiece of their deal, a revamp of the former Phantasy Entertainment Complex as a series of venues and a home for small businesses. Their broader plans include a fieldhouse sports-and-dining complex, set to open in the fall, and a new apartment building slated to replace a former NTB tire and service center.

And in Solon, a development team led by Lyndhurst-based RHM Real Estate Group filed a $2 million request for an early-stage proposal to establish a town center for the suburb, with residences, retail, dining and parking.

All of those applications fell into the "major city" bucket, where developers statewide are seeking $280 million — more than three times what's available.

The state received almost $37.9 million worth of applications tied to deals in outlying communities, including Canton, Painesville and Youngstown.

The Canton application is for the Hall of Fame Village, an expansive project centered on the Pro Football Hall of Fame. The Hall of Fame Resort & Entertainment Co., which missed out on an award earlier this year, is seeking nearly $15.9 million.

In Painesville, developers applied for $5.4 million in tax credits for a project that will mix redevelopment with new construction. Renew Partners LLC, based in Montville, aims to turn an aging mall-turned-office building called Victoria Place into new offices, apartments and restaurants.

Marous Development Group, based in Willoughby, is in line to build new apartments and ground-floor commercial space on nearby land, between downtown's main square and the Grand River. And the city is planning a new amphitheater near the water.

"It's this one connected project that's turning downtown Painesville into a live-work-entertainment district," said Shawn Neece of Renew Partners.

The largest possible award for any applicant is $40 million.

Only one project, north of Cincinnati in Springdale, is seeking that maximum prize. A project in Columbus applied for $34 million.

Property owners can seek a tax credit credit equal to 10% of a project's costs.

The program also gives insurance companies the ability to offset their state premium taxes by investing in real estate. Insurers will qualify for a credit capped at 10% of their contribution to a deal.

Applicants must demonstrate that the incentives are make-or-break for their projects. They also must show that the state will recoup its investment through tax collections.