CUYAHOGA FALLS: Since the Portage Crossing project first came to City Council in 2009, it has grown 40 percent in size and $17 million in the amount of money to be invested by tenants and developer Stark Enterprises.
The retail center will be built in one phase instead of the original two and is 90 percent leased, according to Stark Enterprises chief operating officer Steve Rubin. Giant Eagle is expected to break ground in spring of 2013. Rubin expects Portage Crossing stores and restaurants to open sometime in 2014 — two years earlier than expected.
For their efforts, Stark Enterprises might get the city’s 25¼ acres for free.
This week, the Falls Council’s finance committee discussed a modification of the city’s contract with developer Robert L. Stark that changes the purchase arrangement.
Falls development director Sue Truby said the contract modification took about six months.
Originally, Stark Enterprises was to pay nearly $3.8 million for the property, $2 million of which would have been deposited into a fund that Stark could draw from during construction.
The modification calls for the entire purchase price to be deposited into a “State Road” fund. Stark will be able to use the entire amount as reimbursement for construction costs, presenting receipts or completed work orders to draw from that fund.
Stark has already paid his half of the $900,000 cost of a parcel on the corner of State Road and Portage Trail that housed a BP station.
He has also purchased additional property to expand the project, and must turn over part of it to the city for road and utility improvements.
Although the land will ultimately cost Stark nothing, that doesn’t mean payments of the $11 million the city spent to buy and improve the State Road property will come from the city.
The project will be financed through an Ohio Department of Development program called “payment in lieu of taxes,” or PILOT.
Under the PILOT program, 78 percent of the property taxes assessed to Stark on the unimproved land will be used to pay down the debt over 30 years.
The remaining 22 percent will go to Falls schools. Truby estimates the school share at about $350,000 annually, more than double the revenue from the original project.
Because Portage Crossing has grown from 279,000 square feet to 391,820 square feet, the estimated taxes used to pay the debt will be more than $300,000 higher, or more than $1 million a year, Truby said.
Having the extra money to pay the notes means that although they have 30 years to pay it off, it should be paid in half the time, she said.
And the schools will receive nearly double their expected share — about $350,000 annually.
Despite the increase in the project size and amount of investment by the developer and the anchor stores — from nearly $41 million to almost $60 million — at least one council member thinks giving Stark the land is “way too generous.”
Carol Klinger said she agrees the land must be redeveloped. But she wondered what other prospective developers might have done if they knew they would get the land for free.
“We continue to give and give and to further that point, we were asked to extend the contract and they knew the terms were changing and they were going to get the land for nothing,” she said.
Klinger also objected to the city spending more than $3 million for road and utility improvements for the project, although about half of the money is from state and federal grants.
“Normally when someone gets land for development, they do all kinds of improvements,” Klinger said. “That’s huge.”
Councilman Ken Barnhart said he is grateful the project is coming.
“We have to remember this is a partnership,” he said. “School revenue increases and the city benefits from a larger project.”
Truby said it’s not the Falls investing in the public improvements or giving the land to Stark that’s huge.
“What’s huge to me is another $17 million on top of the project, another $5.3 million (over 30 years) for the schools,” she said. “We have to look at what is the bottom line.”
The council is holding the contract to discuss it June 18.