Oakwood’s legacy: It’s not a walk in the park

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Bob Rosenbaum

First Interstate Properties’ Mitch Schneider, as everyone knows, wants to develop the former Oakwood Club property – part retail, part high-density residential.

A large number of people have been vocal about not wanting the development. They reason that we have enough retail and a shortage of green space.

I happen to agree with them. But let’s take opinion out of the equation.

Objectively speaking, there’s not much anyone can do to stop this. And it’s a lose-lose for Cleveland Heights.

Schneider plans to build his retail development on the South Euclid portion of the property.

While South Euclid’s City Council will need to vote on a zoning change for that site, it has already signaled its intent to do so. Why? Councilwoman Jane Goodman, who claims to be the environmentalist amongst the bunch, has written on Facebook that she supports the development because:

1.     It’s the best they’re likely to get; and

2.     Why should South Euclid allow Cleveland Heights and University Heights get all the commercial tax revenue?

Here’s the real reason: South Euclid is taking a bath at Cedar Center. It spent nearly $17 million to  buy the 12-acre property four years ago as part of a development agreement with Coral Co. Now that project is two years behind schedule with no progress in sight.

It was not a good deal. Schneider’s is about 50 times better; he paid just over a 10th the price ($1.8 million) for five times more land (62 acres). He has rights to buy the remaining Oakwood acreage at an undisclosed price, according to The Plain Dealer.

Who can blame S.E. City Council for jumping on a new development opportunity? For them, this isn’t just an attractive development; it’s a chance to dig out of the Cedar Center morass. Especially since Schneider isn’t asking for incentives, abatement or anything except the bureaucracy’s approval to proceed. And Schneider is a good developer – by which I mean that he does what he says he’s going to do.

And that’s the real concern.

Schneider has said the development will be “value retail”: the likes of Wal-Mart, Target, Kohl’s and Home Depot. Just like Severance and University Square – neither of which is thriving, and both of which reflect poorly on their management.

That’s part of Schneider’s calculation. For years, he must have been wondering when these competitors would show signs of life. With the temptation of Oakwood, he probably decided they never will, so now he’s going to go right after them – taking tenants and, if not, certainly their customers.

The result? Cleveland Heights or University Heights – or both (and the CH-UH school district in either case) – will lose commercial tax revenue and gain blight.

That’s only half the problem.

The other half is that the old Oakwood clubhouse, swimming pool and other amenities are located on the Cleveland Heights end of the property; so that’s where the residential development has to be located.

Unfortunately, while commercial development is additive to the tax base, residential development, as a rule of thumb, costs more in services than it brings in taxes. So while Schneider’s plans will make money for South Euclid, they’ll cost money for Cleveland Heights.

Our City Council is powerless to stop the South Euclid side from proceeding. But to  build high-density residences, Schneider needs to win a zoning change from Cleveland Heights – from single-family residential to multi-family residential.

The city could choose not to go along with this. But that doesn’t mean First Interstate is going away. The retail project doesn’t depend on the residential project to succeed. So as long as South Euclid is on board, Schneider is going to move forward with the most disruptive part of his plan.

What will he do with the Cleveland Heights property if the city refuses to work with him? He hasn’t bought it yet, so it may just sit and fall into disrepair. Eventually, someone will come along with some sort of development plan. But unless they figure out how to make money from greenspace, it won’t likely be a park.

Schneider doesn’t seem predisposed to owning a park. Neither is Cleveland Heights.

Which is why, no matter how this plays out, South Euclid wins, First Interstate wins and Cleveland Heights doesn’t.

Comments

  1. bfw says

    Your analysis is spot on. The Cedar Center project never should have happened. Cedar Center was fully occupied with businesses that served the neighborhood. Welo saw Legacy Village, got starry-eyed, and had to have one of her own. The problem is, there’s no easy freeway access. Welo (ab)used eminent domain to tear down Cedar Center and now wants TIF tax breaks for it. Coral would never have gone in there under free market conditions.

  2. says

    Thanks for the note. Only after I posted this did I become aware of Coral Co.’s request for tax-increment financing from the CH-UH school district. I’m not yet even sure why the South Euclid parcel would be eligible from TIF from a different school district. There might be a deal to be made here, but I doubt it. The school board could tell South Euclid that the TIF request is dead unless it gives up on the Oakwood retail development; it would be justified, since both developments would seem to have potentially negative impact on CH-UH. But I dont’ know enough about the TIF request at this point to understand how important it really is to any of the parties involved.

  3. bfw says

    “I’m not yet even sure why the South Euclid parcel would be eligible from TIF from a different school district.”

    The TIF impacts all property taxes on a parcel, so it involves all the taxing parties – the city, the school district, and the county. Presumably, they must all sign off on it. School districts and cities are separate entities whose boundaries, authority and responsibilities are not related. People confuse them because school districts are often named for the cities with which they share the greatest amount of area, but nothing should be read into the name.

  4. win says

    “I’m not yet even sure why the South Euclid parcel would be eligible from TIF from a different school district.”

    There is a section of S. Euclid that is in the CH-UH School District. Cedar Center is a part of that area, hence the property taxes go to CH-UH not S. Euclid.

    As to the Cedar Center issue in general. Years ago the plan was to redevelop both sides of the street as one unified development. S. Euclid refused to step in and get the multiple property owners to do anything on the North side so Coral dropped the plan and moved forward with the re-do of the southside in UH.

    Is there any citizen opposition to the plan for Oakwood in S. Euclid?

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