An RDL Architects preliminary drawing of what is now known as Commerce Park IV, 23250 Chagrin Blvd., but will be called Icon after it is transformed into a 147-unit luxury apartment building.
BEACHWOOD, Ohio -- City Council approved legislation Tuesday (June 7) that has Beachwood entering into a tax increment finance (TIF) agreement with a Wisconsin developer who plans to transform an office building into luxury Class A apartments.
Wangard Partners Investment Real Estate Services of Milwaukee plans a $70 million project to convert the Commerce Park IV building at 23250 Chagrin Blvd. (neighboring The Vue apartments) into 147 home apartment units with top-quality amenities.
Those amenities would include a pool, fireplace, dog park and first-floor lounge area and club rooms so that residents can meet, mingle and watch sporting events together. The first-floor common area would also include a gourmet kitchen to prepare food for residents and for special events, a fitness room with weights, a stretch area for yoga and a TV.
The roof, which features a view of downtown Cleveland to the west, will include patios.
The TIF agreement is one in which money is not taken from Beachwood City Schools. The city will forgo about $27,000 per year in property taxes in order to help finance the project.
Ryan Sommers of Project Management Consultants of Cleveland, who is handling the project’s finances, said the school system, when the project is fully completed, will take in about $338,000 annually in tax money, based on a $7.5 million estimate of the completed building.
He said that $7.5 million figure could rise to $10 million as the building becomes fully utilized.
The Commerce Park IV building as it now appears. The building comes with an underground garage, which will be utilized when the building is converted to apartments. The garage will also contain a room to store residents' bicycles. (Jeff Piorkowski, special to cleveland.com)
Not part of the TIF agreement is Wangard’s purchase of a neighboring office building, Commerce Park V, which will remain an office building, but will also be fully renovated with a new roof, HVAC system and more.
The sale of the buildings to Wangard is expected to close this week.
The buildings are now both in financially “distressed” condition. Wangard Chairman and CEO Stewart Wangard, who attended Tuesday’s meeting, said Commerce Park IV is now 40 percent occupied and Commerce Park V, 60 percent occupied.
“I’m all in favor of this project,” said Mayor Justin Berns, who was not present, but called in to Tuesday’s meeting. “This, I believe, is a transformational project.”
James Heller, who serves as Beachwood’s economic development consultant and who worked on bringing the deal together, told council, “In this building, another bar is going to be reached.”
Wangard, who founded his company in 1992, told council that the apartments, to be known as Icon, will be designed to fit the times. As such, he said, the dwellings will provide space for residents to work from home.
With 1,000 jobs expected to be coming to Ahuja Medical Center, and because Beachwood hosts other medical facilities and Eaton’s administrative center, Wangard said, “Our residents will be people who work in Beachwood and the surrounding communities.”
Speaking to Wangard’s statement, Heller, a longtime Beachwood resident and former architect who designed the Commerce Park IV building, said, “I can already anticipate the type of rents that are going to be there, because this is a very expensive venture.”
Heller said that if 50 people living and working from their homes in the building each pay $30,000 per year in income tax, it will equate to $1.5 million.
“The city would get 2 percent of ($1.5 million, or $30,000),” he said.
In accordance with the TIF, Wangard will pay the full tax due in year one and be rebated $42,077. In the project’s third year, Wangard will get a rebate of $189,348 per year to help fund the project.
The $27,000 per year in TIF money is the property taxes that would have gone to the City of Beachwood, while the remaining $162,000 is property tax money that would otherwise be paid to Cuyahoga County and its library system.
Of the project and its potential to open up more development within Commerce Park, a goal city leaders have sought, Heller said, “This is the type of thing that is going to be absolutely eye opening to the public and the city of Cleveland.”
As for the quality being put into the units, Wangard told council, “A nominal 70 percent of the building will have balconies on it, so it’s bringing in a lot of fresh air.
“The kitchens -- these are not builder appliances going in -- we take it to the next level of that. (We’ll have) higher-quality appliances, including stainless steel stoves where your controls are at the front, rather than at the back.
“Every unit will have a washer and dryer, and that’s the standard for (Wangard) right now.
The Commerce Park V office building will be renovated, but remain an office building. (Jeff Piorkowski, special to cleveland.com)
“We use subway tile for a backsplash on all our kitchen cabinets,” he said. “We use quartz countertops. We use what are called firehouse-style sinks. Again, this provides an easier lifestyle, even as far as things like washing your dishes.”
The apartment building will be made up of 40 percent one-bedroom units, 40 percent two-bedroom units, 10 percent three-bedroom units and 10 percent studio apartments.
The project, Wangard said, is costlier than building new, because it involves removing things, such as HVAC, and rebuilding. If all goes, smoothly, Wangard hopes to have Icon ready for residents in 2024.
Council approved the TIF agreement by a 6-1 vote. Opposing was Councilman Mike Burkons. Burkons told Wangard that he expects the development will be well done and wished him the best of luck. Still, Burkons disagreed with allowing for a TIF agreement, stating that TIF should only be used for transformational projects, and that he doesn’t believe Icon is transformational.
In a statement released after the meeting, Burkons said, “I don’t understand how in the first half of the meeting we were told that this developer only does ‘best in class’ projects that ‘raise the bar’ and ‘set a new standard.’
“But the second half of the meeting consisted of council members justifying their vote for the TIF by claiming that if we don’t give them this incentive worth $180,000 a year for the next 30 years, they fear this same developer that only builds ‘best in class’ projects will build crappy apartments that attract the wrong kind of tenants, whatever that means.”
Councilwoman June Taylor had stated during the meeting that if Wangard were to move forward on the project without the city’s assistance, “We could have more apartments not of this caliber. And then, all of a sudden, we attract tenants of which, all of a sudden, we are having a gallery of citizens that say to us, ‘How many more apartments are we going to have in this city, and how many more students are we going to have in the schools that we don’t share values with?’
“That is the refrain you’re hearing in first-ring suburbs right now. That’s what they’re talking about in Shaker Heights, that’s what they’re talking about in Warrensville Heights, that’s why they’ve got a checkpoint now at Pinecrest (in Orange).
“We’re talking about a Class A apartment building that does not currently exist on this level,” she said. “And, from what has been described, seems to have the amenities that’s synonymous with the name, the Icon.”
Taylor also asked for assurances that there will be opportunities for minority- and women-owned businesses to work on the project.
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