Port moves on Broadway Building

Legislation on financial plan transferring to schools, city

As a redevelopment plan for the Broadway Building moves forward, the city of Lorain could take possession of the building — for only a short amount of time.

The transfer could be necessary as local officials from the city, Lorain City Schools and the Lorain Port Authority craft a financial incentive plan for developer Ariel on Broadway LLC to restore the building to a hotel.

On June 12, the Port board approved a resolution that would allow the Port to transfer ownership of the building to the city of Lorain.

“It’s a paperwork part of the process,” said Port Executive Director Tom Brown.

Based on Ohio law, the city must own the building for City Council to consider a financial incentive known as tax increment financing, which also is known as a TIF, Brown said.

If Council approved the incentive for Ariel on Broadway, then the city would transfer ownership of the building back to the Port, Brown said.

The city would not be liable for paying taxes or restoration costs involved in the project to redevelop the Broadway Building as a hotel and business center for Lorain, Brown said.

The city’s ownership would last a short time — possibly as little as 15 or 30 minutes, Brown said.

The Port board considered Brown’s report on the legislation but the board members had little comment on the procedure.

With the Port vote, the Lorain City School Board and Lorain City Council could move closer to considering a 30-year financial plan for Ariel on Broadway, the company of Cleveland businesswoman Radhika Reddy.

The city and school board have draft financial agreements stating Ariel on Broadway could invest more than $7.99 million to create a 55-room hotel in the building.

The school district and city could grant a 100 percent tax abatement on the property taxes that would be owed, based on the value of the improvements, according to the draft plan.

That tax abatement could last up to 15 years, according to the draft documents.

Once the tax abatement expires, for years 16 to 30 of the life of the project, the tax increment financing plan would allow Ariel on Broadway to not pay property taxes. Instead, the developer would make service payments to the county treasurer, in an amount equal to what the property taxes would be.

That money will be turned over to the city to return to Ariel on Broadway to cover costs of improvements as a financial incentive, Brown said.

With old buildings, restoration often costs more than putting up new buildings, Brown said.

Without a creative incentive plan, the older building will not generate cash flow to cover the cost of restoration, Brown said.

The Broadway Building is a risky project and the Port board wants to ensure Ariel on Broadway has the best chance of success, he said.

The Lorain City School board and Lorain City Council could consider the necessary legislation at their meetings scheduled for June 18.

RICHARD PAYERCHIN — THE MORNING JOURNAL The Broadway Building, 301 Broadway, Lorain, is pictured on Dec. 8, 2017. The building also has been called the Spitzer Plaza Hotel and the Lorain Renaissance Inn.