The Morning Journal (Lorain, OH)
Spitzer hopes to finish HarborWalk
School board OKs tax deal
Spitzer Great Lakes Ltd. Co. hopes a change in a property tax abatement can help the company add new homes to Lorain’s HarborWalk neighborhood.
The Lorain City Schools Board of Education on Dec. 17 voted 4-0 to alter the property tax agreement for HarborWalk, the development of waterfront residences on the site of the former AMSHIP yards.
Lorain City Council will consider revising the development agreement in January.
In the new agreement, the school board grants Spitzer a tax abatement of 100 percent, up from 75 percent, on the property taxes paid on the new construction.
In turn, Spitzer uses that money to repay the city of Lorain for building the needed infrastructure, such as roads and sewer lines, to support the new homes.
Long-term benefit
Cathy Schuster, director of real estate for Spitzer Management Inc., explained the deal as part of the school board’s Dec. 17 meeting.
Lorain Schools Treasurer Joshua Hill endorsed the change and encouraged school board members
Mark Ballard, Yvonne Johnson, Bill Sturgill and Tim Williams to take the long view.
If the board does not grant the abatement and Spitzer cannot finish the project, then Lorain Schools never will get more property taxes from new homes, Hill said.
When the project is built out, the school district is looking at collecting up to $1.3 million a year in new property taxes, based on today’s prices, Schuster said.
The development also could bring new families into the community, helping revitalize downtown Lorain, Hill said.
“There is that intrinsic value of it ... obviously everything around it could prosper,” Hill said. “So it’s pouring life back into the community, essentially.”
“And that’s in Lorain, it’s not in Amherst,” Sturgill added.
In recent years, new homes built on Lorain’s west side sit in the area of Lorain that overlaps with Amherst Exempted Village Schools, not Lorain Schools.
Project history
Spitzer started the project with Zaremba Black River Development LLC in 2001 and 2002, Schuster said.
“We couldn’t go fast enough when we first started,” she said. “Unfortunately, we haven’t built a home in 10 years.”
Spitzer, the city and Lorain Schools created a development agreement with a financing plan known as tax increment financing, or TIF.
Instead of paying property taxes to the schools, Spitzer pays that amount to repay the city for installing the roads, sewers and utilities.
The property tax deal will last until the debt is repaid in 2032.
But market conditions took a dive and banks did not want to finance new housing, Schuster said.
The Zaremba company was the exclusive builder for the first 15 years of the project, she said.
However, Cleveland developer Nathan Zaremba died in spring 2017.
Now, Spitzer is looking for other partners to build, Schuster said.
“We have 142 homes built now,” she said. “Another 258 homes are ready to go, the lots are improved, we just need to find builders.”
The company also has lowered the lot prices and refinanced the bonds; they cannot refinance the debt again, according to Ohio law, Schuster said.
“We’re trying to figure out a way that in the next 15 years to get the place built out and pay back all the debt,” she said.
The company has $6 million in outstanding debt and the city collects TIF money of about $350,000, representing 75 percent of the taxes paid, Schuster said.
The school district collects about $110,000 a year from the property taxes, she said.
That amount is relatively small compared to the school district budget, but it is really critical to making the project work, Schuster said.
To repay the city, Lorain County businessman Alan Spitzer has paid more than $3 million to cover the shortfall between expected and actual property tax collections that pay for the city infrastructure, she said.
“Everyone has been feeling the pain, there’s no question about it,” Schuster said. “It is a difficult check for Mr. Spitzer to write every year, but that was the guarantee we offered the city.”