CUYAHOGA FALLS: City Council will decide Monday whether to approve an amended contract between the city and Portage Crossing developer Stark Enterprises.
If council approves the contract, the project is expected to break ground in the fall.
Rejecting the contract could mean starting over with a new developer and a new plan.
Redeveloping the corner of State Road and Portage Trail has been in the works since the city bought State Road Shopping Center for $10 million in 2008 and tore it down.
Stark Enterprises, developer of several area retail centers, including The Strip in Jackson Township and Crocker Park in Westlake, has been under contract with the city to buy and develop the land since 2010.
On Monday, Falls Development Director Sue Truby thanked council for its patience. She asked members to approve the contract.
Some of the council members and residents are concerned about clauses in the contract that reimburse Stark Enterprises $50,000 annually for 10 years for electric service to the common areas of the development, and an admission tax from Cinemark up to $129,000 per year for 10 years.
Councilwoman Carrie Hummel Snyder said she is eager to see the project completed. She echoed many who spoke to endorse the project but not the extra money going to Stark.
“We, as taxpayers, are all investors,” she said. “I do not support the electric subsidy. I do not support asking our [electric] rate payers to support a for-profit business.”
Snyder said she understands the city would not get the admission tax if not for Stark bringing Cinemark to the deal.
“My issue there is we don’t know what the additional cost in terms of police, fire and emergency services may be brought to bear with residents and people from out of town who will be visiting the theater,” Hummel said.
Joe Albrecht with Albrecht Inc., which owns and developed the State Road Acme and Marc’s Plaza in the Falls, said he doesn’t understand why Stark Enterprises would get free electricity and free land.
“The people of Cuyahoga Falls are paying Portage Crossing LLC so they can take the property,” he said. “Do you sell your house for zero dollars, then agree to pay the new owners’ electric bill for 10 years?”
Albrecht questioned the value of a movie theater in the technology age.
“Technology is rolling on, and it might have movie theaters in its cross hairs,” he said. “You can buy a movie theater for your house cheap. If you’re relying on income from that movie theater 10, 15, 20 years out, it might not be there.”
Steve Rubin, chief operating officer for Stark Enterprises, said the lease for Cinemark is 10 or 15 years, with five-year options.
“We probably have the top three movie theaters in our properties,” Rubin said. “Bob Stark is personally signing on for $15 million or $16 million. We are not going into this without sustainable businesses.”
Rubin said if any of the businesses close, including the theater, Stark Enterprises would make the investment to find another business to lease the space, as they have with their other developments.
Utility rate not unusual
Service Director Valerie Wax Carr said it is not unusual to give a special utility rate to a business.
GoJo Industries was enticed to stay in the city with a special water rate.
The income and property tax revenue generated by businesses is what runs the city, Carr said.
“The more retail, commercial and industrial utility customers we have, the lower the rates for residential customers,” she said.
Carr said the electric reimbursement is not a subsidy. Portage Crossing businesses would generate an estimated $400,000 a year in electric revenue.
Returning $50,000 to the developer doesn’t mean the city won’t make a profit.
“This money doesn’t come from our rate payers,” she said. “It’s no different than a tax abatement.”
Finance Committee Chairwoman Carol Klinger said she would like to see more safeguards favoring the city in the contract, including a restriction on a draw-down fund comprised of the $3.8 million purchase price the developer can use for construction.
“We’re banking on jobs, real estate taxes and more than $200,000 in income taxes,” she said. “If the 241,000 square feet isn’t built in its totality, whatever is left of the purchase price should come back to the city.”
Local developer Joel Testa competed with Stark to become the site’s developer. He supports Portage Crossing.
“I think this project you have in front of you is the best,” he said “Whatever the decision, once we put a project into action, let’s get behind it. Let’s support it. There are no guarantees for any of us.”
Mayor Don Robart likened council’s concerns to those voiced when Sheraton Suites was proposed.
“We have a beautiful vacant lot we can put Portage Crossing on,” Robart said. “The city brings in half a million [dollars] from the Sheraton. The schools receive $200,000 a year in property taxes. Had those skeptical council people been successful, we wouldn’t have that.”
Truby said most of the complaints she receives about the project relate to the amount of time it has taken to break ground.
Rubin said developing the best project possible didn’t happen overnight.
“It took as long as it did because we went to virtually everybody,” he said. “...We exhausted our resources to make this project the best it could be.”
Rubin said he respects council and the role it plays.
“We have done our job and brought you the very best project attainable for this property,” he said. “I will leave it to you to decide if it is in your best interest.”
Gina Mace can be reached at email@example.com.