CANTON: City Council has approved lending $3 million to fill a gap in financing for a project to convert a former factory into 95 market-rate apartments.
Cormony Development also has a loan of nearly $14 million from Huntington Bank to invest in the former Hercules Engine Co. plant, with construction scheduled to start in April.
Completion of the first phase by the end of 2014 is a condition of tax credits from the Ohio Department of Development, said Robert Timken, a managing director of Cormony.
The project will be a “gateway for investment in downtown Canton,” said Dave Kirven, president of the East Central Ohio Building and Construction Trades Council.
“It’s the future of Canton we’re looking at with this loan,” Councilman Greg Hawk said Monday.
Councilwoman Mary Cirelli cast the lone vote against the loan Monday. She questioned whether the city can afford to lend from reserve funds.
Administration officials had not answered her inquiries related to the city’s total debt and the capital fund that will be last-resort security for the loan, she said.
Mayor William J. Healy II said city government is a $170 million a year operation, with only about $53 million in the cash-strapped general fund, which pays salaries for police, firefighters and elected officials.
Principals in the project, including Timken and fellow managing directors Samuel Polakoff and Andrew Goldman, personally will be responsible for loan repayment and are capable of doing so, city Development Director Fonda Williams said. He called the deal good for the city.
He said Swedish construction company Skanska, the contractor for the project, also has committed its own resources to guarantee the loan.
If the owners have the resources, Cirelli asked, “Why aren’t they using their own money?”
Cormony will make two years of interest payments at 4 percent before the city must begin paying off its own bonds in 2016.
Cormony’s website shows the dingy factory site, closed in 1999, freshened with artful landscaping and smooth pavement.
Adjacent to railroad tracks, the property at Market Avenue and 11th Street Southeast is close to the city’s highest concentration of subsidized housing, but even closer to the interchange of U.S. Route 30 and Interstate 77.
The 26-acre site on the southern fringe of the central business district is arguably big enough to constitute its own neighborhood. There are 610,000 square feet in about 29 connected structures built between 1855 and 1945.
Hercules was once the world’s largest producer of internal combustion engines. During World War II, the company devoted all its production to war needs, employing 5,800 men and women working around the clock every day, according to Cormony’s website. The site is listed on the National Register of Historic Places.
Cormony, based in Rockville, Md., began working to redevelop the property in 2005. The plan was announced with fanfare in 2008 when Healy touted it as the next Belden Village, the thriving retail area in neighboring Jackson Township. Progress halted with the economic downturn later that year.
Environmental remediation is continuing with the aid of a $3 million Clean Ohio grant.
Apartments are envisioned as the first phase of a complete redevelopment with offices, stores, restaurants and an event center.
Additional enabling legislation from City Council is needed before the loan can proceed.
Councilman Thomas West said that while he has seen many businesses open and close in the area, “I think this project is going to be the catalyst for change in downtown.”
Nancy Molnar can be contacted at email@example.com.