A $100 million project that, as proposed, would yield Upper Arlington’s tallest building and generate $1.2 million in annual income-tax revenue moved a step closer to construction this week after Upper Arlington City Council voted 5-1 to approve a development agreement for the Arlington Gateway.
The legislation presented to council Aug. 27 was designated an emergency, which means that under Ohio law, it goes into effect immediately and cannot be the subject of a referendum petition that could void the agreement by a citywide vote.
City Manager Ted Staton said an emergency clause was tied to the agreement so the developer, Continental Real Estate Cos., could obtain financing to complete the site purchase, secure the office tenants and obtain needed financing in order to begin construction, “which will result in the generation of significant income-tax revenues and increase in property values at the site.”
Staton’s report to council said those revenues are critical to the city’s ability to finance the public-infrastructure improvements necessary for the project.
Staton’s report also said the emergency clause was needed because tax revenues from the gateway would “enhance the city’s ability to provide for the public peace, health or safety of the residents.”
As proposed, the Arlington Gateway is an 11-story project at 1325-97 W. Lane Ave. and 2376 North Star Road designed to include 130,000 square feet of office space, 218 luxury apartments, 14,350 square feet of retail space and an 843-vehicle parking garage.
Under the terms of the development deal, Continental Real Estate Cos. agreed to comply with the conditions of a final development plan approved in June, including a traffic study that has yet to be finalized but must be approved by Upper Arlington City Engineer Jackie Thiel.
The developer also must work with the city to reach a tax-increment-financing plan to pay for infrastructure in the area around the project site.
Continental has agreed to complete the gateway project and, beginning in 2022, that the income tax from employees of the development will be at least $860,000 for two consecutive years.
“Day 1, after the building is stabilized, income tax should be about $1.2 million to $1.3 million” to the city of Upper Arlington, Continental chairman Frank Kass said.
The gateway site was annexed to the city in 2005 but is in the Columbus City School District.
Kass has a 30-year, 100 percent payment-in-lieu-of-taxes (PILOT) agreement with CCS that stipulates the property owner will pay $450,000 to the district each year for 30 years.
According to Kass, beginning in the 31st year after the project is completed, 69 percent of the property taxes from the site would go to CCS. He has estimated the total annual payments to the district would increase to between $1.4 million and $1.5 million annually.
Kass said CCS currently receives $116,000 in annual tax payments from the proposed development site.
He said the deal with CCS would enable Upper Arlington to issue bonds backed by the balance of the real-estate taxes and the income taxes generated from the new development on that corner, the proceeds from which would pay for construction of the estimated $18 million-plus parking garage and the off-site infrastructure.
On Aug. 27, Kass wouldn’t reveal the name of the financial company that will anchor the project but said it’s a “top four” publicly traded financial company that will relocate six central Ohio offices to the gateway.
Representatives of the gateway development team have said a lease agreement is in place with Spavia, a “high-end” treatment spa, to occupy a portion of the retail space and that Half Price Books, currently at 1375 W. Lane Ave., would stay as a tenant.
Councilman Brian Close, who joined council in January, recused himself from voting on the development agreement. Council President Kip Greenhill said Close wouldn’t take part because the law firm he works for was involved in the gateway planning “in the initial stages of the project” about three years ago.
Councilwoman Carolyn Casper cast the lone dissenting vote.
“If the traffic thing doesn’t come through, it doesn’t matter what assurances we give (the developer and potential tenants) tonight because if the traffic study doesn’t solve the issues, it won’t happen,” Casper said. “I think it’s going to be a good project, (and) I think we can come to an agreement on it, but the way it is today, I don’t think it’s ready.”
Councilwoman Michele Hoyle said she voted for the agreement because she is committed to the city’s long-term financial stability.
“The financial potential of this project is too compelling,” she said. “This particular site was annexed ... expressly for dense, mixed-use development and expressly to generate significant income-tax revenue.
“Those income taxes do ensure our public safety because they pay for unequaled police and fire protection, our snow removal, our roadway and park improvements and new improvements like sidewalks. I don’t believe we can afford to wait another 13 years for another viable development to come forward.”
The agreement was opposed by numerous residents at the Aug. 27 meeting, including a group calling itself the UA Gatekeepers, who said the project has grown from an original proposal of 7 stories at 1325-59 W. Lane Ave. that would have had 13,900 square feet of retail and restaurant space on its ground floor, 19,400 square feet of office space on the second floor and 42 luxury apartments and 38 upscale condominiums on its upper four floors.
As currently proposed, the UA Gatekeepers said, the project would bring too much traffic to the area, compromising the quality of neighborhoods and endangering pedestrians.
The group, which said it had gathered signatures from more than 250 residents who oppose the gateway in the previous nine days, also said the planned architecture and proposed 11-story, 152-foot, 10-inch building – which is more than 56 feet taller than city zoning codes permit – is out of character with the community.
“This is something that will affect all of Upper Arlington,” Jeff Loudon said. “That’s way too much, and it’s just way too out of character with what we love about Upper Arlington.”
Loudon and others opposed to the project asked council to delay the vote on the development agreement to give residents more time to express their concerns about the project and potentially reach compromises with the developer.
Pending approval of the project’s traffic study and development-plan conditions, Kass said, construction of the gateway’s parking garage is expected in 2019. The office, retail and residential components then would be built in 2020, and the project should be completed in 2021.