Progress on a prominent Powell development has stalled while the developer requests city funds to complete the project.
Ali Khaksarfard is the developer behind Armita Plaza, a retail strip center at 170 W. Olentangy St., at the southeast corner of Murphy Parkway and West Olentangy Street.
The plaza's final development plan was approved in July 2016, but the project remains incomplete. Now, the developer claims the city has "significantly changed the nature and extent of the public improvements" required and is asking for public funds.
A traffic study on the potential development required that Khaksarfard provide an eastbound turn lane on Olentangy Street to Lincoln Street and widen southbound Lincoln Street to add a left-turn lane and a right through lane.
Subsequently, the city required the developer to complete stormwater infrastructure improvements, an addition Khaksarfard now has taken issue with.
Columbus law firm Sikora Law and attorney Richard Craven have represented Khaksarfard in dealings with the city.
In a letter addressed to Powell City Council on Oct. 12, Craven said Khaksarfard "would have never agreed to proceed with the project if it would have known that the city would require such expensive public improvements," and said the required work is projected to cost $248,930.
Craven pointed to the letter for his own comments on Khaksarfard's behalf.
"In fact, the plans for the public improvements went through multiple revisions with the engineer's office, with additional requirements being added with each revision by the city, amounting to a 14-month period between the time that the final development plan was approved by the city and the final engineering plan was approved related to the public improvements," he wrote.
"What started as widening of two public roads has grown into the city requiring extensive storm water management improvements at the corner of SR 750 and Lincoln Street."
To make up those funds, Craven and Khaksarfard have requested that the city provide a tax-increment financing agreement that would finance those improvements.
A TIF is an economic-development mechanism available to local governments to finance public-infrastructure improvements and, in certain circumstances, residential rehabilitation, according to the Ohio Development Services Agency.
They work by redirecting property-tax revenue from increases in property value toward infrastructure within the district.
Thus far, the city has shown no interest in providing the TIF Khaksarfard is looking for.
Despite Khaksarfard and Craven's requests to city staff members, the city's finance committee and City Council, Powell spokeswoman Megan Canavan said the city has no plans to agree to such a deal.
"Armita's request has gone before the finance committee and City Council and they have ultimately declined to provide funding for this project," she said. "The developer will be responsible for completing their public improvements as they agreed to during the approval process."
Canavan said the addition of the storm-sewer work was nothing out of the ordinary, and said the city followed its usual processes for development approval.
"It's that whole plan-approval process," she said. "Those are conditions that the developer and the city agreed to."
Khaksarfard and Craven contend that securing city funding for the improvements is crucial to the project.
According to Craven's letter, the lender financing the development will not give Khaksarfard additional funds to complete the improvements. Craven writes that Khaksarfard "attempted to incorporate these expenses into the budget and rent for the potential tenants of Armita Plaza," but had no success.
"In fact, not a single tenant was interested in occupying Armita Plaza at such high rental rates," the letter reads. "Without the TIF funds to offset the cost of the required public improvements, the city and Armita Plaza run the risk of having the project completed to the heightened standards for traffic and storm water management in the city, but with no tenants to support its operation."
Craven's letter claims Armita Plaza has "letters of intent or other written commitments" from eight different business owners that would result in a 95 percent occupancy rate if rental rates were "aligned with the average rental rates in the area."
Other potential tenants, the letter claims, already have chosen other locations "as Armita Plaza could not promise a competitive leasing rate due to the cost of the public improvements."
Canavan said city leaders are unsure how they would react if the development were to stall indefinitely.
"We haven't necessarily had a project like this one where it's almost there but not complete," she said.