Cleveland proposes paying off Shaker Square debts & transferring ownership
The city of Cleveland wants to spend $10 million in American Rescue Plan Act funding to prevent a foreclosure of the Shaker Square shopping center.
Under the city’s proposal, Cleveland Neighborhood Progress, through its real estate development arm New Village Corporation, would take control of the property. CNP partnered with the local nonprofit community development corporation, Burten, Bell, Carr, to work out the plan.
“The city correctly understood that Shaker Square is the anchor for the southeast side of Cleveland, not to mention it’s one of the most iconic structures in the community,” said Cleveland Neighborhood Progress CEO Tania Menesse.
The shopping center faces foreclosure and is currently under the control of a court appointed receiver.
The current owner, Coral Shaker Square, LLC, owes at least $10 million on its mortgage.
The contribution from Cleveland would help pay off that mortgage. Ownership would then transfer to Cleveland Neighborhood Progress, which will seek additional funding for maintenance.
Then it could be sold to a developer or put into the care of a trust.
“Right now, the intention of the bondholders to take Shaker Square to sheriff sale puts the property and the merchants that are there and the residents around it at such significant risk of an ownership that won’t be able to reinvest and stabilize the property for the community,” Menesse said.
Having Cleveland Neighborhood Progress and Burten, Bell, Carr take over the property is a good plan, said Mary Ann Kovach, president of the Shaker Square business association that represents the tenants in the shopping center.
“Because in order to sell the square, there’s a significant amount of deferred maintenance that needs to be done. I believe it’s in the millions of dollars,” Kovach said. “Things like roofing, external repairs to things like the woodwork, carpentry, painting, sidewalk replacement. And who knows what kind of repairs need to be done to the internal systems, plumbing, electrical and that kind of thing.”
It’s unclear how much a new owner will have to invest in repairs. The estimate based on Burten, Bell, Carr’s conversations with tenants and the current owner is at least $4 million.
In 2019, a plan to redesign the outdoor parts of the square, and reroute traffic on Shaker Boulevard, met opposition from business owners. Kovach said the outside areas can be looked at, but the priority needs to be building repairs, which were left out of the 2019 plan.
That plan was put on hold when the foreclosure process was initiated.
The new proposal for the square is part of Mayor Frank Jackson’s $121 million American Rescue Plan Act spending proposal and requires approval by city council. The city released details on the largest part of that legislation, $80 million for economic development, on Wednesday.