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Overbuilt Retail Has Left Dead Malls Strewn Across Northeast Ohio. Will Severance Town Center Be Next?

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She also says the city wants to work with the new owner to provide assistance that will make Severance viable in the future. Built-out cities like Cleveland Heights often use tools like tax increment financing and other public subsidies to make complex projects more feasible.

Simons has a specific projection: "Parts of the mall may stay, other parts may not. In the long run, I'd bet that half of that mall would go to housing. What choice does it really have?"

Vince Reddy, a project manager with LAND Studio who worked for the City of Cleveland Heights for nine years, agrees that Severance could become a new mixed-use neighborhood if handled proactively by the city and developer. "It could be much more bicycle and pedestrian accessible," he says. "I could see a reworking of the street network, to bring the city's street grid into that part of the mall, and create more of an actual neighborhood feeling."

Deanna Bremer Fisher, executive director of the nonprofit advocacy group FutureHeights, says it's important that the city reach out to citizens now to garner public input. To that end, the organization is planning to host a community forum on Severance's future this fall.


Oakwood Commons: more stores planned

Down the road from Severance, Oakwood Commons is humming along just fine, anchored by the new, larger Walmart, complete with a full-size grocery store. Although only one additional outparcel building has been constructed so far, developer Mitchell Schneider of First Interstate says they will break ground on the rest of his project this fall.

"I'd say we're halfway there, or maybe 60 percent of the way there," says Schneider, who expresses some frustration at not being able to lure a single anchor tenant to occupy the large parcel adjacent to Walmart, which could accommodate a 135,000-square-foot retailer. Instead, he says, the parcel will be broken up to accommodate multiple retailers.

Schneider won't comment on current tenant lease negotiations; yet according to the website for commercial brokerage Goodman Real Estate, national retailers HomeGoods and T.J. Maxx are slated to open here in 2016. Schneider also won't say whether any of the new tenants will be lured from existing shopping centers. However, T.J. Maxx and HomeGoods are located at nearby University Square, and these stores have remained open despite the shopping center's troubles. Common sense suggests these locations will be shuttered if the retailers move to Oakwood.

When Oakwood Commons was first proposed in 2010, it was considered an open secret by many people that Walmart wanted to move there. Schneider, citing negotiations, wouldn't name the prospective tenants for the project, but claimed at least some would be new to Northeast Ohio. He says this is still true. "Assuming that we are able to conclude all of the lease negotiations we are currently engaged in, there will be retailers at Oakwood Commons that are new to the area."

In First Interstate's original application for zoning approval to South Euclid, the company maintained that the development of Oakwood Commons would actually strengthen surrounding retail areas. "Yes, I do think that's still true," Schneider maintains, despite the fact that Walmart's departure from Severance accelerated the mall's distressed state.

Walmart wanted to leave Severance anyway, Schneider says, because it wanted to open a larger supercenter with a grocery store. That trend has played out across the country for decades, leaving behind dozens of empty Walmarts that litter the suburban landscape. "Walmart was in a smaller store, and precluded by lease restrictions from selling food at that store," says Schneider. "A critical part of its business is being a supermarket. I would say that Walmart was restricted from doing its primary business at Severance and needed to find a different location."


Promises unfulfilled?

Oakwood Commons was handily approved by South Euclid voters in 2011, and Schneider proclaimed in his original zoning application that the 325,000-square-foot center would generate about 400 jobs and $1.7 million in annual property taxes. A report prepared by Team NEO estimated that the Oakwood project would generate $460,000 to $523,000 in local income tax for South Euclid. However, four years later, there's some question as to whether these promises will be kept.

This reporter requested an interview with South Euclid officials, who initially preferred to answer questions by email and text message. According to Keith Benjamin, director of community services for South Euclid, Oakwood generated $130,000 in income taxes last year. He adds that RITA is still collecting income taxes, and that number could go up. If the project is halfway done, however, it's hard to see how that amount will ever reach $500,000. Benjamin remains "cautiously optimistic about the potential for future revenue generation.

"My hope, depending on who the retailers are at the site, is that it will generate as close to that $500,000 number as possible," he adds. "Obviously, it depends on what retailers come in."

In other words, Benjamin acknowledges that Oakwood could fall short of its projected revenues to the city of South Euclid — even though these were the numbers that were touted to voters.

The developer and city of South Euclid also failed to provide specific job numbers, although Schneider still claims that the project is on track to create 400 jobs. Yet if Walmart only created 85 new jobs when it opened here, simple math suggests that the project could easily fall short. Benjamin says that South Euclid has not been able to obtain specific jobs numbers for the project. "We went to Walmart and they wouldn't release the numbers," he claims.

Schneider himself seemed to tacitly acknowledge that Oakwood would steal jobs from Severance when Walmart announced it was moving in 2012. Back then, Schneider told the Sun News that the retail and retirement community he was planning for the Cleveland Heights portion of Oakwood would "create significant jobs so that the income tax revenues to the City of Cleveland Heights would more than make up for the Walmart jobs transferred to South Euclid."

However, Schneider has since canceled that project, stating that he found it difficult to "engage" with Cleveland Heights officials. The property has been sold to the Hebrew Academy of Cleveland.

One reason why South Euclid officials were so keen on developing Oakwood is that they saw it as a revenue generator. At the time the project was proposed, state support for local government had been cut and the local economy was still suffering a post-recession hangover. Benjamin says that South Euclid was eager to develop new revenue sources given cuts in state support. Yet studies show retail development isn't the best way for cities to develop their tax base.

"At the municipal level, retail isn't really a big money maker for municipalities," says Kevin Leeson, a planner with the Cuyahoga County Planning Commission. "Most property taxes go to the schools, sales tax goes to the county and the state, so the biggest chunk comes from income taxes, which generally aren't real high in a retail environment [they're low-paying jobs]. From a municipal tax standpoint, cities make more money in industrial and office development."

On the plus side, Oakwood is served by public transit and has nice sidewalks and sustainably constructed buildings and landscaping. First Interstate preserved a lovely 21-acre portion of the former country club as parkland, contributing $400,000 towards creation of the green space.

Ironically, Schneider says he believes that Severance is "a fantastic piece of real estate that is and will be a part of the extended University Circle area. It could be a wonderful mixed use property." He also says that he doesn't plan on buying it anytime soon.


Master planning could help

Cleveland Heights' new master planning process, which was funded this year by a grant from Cuyahoga County, could help the city to better prepare itself for the future, argues Bremer Fisher. One of the reasons the Heights portion of the Oakwood property was not developed as retail or housing is that "the city did not provide a master plan or framework to the developer.

"With Severance," she adds, "there's an opportunity to do it differently."

There's no silver bullet solution to overbuilt retail in Northeast Ohio, since our fragmented system of government and Ohio's home rule provision ensures that communities are able to make many of their own land use decisions. A recent Northeast Ohio Sustainable Communities Consortium report showed that if Northeast Ohio continues on its current path, we will face "unprecedented challenges" by 2040, including property abandonment, jeopardized natural resources and fiscal challenges for local governments. Yet Bremer Fisher and others say cooperative planning is the first step cities can take to think beyond their own borders.

"We've gotta start thinking regionally, and that's beginning to happen," says Glenn Coyne, executive director of the Cuyahoga County Planning Commission. "Downtown areas are seeing rebirth, and the outer ring suburbs are still fairly strong. It's what's going to happen in between ... . We need to take a look at how cities like Cleveland Heights and South Euclid develop."

Some Heights activists are less optimistic. "It's completely predictable," says Fran Mentsch, who led the Citizens Against Oakwood group. "Oakwood is a huge lost opportunity." She and others argue that the decline of Severance will further contribute to the challenges facing Cleveland Heights, which already struggles with blight. The city lost 8 percent of its population from 2000 to 2009 and the poverty rate has spiked to 18 percent, a whopping 7-point increase. Cleveland Heights will also likely place an income tax hike on the ballot this fall.

According to Coyne, only 17 of the 58 communities outside Cleveland that are part of Cuyahoga County have master plans that have been updated within the past 10 years. The rest have no master plans at all or out of date plans. The county has funded four cities — Cleveland Heights, University Heights, Olmsted Falls and Parma Heights — to complete master plans this year.

"For communities that make planning a priority, we want to help them," says Coyne. "If a community has a master plan that's up to date, and they get a development request or a zoning request, they're in a much stronger position to react to it than if they don't."

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