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Community Dialogue about The NuCLEus Project

This briefing provides an overview of the NuCLEus Project, including its description, potential economic impact, project location, developer's proposal, and analysis. It also discusses the question before the Board of Education and the community input timeline and process.

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Community Dialogue about The NuCLEus Project

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  1. Community DialogueaboutThe NuCLEus Project

  2. NuCLEus Briefing Agenda • Project Description • Potential economic impact • Project Location • Developer’s Proposal • Analysis of the Proposal • The Question Before the Board of Education • Community Input Timeline and Process

  3. NuCLEus Briefing Agenda • Project Description • Potential economic impact • Project Location • Developer’s Proposal • Analysis of the Proposal • The Question Before the Board of Education • Community Input Timeline and Process

  4. NuCLEus Project Description

  5. NuCLEus Project Description • Leveraging a mixed use district at the center of downtown • 125,000 SF Retail and Restaurants • 200,000 SF Office Space • 120 Room Luxury Hotel • 406 Apartments • 36 Condominiums • 2100 Garage/Parking Spaces

  6. NuCLEus Project Description:Potential Economic Impact • 3000 construction jobs • 900 high compensation office sector jobs • 300 retail and service sector jobs • 360 new downtown residents, 700 total • Anchor tenants • Anticipated to drive increases in residential and commercial rental rates in the city

  7. NuCLEus Project Description:Project Location

  8. NuCLEus Project Description:Project Location

  9. NuCLEus Project Description • NuCLEus is expected to cost approximately $542 million to build but is estimated to have a market value of only $250 million upon completion in 2021

  10. NuCLEus Briefing Agenda • Project Description • Potential economic impact • Project Location • Developer’s Proposal • Analysis of the Proposal • The Question Before the Board of Education • Community Input Timeline and Process

  11. NuCLEus Developer’s Proposal:Developer is requesting a TIF • NuCLEus is expected to cost approximately $542 million to build but is estimated to have a market value of only $250 million upon completion in 2021 • The cost of development vs. sources of funds creates a funding gap the developer needs to close

  12. NuCLEus Developer’s Proposal:Developer is requesting a TIF • The developer is seeking tax relief from the City of Cleveland and from the Cleveland Metropolitan School District to close this gap. • This tax relief is called Tax Increment Financing (TIF). • If granted a TIF, the developer can use the tax payments the NuCLEus building would generate to pay the mortgage for the building.

  13. NuCLEus Developer’s Proposal:Developer is requesting a TIF • IMPORTANT TO UNDERSTAND: The developer would not get any taxes from any other tax payer. • If granted a TIF, the school district will not collect taxes that would be generated by our existing levies during the TIF period.

  14. NuCLEus Developer’s Proposal:Developer is requesting a TIF • The developer is requesting a 30 year TIF, from 2017 to 2046. • If a TIF is approved, the District will not collect new taxes generated by the building from our existing levies until 2047. • If a TIF is not approved, the developer states that the building will not be built.

  15. NuCLEus Developer’s Proposal:Developer Proposes a 5 Element Deal NuCLEus proposes the following five (5) elements to CMSD in exchange for the requested TIF: • Pay a one-time payment, in 2018, of $18 million instead of the tax revenue that would be collected over the 30 year period of the proposed TIF. This is like taking the one-time cash payment option in the lottery.

  16. NuCLEus Developer’s Proposal:Developer Proposes a 5 Element Deal NuCLEus proposes the following five (5) elements to CMSD in exchange for the requested TIF: • Split evenly with the school district any tax revenue generated by the NuCLEus building beyond taxes collected from the expected $250 million value of the building when it would open in 2021.

  17. NuCLEus Developer’s Proposal:Developer Proposes a 5 Element Deal NuCLEus proposes the following five (5) elements to CMSD in exchange for the requested TIF: • Limit the requested TIF to existing taxes only. The District would still collect the full value of any new levies issued after the TIF agreement is finalized. This does not include levy renewals, only new levies.

  18. NuCLEus Developer’s Proposal:Developer Proposes a 5 Element Deal NuCLEus proposes the following five (5) elements to CMSD in exchange for the requested TIF: • Hold the District harmless of any loss if the building is valued under the proposed $250 million. This means the developer cannot ask for any of the $18 million upfront payment back if the building doesn’t do as well as expected.

  19. NuCLEus Developer’s Proposal:Developer Proposes a 5 Element Deal NuCLEus proposes the following five (5) elements to CMSD in exchange for the requested TIF: • In 2024, allow CMSD to audit the project to see if any additional payment beyond the $18 million is owed to the District. This protects CMSD if the property generates more taxes than expected or if it is completed early.

  20. NuCLEus Briefing Agenda • Project Description • Potential economic impact • Project Location • Developer’s Proposal • Analysis of the Proposal • The Question Before the Board of Education • Community Input Timeline and Process

  21. NuCLEus Developer’s Proposal:Analysis of the 5 Element Deal • The property the developer proposes to build on currently generates $360,000 in taxes for CMSD each year. • The community will continue to collect those taxes whether or not the district approves the TIF request. • The district does not lose any money if the request is approved.

  22. NuCLEus Developer’s Proposal:Analysis of the 5 Element Deal • If the building were to be built without a TIF, the District could potentially generate $121 million in new tax revenue over the next 30 years. • The $18 million the developer is offering to pay CMSD in 2018 is the ‘lump sum’ payment the District would receive instead of collecting these taxes. This is like the lump sum payment you would receive if you won the lottery.

  23. NuCLEus Developer’s Proposal:Analysis of the 5 Element Deal • If the building were to be built without a TIF, the District could potentially generate $121 million in new tax revenue over the next 30 years. • If the district were to invest this $18 million in the bank for 30 years, we would need to earn 6.75% interest to generate $121 million. • The average interest rate for the past 30 years was 5%. At 5%, we would earn about $78 million.

  24. NuCLEus Developer’s Proposal:Analysis of the 5 Element Deal • The district could put the $18 million into the capital improvement fund. • If the district puts the $18 million in the capital improvement fund, it becomes eligible for the 2/3 match from the state of Ohio and would be worth $56 million. • The average interest rate for the past 30 years was 5%. At 5%, $56 million would earn about $242 million.

  25. NuCLEus Developer’s Proposal:Analysis of the 5 Element Deal • The district could put the $18 million into the capital improvement fund. • If the district puts the $18 million in the capital improvement fund, it can only be used for state approved school construction or renovation. This is similar to Issue 4 which taxpayers approved in 2014.

  26. NuCLEus Developer’s Proposal:Analysis of the 5 Element Deal • The district could put the $18 million into the capital improvement fund. • There are three potential risks to consider: • Ohio could end the school construction program • The District’s enrollment could limit our eligibility for the program • The construction program has clear rules for how the money can be used

  27. NuCLEus Briefing Agenda • Project Description • Potential economic impact • Project Location • Developer’s Proposal • Analysis of the Proposal • The Question Before the Board of Education • Community Input Timeline and Process

  28. NuCLEus Developer’s Proposal:The Question Before the Board • The Board of Education is being asked to consider granting the proposed TIF under the terms outlined above. • The Board is considering two options: • Accept the TIF, placing the $18 million into the District’s Capital Improvement Fund • Reject the TIF

  29. NuCLEus Developer’s Proposal:The Question Before the Board • If the Board approves the TIF as proposed: • The District will continue to collect $360,000 per year on the building property • Generate $56 million for the construction and renovation of schools, subject to the limits of the Ohio school construction program.

  30. NuCLEus Developer’s Proposal:The Question Before the Board • If the Board approves the TIF as proposed: • Collect additional tax revenue from the building on any new tax levy approved by voters between 2017 and 2047. • Will not collect new tax revenue from existing levies until 2048 (unless the building has a higher value when complete than currently estimated)

  31. NuCLEus Developer’s Proposal:The Question Before the Board • If the Board rejects the TIF as proposed: • The District will continue to collect $360,000 per year on the building property • The project will not likely be built. Therefore the district would not expect any additional revenue unless a different project were to be built on this site.

  32. NuCLEus Developer’s Proposal:The Question Before the Board • If the Board rejects the TIF as proposed: • Cleveland City Council could still vote to approve the TIF. If City Council did so, CMSD would not get the Five Element Deal currently being offered.

  33. NuCLEus Briefing Agenda • Project Description • Potential economic impact • Project Location • Developer’s Proposal • Analysis of the Proposal • The Question Before the Board of Education • Community Input Timeline and Process

  34. NuCLEus Developer’s Proposal:Community Input Timeline and Process • During the month of July, CMSD will work to inform and educate District residents about the requested TIF through: • District mailings and Telephone Outreach • Publication of community newspaper articles • District website information • Social Media outreach • Community meetings / Information sessions

  35. NuCLEus Developer’s Proposal:Community Input Timeline and Process • CMSD will host seven public hearings to gather community feedback about the requested TIF: • Saturday, July 29th at 12:00 pm - West • Sunday, July 30th at 2:00 pm - East • Monday, July 31st at 6:00 pm - West • Tuesday, August 1st at 6:00 pm - East • Wednesday, August 2nd at 6:00 pm - East • Thursday, August 3rd at 6:00 pm - West • Saturday, August 5th at 12:00 pm - East • Sunday, August 6th at 2:00 pm - East

  36. NuCLEus Developer’s Proposal:Community Input Timeline and Process • CMSD is seeking input from District Residents to answer three specific questions: • What benefits do you see to granting this TIF request? • What risks do you see to granting this TIF request? • If you were a member of the Board of Education, would you vote to approve this TIF or to reject this TIF?

  37. NuCLEus Developer’s Proposal:Community Input Timeline and Process • Resident Feedback will be collected on an online survey available on the District’s website until Monday, August 7th.

  38. NuCLEus Developer’s Proposal:Community Input Timeline and Process • The Board of Education will hold a Board Work Session on Tuesday, August 8th to review and publicly discuss the feedback received from residents. • The Board of Education will hold a Board Business Meeting on Tuesday, August 22nd to approve or reject the proposed TIF.

  39. To learn more about this proposedTax Incentive Financing (TIF) request,please visitwww.clevelandmetroschools.org/NuCLEus

  40. If you have questions about thisTax Incentive Financing (TIF) request,please submit them toNuCLEus@clevelandmetroschools.orgYou will receive a reply within 2 business daysand your questions will help us updatethe FAQs on the District website.

  41. If your questions are answeredand you’re ready to provide feedbackto the Board’s three community questions,please visitwww.clevelandmetroschools.org/nucleusto complete the online survey!

  42. THANK YOU FOR TAKING THE TIMETO LEARN ABOUT AND PROVIDE FEEDBACKON THIS IMPORTANT COMMUNITY ISSUE

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