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Chagrin loses $335,000 in West Orange Street deal
(by Barbara Christian - October 01, 2009)
Chagrin loses $335,000 in West Orange Street deal
By BARBARA CHRISTIAN
If all goes according to plan, the first shovel of dirt will be turned in April 2010 for the long-awaited development on West Orange Street, Chagrin Falls Village Council learned Monday. But the Village of Chagrin Falls is losing $335,000 on its investment there in the process.
To begin the march toward that goal, council passed two ordinances. The first permitted Mayor Thomas Brick to enter into an agreement with Lawrence Shibley's Orange Street Partners LLC for a three-year option to buy lots at 48 and 50 W. Orange St.
The village will not actually buy what amounts to four lots. Mr. Shibley is giving the village the four lots. The village will gather them together with the seven contiguous lots it owns.
Mr. Shibley planned to build Village View, a condominium development, but he was unable to obtain financing.
The village will relinquish Mr. Shibley's $50,000 earnest money but gain his two parcels, which are valued at $275,000.
The second ordinance authorizes the mayor to enter into a non-binding letter of intent with developer Robert J. Vitt for the sale of all 11 lots for $477,000. The village paid $812,000 for its seven lots.
Mr. Vitt, who was at Monday's meeting, said his company is funding the project and bypassing the uncertainty of lender financing.
Council President Steven Patton said, even with the discounted price, the deal makes economic sense for the village, because Mr. Vitt is a proven residential developer with a good track record.
He said the values, including the current value of the empty lots, were corroborated by the village's real-estate consultant, Russell Berusch.
The agreement will provide the village with a stream of income and real-estate taxes it is not now getting from the empty lots, Mr. Patton said. In addition, there is a $7,370-per-lot payment to the village as an incentive for acting on a number of development and zoning issues in a timely manner.
The issues are: rezoning of the Williams Street corner lot from office to residential; issuance of a permit to demolish the blue office building on that lot; variances which already were granted to Mr. Shibley but which have to be redone under the new ownership; approval of a storm-water plan; and permission to construct a road off Williams Street to access the lots.
Mr. Vitt told council he is prepared to close by the end of December 2009 and begin construction next April.
Another issue the village has no control over but which Mr. Vitt wants to solve is removal of a utility pole from the property. He said he has already begun talking to First Energy Corp. and the pole may be a main trunk line for telephone service as well. Removal of the pole is not a deal breaker, Mr. Vitt said.
Councilman Robert Williams said the upside to contracting with Mr. Vitt is that he is an experienced developer to whom this kind of development "is no mystery."
However, new Councilman Adam Jacobs said he isn't sure about the way the deal is being handled and asked council consider advertising the project so other developers would have a chance. He said council has a responsibility to the public and suggested a two-week deadline for other bids.
Mr. Williams said that was tried before but with little success. The economic climate also is not conducive, because it would take months for a new developer to become familiar with the complex project and find financing, he said.
Mr. Jacobs conceded that council is operating legally but said he would like the process to be more transparent.
According to Mr. Patton, the entire process has been transparent from the start, with many public forums. He said he feared the village would lose a viable project while looking for those that may not be a sure thing.
While Mr. Vitt said two weeks would not impact him, but "time is money, especially if it's your own money."
Councilwoman Janna Lutz said a two-week time frame for developers to come forward would be "just a gesture," and there's no time for real study of such a large project.
Councilman Dwight Milko, who owns a real-estate company, said Mr. Vitt's proposal is "manna from heaven."
"There is no development going on, and nothing is being sold, and if there is a sale, there are no willing lenders, and developers cannot get funds," Mr. Milko said.
In the end, Mr. Jacobs was the only councilman to abstain from voting on the letter of intent.
The next steps for Mr. Vitt will be a hearing before the board of zoning appeals at 8 p.m. Oct. 13. Planning and zoning commission members could complete their deliberations at 7:30 p.m. Oct. 19.
The request Mr. Vitt has made is that the corner lot on West Orange and Williams streets be rezoned to residential to accommodate the one single-family home in the development. It is now zoned for office use.
Planners are considering one of two methods. They could rezone the office property to residential or approve overlay zoning which would allow both commercial and residential.
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