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What it takes to do infill development

Marc Lefkowitz  |  05/23/12 @ 7:00pm  |  Posted in Vibrant cities

Ari Maron, developer of E. 4th Street and Uptown, shared his thoughts on Cleveland's future with non-profit community developers last week. Inviting an influential private developer to a neighborhood summit is a bit like the fox in the henhouse, and Maron's comments about concentrating resources seemed to be a mild rebuke of the patchwork of neighborhood bricks and mortar projects that are guided by the far less leveraged community development corporations. They are also timely in that CDCs are once again under strain to consider moving away from place-based development and into people-based concerns like health and education.

"There's no magic to this," said Maron, sitting with a panel of non-profit groups focused on urban design in the opulently restored ballroom of Tudor Arms, his adaptive reuse from vacant Cleveland Jobs Corps building to a Double Tree hotel. "It's focused resources on the most catalytic sites."

Maron's comments follow the pattern of private developers' toward the community development model which spreads resources across a big geographic area in the city. To expect more transformative spaces like Uptown, the $61 million infill development in University Circle, many private developers would see the city give over more of its public resources to the private side where the skills to get big deals done resides. Maron and his father, Rick, CEO of MRN, Ltd. assembled six layers of public financing subordinate to a bank loan.

Is it fair for Maron to lecture his under capitalized non-profit cousins as the beneficiary of so much public subsidy? Private developers inherently take more risks with big bang developments and thus get to crow a little when they reach his level of influence.

Non-profit developers tend to neighborhood needs like housing first, but often struggle attracting the talent to put together deals for transformative projects like Uptown and E. 4th Street. Maron, like Scott Wolstein, understands the risk-reward of urban redevelopment, which involves spending resources chasing tens of millions in public subsidy (or at least paying for the likes of Steve Strnisha to go out and shake the trees for it). For Uptown, that includes: $3 million in New Market Tax Credits, state and federal historic tax credits, a $2.5 million grant and $2.5 million loan from the city and a $1 million grant from University Circle, Inc.

"That's the level of support you need when you want to do catalytic infill development in an historic district," Maron admitted.

To the risk takers go the rewards? Maron seems pleased with the results in Uptown: "We're getting $2 a square foot for the residential and $35 a square foot in gross retail rent," he said to gasps of appreciation in the room.

Most of Maron's comments were positive reinforcement of risk taking and entrepreneurialism leading the new renaissance in Cleveland.

"I stay in Cleveland because of the support of the community. I can have an impact here, even more than somewhere like New York."

Maron talks about the energy he gets from being an entrepreneur, but also from creating vibrant places. "The only way I know to create place is to create density. That needs to be our focus."

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