Demand for rooms in the area is high, and hospital patients' families, visiting doctors and tourists often end up at hotels in downtown Cleveland or the eastern suburbs.
View full sizeSnavely Development Co. and Concord Hospitality Enterprises Co. plan an eight-story, 150-room hotel in University Circle, on Cornell Road, just off Euclid Avenue. This rendering shows the proposed hotel from Cornell, a view that patients and visitors will have from just outside University Hospitals' new cancer center.CLEVELAND, Ohio -- A Chagrin Falls developer and a North Carolina hotel manager have signed on to build a $27 million hotel in University Circle, across the street from University Hospitals's new cancer center.
Snavely Development Co. and Concord Hospitality Enterprises Co. plan a 150-room, eight-story hotel off Cornell Road, behind a retail strip that runs along Euclid Avenue. The brand of hotel has not been announced.
The project capitalizes on the job growth and tourism in University Circle and the surrounding area, home to major hospitals, museums, the Cleveland Orchestra and educational institutions. At a time when development remains challenging, University Circle is one of the few markets where a hotel project could push forward.
On Wednesday, a review board affiliated with University Circle Inc., a nonprofit community group, took steps toward allocating $12 million to $15 million in highly prized New Markets Tax Credits to the hotel project.
The federal income tax credits, awarded by the U.S. Treasury to stimulate development in low-income areas, can be sold to banks or other profitable businesses to help fund projects.
"It's very important to meet the market for a business-friendly, family-friendly hotel that's in the mid-price range," said Chris Ronayne, president of University Circle Inc. and a member of the board that voted on the New Markets request.
University Circle Inc. and University Hospitals teamed up in 2008 to seek proposals for the hotel. Demand for rooms in the area is high, and hospital patients' families, visiting doctors and tourists often end up at hotels in downtown Cleveland or the eastern suburbs. In the University Circle area, the only options for overnight visitors are the InterContinental hotels, the Cleveland Clinic Guest House and Glidden House, a small hotel on the Case Western Reserve University campus.
With University Hospitals remaking its main campus and building a cancer hospital on Euclid Avenue, the need for hotel rooms has only been growing. Last year, Cleveland developer MRN Ltd. announced plans to turn the former Tudor Arms Hotel at Carnegie Avenue and East 107th Street into a Doubletree.
On Thursday, Snavely will present plans for the University Circle hotel to city design and planning officials. Guests at the property will pay an average rate of $140 a night and will park in a University Hospitals garage off Cornell Road.
President Peter Snavely hopes to start construction in early 2011 and open the hotel in late summer or fall 2012. The project will create roughly 200 construction jobs, just as University Hospitals is wrapping up several nearby projects, and the hotel will employ about 50 people when it opens.
Snavely still has to acquire the land, a parking lot owned by University Circle Inc. and University Hospitals. He plans to buy the property for about $33 per square foot -- roughly $425,000 for University Circle Inc. and $150,000 for University Hospitals. The deal will eliminate about 50 parking spaces, most of them used by University Hospitals permit-holders. The remaining parking lot will be refashioned, with 50 metered parking spaces, landscaping and an improved back side for the nearby stores and restaurants.
Snavely and Concord will jointly own the hotel, which will be managed by Concord, a hotel operator based in Raleigh, N.C. The developer also has to secure financing, no small feat. On top of the tax credits, the financing could include loans from sources including Cuyahoga County. Snavely has discussed additional New Markets Tax Credits with the Cleveland-Cuyahoga County Port Authority, which has an allocation.
The port has had preliminary talks with the developer, said Chief Financial Officer Brent Leslie. Tracey Nichols, Cleveland's economic development director, said the developer has talked to the city about Tax Increment Financing, an arrangement in which debt on a project can be repaid using increased property-tax revenues created by the development.
"We are really moving very fast today," said Snavely, who hopes to close on financing by the end of the year. "It's exciting to be in the flight of a development process that can actually happen."