The state, Cuyahoga County and the city of Cleveland are offering $23 million to help AmTrust remake a largely vacant building at East Ninth Street and Superior Avenue.
View full sizeAmTrust Financial Services Inc. could bring 1,000 jobs to downtown Cleveland. The company's deal, bolstered by public support, will revive a largely vacant office building at 800 Superior Ave.CLEVELAND, Ohio -- An insurance company based in New York could bring 1,000 jobs to downtown Cleveland, reviving a largely vacant building and brightening the city's ailing financial district.
AmTrust Financial Services Inc. plans to create up to 800 jobs over three years and move most of its local suburban employees - 245 people in Seven Hills - to the former KeyBank Center office building at East Ninth Street and Superior Avenue.
The deal, which won support from a state tax-credit board Monday, represents a huge win for Cleveland.
The city faces the loss of big office tenants including Eaton Corp. to the suburbs. Meanwhile, companies including accounting firm Ernst & Young are moving across downtown, leaving swaths of empty space along East Ninth Street.
AmTrust will fill much of the 23-story building at 800 Superior Ave., part of a neighborhood that downtown boosters are trying to recast as a residential and business district called NineTwelve.
"We're eager to build upon our existing investments in Northeast Ohio and excited to be part of the urban renaissance in downtown Cleveland, which is in the midst of a sweeping and exciting transformation," Barry Zyskind, AmTrust's chief executive officer, said in a written statement.
Growth through hiring, acquisitions
Founded in 1998, AmTrust provides insurance to small and mid-size businesses. It is not related to Cleveland's former AmTrust Bank or its successor, Ohio Savings Bank.
The insurance company and its affiliates have operations in 22 states and overseas. AmTrust went public in 2006. Between Dec. 31 of that year and Dec. 31, 2010, the company expanded from 325 to 1,400 employees, according to regulatory filings.
Executives say the company, which has grown through hiring and acquisitions, now employs more than 1,500 people. The company's local employees range from its chief financial officer to accountants, underwriters, claims adjusters and information technology workers.
AmTrust has not said whether existing employees will move to Cleveland from sites other than Seven Hills, where it was advertising nearly 40 open positions Monday afternoon.
Cleveland would be the company's single largest office.
"This is game-changing for the local economy and downtown Cleveland," Mayor Frank Jackson said in a written statement. "Talking about jobs is one thing, but actually creating them is the real thing. It's rare anywhere in the country to create hundreds of new good jobs in one fell swoop."
A $20 million renovation project
AmTrust opened a one-person office in Beachwood in 2001 and bought an office building in Seven Hills in 2005.
In August, an AmTrust affiliate acquired the 800 Superior building and parking garage for $7.5 million through an online auction, after the previous owner handed off the keys to a lender.
Now the state, Cuyahoga County and the city of Cleveland are offering $23 million in incentives to help AmTrust remake the property.
The insurer will spend at least $20 million to transform the building into a prime office complex. AmTrust expects to occupy 250,000 to 300,000 square feet of the property, which comprises roughly 450,000 square feet of office space.
"It's a real anchor on Ninth Street, which we know needs some work," said Joe Roman, chief executive of the Greater Cleveland Partnership, the region's chamber of commerce. "There are a lot of vacancies, but here's a new investor in town taking an objective look at what's going on and deciding to invest and add jobs. I think every single investment on Ninth Street makes the next one that much easier."
AmTrust board members George and Michael Karfunkel are real estate investors whose properties house several AmTrust offices. The company and the Karfunkels found a deal on 800 Superior, a building that could accommodate AmTrust's growth in a location its executives like.
Ronald Pipoly, AmTrust's chief financial officer, said downtown Cleveland is on the cusp of job growth, aided by projects including a casino, a new convention center, the medical mart and the Flats East Bank development.
Public officials and business leaders said the AmTrust expansion is the biggest single-company boost for downtown's office market in years - if not decades.
"The office market downtown has basically treaded water for many years," said David Browning, managing director of the CBRE Group Inc. real estate brokerage in downtown Cleveland. "We had gone through a period where we lost many businesses that either left the region or went to the suburbs and the like. It's only recently that we've been able to pick up some nice job growth downtown."
State, local gov'ts support expansion
A state board approved an $11.4 million job-creation tax credit for the company Monday. That dollar figure is based on AmTrust's creating $40 million in payroll, generating 800 jobs and keeping 200 positions. The company also could receive $5 million in state loans.
Cuyahoga County expects to consider a $3 million loan for AmTrust early next year. It would be the first major loan from County Executive Ed FitzGerald's nascent economic-development fund. The loan, tied to new jobs and property improvements, would last 15 years and carry a 3 percent annual interest rate, FitzGerald said.
"We're talking about twice as many jobs as Chiquita down in Hamilton County is taking out of the state," he said of AmTrust's job-creation goal. "It's a big deal. . . . This is not a tough call. It pays for itself so much."
Public officials expect the average pay at AmTrust to be $50,000 a year.
The city of Cleveland is considering a $1.3 million grant for AmTrust and a tax-increment financing deal worth $2 million. That financing arrangement would tap anticipated increases in the value of 800 Superior to pay for improvements to the property - without cutting into tax revenues earmarked for Cleveland public schools.
Cleveland and Seven Hills have a tax-sharing agreement that will lessen the blow to the suburb as a result of AmTrust's decision to move workers. Seven Hills Mayor Michael Barth did not respond to a request for comment Monday.
The 800 Superior building will be mostly empty this year. KeyBank has moved employees to other downtown locations, and law firm Calfee, Halter & Griswold LLP is leaving for new headquarters on East Sixth Street. Now AmTrust will provide some additional security to small restaurants and retailers nearby.
"We're ecstatic," Kerry Riter, general manager of The Market Café on East Ninth Street, said Monday afternoon. "I think it's wonderful not only for the Market but also for the downtown economy as a whole."
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