The Port, a conduit in the deal, expects to issue the bonds within several weeks. The Geis Cos., the developer, plans to give Cuyahoga County keys to its new building in July 2014.
CLEVELAND, Ohio -- The financing package for Cuyahoga County's new headquarters came together Thursday, as the Cleveland-Cuyahoga County Port Authority agreed to issue $90 million in bonds to pay for the project.
The Port will act as a conduit for the deal, issuing tax-exempt lease revenue bonds that will be paid off using rent from the county. The Geis Cos., a real estate developer and construction company based in Streetsboro, is demolishing a pair of vacant, low-rise office buildings at East Ninth Street and Prospect Avenue and plans to build an eight-story government headquarters there.
The Port expects to issue the bonds within several weeks. Geis has started demolition inside the old P and H office buildings and plans to give the county keys to the new building in July 2014.
The bond financing only applies to the county headquarters -- on 0.72 acres of a larger site involving several old office buildings and parking structures. Geis acquired that property, the Ameritrust complex, from Cuyahoga County in February for $27 million. The developer hopes to turn the complex, which includes a historic rotunda and a tower designed by Marcel Breuer, into apartments, a hotel and offices. The Port is not involved in the broader project.
As part of the bond deal, the Port will own the county's new building. Geis will construct and manage the headquarters, which the county will lease through July 2040. The county has an option to buy the building from the Port Authority for $1 at the end of the lease term.
During a Port board meeting Thursday morning, members asked the most questions about long-running litigation over a ground lease beneath the future headquarters site.
The county has been fighting a legal battle over the lease terms and rate with a partial owner of the land, a company represented by Cleveland parking-lot owner Lou Frangos. Cuyahoga County courts have said the ground lease is valid, and a judge recently approved a base rent amount for the lease after an arbitrator weighed in; however, other lingering issues and appeal options might impact what the county pays.
Geis has agreed to pay $11,000 a year toward the ground lease, with the county picking up any additional rent.
"We've been through this a number of times, and it is a complicated issue, but I think we've gotten over it," Ryan Stefan, the senior vice president of public finance at investment bank Piper Jaffray & Co. in Westlake, told the Port board.
Stefan said he expects the bonds to receive a rating of "Aa2" from Moody's and a "AA" rating from Standard & Poor's.
Separately, the Port Authority agreed to issue up to $85 million in bonds for the Medical Center Co., a nonprofit organization that provides electricity, steam, chilled water and other utility services for institutions in Cleveland's University Circle neighborhood. Taking advantage of low interest rates, the Medical Center Co. will use proceeds from the bond deal to pay off the balance on higher-rate bonds issued in 2011.
The Port board also approved the sale of a charter-school building that once housed Myers University and, later, Chancellor University. The Port accepted the building as partial repayment of a 2004 financing deal and later leased the property, at 1906 E. 40th St. in Cleveland, to I Can Schools. Charter Stone Capital has agreed to pay $2 million for the building and will extend the school's lease for 15 years.
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