Before the Covid-19 pandemic, the Millennia Companies had planned to build a high-end hotel and luxury apartments at the long-vacant, historic building at 925 Euclid Avenue in downtown Cleveland, but the pandemic crushed that.
“COVID hit really hard,” said Tom Mignogna, a lead development manager for Millennia.
Instead, they switched their plans and pivoted towards building workforce housing. “We went back to the drawing board, and by summertime we came up with a rehabilitation plan that would address the social and market needs of downtown Cleveland,” he said. “We needed more affordable housing. We modified our development plan to address the real-world conditions now.”
With downtown apartments priced on average at $1.57 per square foot, or $1,100 for a 700 square foot one bedroom unit, many front line workers such as restaurant employees and hotel workers cannot afford to live there. The Centennial aims to address that by building workforce housing that is accessible to workers earning 50-80% of area median income (80% of AMI for a family of four is $60,800).
“With this project, we will be correcting decades of new affordable housing products that have not been added to the downtown market,” Mignogna said. “While developers over the last decade have been focused on producing high-end market rate housing — and we were one of them, we’ve done it — in one swoop, this project will provide the desperately needed amount of affordable housing to the downtown market that has been ignored.”
Michael Deemer, executive vice president of Business Development for Downtown Cleveland Alliance, said the Centennial fills an important gap: “We have 106,000 people working in downtown alone. We have a lot of jobs in the heart of the city and people who work in the city ought to have the opportunity to live close to where they work. There’s definitely a need.”
When construction starts later this year, the building will offer 868 one- and two- bedroom units on 17 floors. Workforce housing will be located on floors four to 20, sandwiched between office space on the first to third floors and the 21st floor. Mignona said that the building will offer front line workers a chance to live downtown.
“They have to live 20 minutes out in the outer neighborhoods of Cleveland,” said Mignogna of some of the tradespeople who work in downtown buildings, as well as other front line workers such as hospitality workers. “Now, there’s no need for private transportation. They could live where they work or walk to work. It [The Centennial] is also right there on the HealthLine.”
In addition to the Centennial, Prospect Yard at 1937 Prospect Ave. was completed last year, with 42 units dedicated to affordable and workforce housing. This development project will be recognized at the 2021 Ruth Ratner Miller Lifetime Achievement Awards by Downtown Cleveland Alliance for its enhancement of the downtown area. Other projects like 1010 Euclid Avenue, also known as the Swetland Building, contain smaller apartments that are geared towards employees of the nearby hotel at The 9.
Prospect Yard, which filled immediately and has a waiting list, was financed in part through historic and low-income tax credits. Millennia plans to utilize the newly passed Transformational Mixed-Use Development (TMUD) Tax Credit if their application is successful. Rents will be capped according to the Ohio Housing Finance Agency (OHFA), and there will be no market-rate housing. Square footage is expected to be priced from .69 cents to $2.00 per square foot, depending upon OHFA-posted allowable rents.
So, with such obvious demand, why aren’t there more workforce housing projects in the downtown area?
For one thing, the tax credits needed to make rents affordable are very competitive and hard to come by. “Oftentimes, the historic tax credit alone is not enough to achieve the affordability that we want,” Deemer said. “There needs to be an additional tool which becomes the low-income tax credit.”
The Centennial’s workforce housing will be targeted towards tenants at 50%, 60% and 80% of the area median income, said Mignogna. According to OHFA, 80% of Cleveland’s median income for a family of four is $60,800. Those that make under the limit can qualify as an 80% low-income household. This means affordable housing for teachers, custodians, front line workers, hospitality workers, bus drivers, police officers, young single professionals and small families.
Mignogna described the Centennial as the most challenging project he’d ever been involved in. Built in 1924, 925 Euclid Avenue was originally known as the Union Trust Building and Huntington Building. It is one of the world’s largest bank halls, featuring marble columns and vaulted ceilings which still stand today. To turn office space into apartments requires a lot of retrofitting. This comes with a price tag of about $430 million.
When the building reopens, it will also include a museum called the Cleveland Exposition Center that will host a collection of artifacts from the Western Reserve Historical Society in the former bank lobby.
Mignogna hopes to close on construction financing in the third quarter of 2021 or, “By the time the Browns play their first home game.” Tenants should be able to start signing leases 15 months after that.
Deemer hopes to see more projects like this one built in downtown Cleveland. The City of Cleveland is in the early stages of developing a 10-year housing plan after completing a 2020 study of tax abatement policy, and DCA is working closely with them to expand public assistance options for new housing types.
“In order to achieve the type of quality affordable housing we would like, there needs to be a stronger public sector toolbox,” he said. “One thing the housing plan will look at is what other cities are doing well that encourage types of products that we would like to see.”
Downtown Cleveland Alliance is an underwriter of The Land, helping to support coverage of Cleveland’s downtown neighborhood.
Aja Hannah is a freelance journalist based in Northeast Ohio. She believes in the Oxford comma, cheap flights, and a daily dose of chocolate.