Columbus City Council will act tonight on a huge new development on city-owned land in the Short North Neighborhood.
The development plans for the North Market Tower call for a 26-story building to rise from what is now the North Market parking lot.
The $192 million development will expand the current market’s footprint and include a public atrium, restaurant space, a hotel and apartments and room for offices. However some question whether the city is getting a good deal for the highly desirable piece of real estate.
The piece of land sits one block from High Street in the heart of the booming Short North Neighborhood. The two acres are surrounded by hotels, restaurants, condos and apartments.
Columbus taxpayers are the property’s current owners, and the Franklin County auditor values it at $4.5 million dollars. Greg Hrabcak, a commercial real estate agent with HER realtors explains it would likely fetch far more than that on the open market.
Several properties near the North Market have sold recently, Hrabcak said.
“That .461 acres on the corner of High street and First Avenue, sold June 27 of 2017 for $4.5 million. So if you look at that, the equivalent of that could be $9 million an acre,” he said.
Hrabcak points out there are few areas of the city more attractive than the Short North, and usually getting a parcel as large as the North Market’s would require cobbling together a number of different properties.
The North Market site is not all parking lot. The market itself takes up some of that space and it’s not going anywhere. Still, developers will have a decent amount of land to work with, and it’s not like values have gone down since 2017.
The city is planning to transfer the property to a development group without cost. North Market Development Authority executive director Rick Harrison Wolfe bristles at the suggestion they’re getting the land for free.
“They’re not giving it away,” Wolfe says of the city plan. “So that’s a key thing—there’s no public market in the world that operates without a subsidy from someone.”
He points to the market’s parking revenue—roughly $300,000 a year. Under a different deal the market might lose that parking revenue, instead the agreement calls for the developer to cut the market a check for the parking revenue every year.
“That’s their subsidy to us, and the developer has to take over that subsidy in perpetuity” Wolfe says. “So, think about that—$300,000 a year in perpetuity. They’re paying a lot for that land. But they understand the importance of the market and this project together, so that’s something they’re willing to take on.”
The Wood Companies and Schiff Capital Group make up the development team. Neither responded to interview requests for this story.
Under their $300,000 annual payment, it would take about 15 years for them to pay off the auditor’s current valuation of the parcel. They’ll also contribute $200,000 a year during construction to off set lost revenue at the market.
Columbus economic development administrator Mark Lundine explains this fits with the city’s underlying strategy to drive dollars into the market itself and not into city coffers.
“The city could’ve gotten a much greater financial return had we not taken into account the support and expansion necessary for the market, but we chose to invest in that, versus just pursuing the greatest possible return.” he says.
That rings a bit hollow for City Council candidate Joe Motil who says the land and the parking lot should not be given away from free.
“You know, first of all, it’s the tax payers’ land, and we shouldn’t be giving away public parking lots as we have in the Short North area for nothing,” Motil said.
Another city council candidate Liliana Baiman raised similar concerns about the project.
“The last thing we need to do is give away taxpayer land for free in one of the hottest neighborhoods in Columbus (plus millions of taxpayer dollars in infrastructure and design work) to create upscale apartments and boutique hotels.”
The city will bring in revenue from the project through income taxes on workers inthe new building. The development group suggests it will generate $33 million in income taxes over 15 years.
However because it’s in the downtown Community Reinvestment Area (CRA) district, the development also qualifies for tax breaks.
The tower will receive property tax abatements on its hotel, residential and office space improvements. The improvements for retail space can’t be abated, which means that portion of the building’s improvements will start generating taxes for the school district.
Those tax breaks are meant to attract new investment, but Motil says they’re no longer necessary in the area.
“These 15 year, 100% tax abatements in the downtown district are no longer needed,” Motil says. “They haven’t been needed for years now. This is an, as everybody knows, a risk-free development area where everybody is making money hand over fist.”
Motil was actually a member of the city’s Historic Resources Commission when the market introduced plans to move from an old quonset hut into its current space, and he laments the changing face of the neighborhood.
The same commission has to sign off on plans for the new tower. Motil hopes they’ll push for changes but admits it’s not likely. He’ll be on hand tonight when city council brings up the plan for a vote.