Elyria esports arena developer requests tax exemption, promises major work soon

Elyria will consider a tax exemption for a proposed downtown esports center after its developer provided an update on Monday explaining the plan's long delay. Elyria Block Development LLC initially presented the plans for its proposed Forge 417 esports arena with other facilities in 2022, but the project has been repeatedly delayed and interior plans were only submitted to the city in March. Elyria Block Development is owned by Kevin Flanigan, a Grafton-based developer. On Monday, a representative for the developer went before a joint meeting of City Council's Finance and Community Development committees to explain the delays, update them on the plan and request a 15-year, 100 percent Community Reinvestment Area, or CRA, tax exemption for the esports portion of the project at 417 Broad St. The joint committee voted to send the proposed exemption before City Council as a whole for consideration, and Law Director Amanda Deery said a tentative special meeting of Council was scheduled for July 22 to consider the legislation. Stephanie Mercado, an economic development consultant on the Forge 417 project, provided the update to the joint committee. "We are still looking at relatively the same project as the last time we were here (before Council)," Mercado said. "We are looking at a 60,000-square-foot renovation of the Dixon and Robinson building(s) with the first floor being connected and more esports focused, but it's really a flex-use space for leveraging technology. So yes, there is esports innovation involved with it, but it's also technology that could be open to employers or educators during daytime hours." On the Dixon side of the building, the second and third floors will be made up of office space. The developer will convert the second and third floors of the former Robinson building into 16 single-bedroom and studio apartments, which Mercado said was a departure from the original plans. Mercado said most of the apartments will be market rate, but funding stipulations will require that some of the apartments be affordable housing. "Pivoting and adding some of the multifamily makes the financial underwriting of the project work, because it's a … more reliable end use of a building to underwrite for financing purposes," she said. Elyria Assistant Safety Service Director Dawn Calvert said that the proposed CRA tax exemption would apply only to the esports portion of the facility, not the multifamily housing. Calvert said that the proposed exemption would exempt the property owner from paying any additional property taxes on the esports arena for the next 15 years. This means that the property owner would still pay taxes on the current value of the property, but not on any additional value created by the construction of the esports facility and offices. Calvert also said that in addition to needing the approval of the city, the exemption also needed votes from the Board of Education of both Elyria Schools and the Lorain County Joint Vocational School. Elyria's board would need to vote both waive its right to receive 45 days' notice of the proposed exemption, as well as to approve the exemption itself. The JVS board would only need to waive the 45-day notice requirement. "So there are kind of three pieces that are outstanding for us to be able to execute it fully, but we have been communicating with both board(s) of education," Calvert said. "They are fully aware of what the request is, and what the next steps are." Calvert said that Elyria's Board of Education would consider the exemption at its next meeting today and the JVS board would hear the proposal at its meeting on Thursday. "So we anticipate that they will have resolution to provide to us, so by the time we are ready for a vote of full Council, we will have everything we need to be able to move forward with that," Calvert said. There had previously been conversation around potentially instituting a tax increment financing, or TIF, agreement to help fund the project, but Calvert said that plan had been scrapped and the CRA would replace it. Some members of Council expressed concern over the length of time which the project had already taken, along with the fact that its plan had changed so late in the process. Questions about the lack of visible work at the building have persisted among Elyrians since the project was announced in 2022, but Mercado said that the project had been undergoing work, it had just been mostly outside public view. Mercado also said that the project had initially hoped to close its financing shortly after the project received $2 million in state historic tax credits through the Ohio Department of Development in 2022, but that both the financing and the planning had to be adapted after early work uncovered more structural issues in the old building than expected. "Our architects and engineers made some assumptions about what was behind the walls, but you don't really know until you start to engage in selective demolition," Mercado said. "... When we went through that process,while there is always the expectation you will uncover something you weren't expecting, there were materially more structural concerns with both buildings." Specifically, further examination of the buildings unveiled issues with the structural integrity of the shared back wall. These issues forced the project architects to redo their designs and to run those designs back through the Department of Development's Ohio Historic Preservation Tax Credit program for fresh approval. Several other funding sources also required the project to be resubmitted for approval. "We are here now to say we have gone through that structural work, the back wall is shored up, there is a new roof on the building, all of this was done to preserve the existing structure," Mercado said. "Without those repairs, there would be a threat of a structural issue. … Where we are now, we are actively involved in our closing process. We are looking to close in the very, very, very near future." To receive some of its funding, including the $2 million in historical tax credits, the project needs to be completed by the end of 2026. Mercado said she felt that because of the "pre-development" work that had already been done, the developer was ready to start now and could get the project finished by that deadline. "As soon as we close on our financing, there is not going to be any gap of time, we are ready to move," Mercado said. "We have submitted drawings of the building to the city for approval and we are ready to work on some of the major packages immediately." Calvert said that the project was expected to create an estimated 20 equivalent full-time jobs in its first year, and 40 full-time equivalent jobs by year three with an annual estimated payroll of $1.8 million. "I think what you have to focus on is not the loss of the property tax, because in order to lose something you have to have it to begin with," Elyria Finance Director Ted Pileski said. "This incremental value, we're not collecting that now. What you have to focus on is the income tax revenue that is going to be brought in with the construction and the jobs. I think it's a great addition to downtown." Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.