Developer MRN Ltd. Secures Financing for First Phase of Uptown Project

Developer MRN Ltd. secures financing for first phase of Uptown neighborhood project at University Circle

By Michelle Jarboe, The Plain Dealer

CLEVELAND, Ohio -- A long-discussed project at the heart of University Circle could break ground this summer, creating a residential backbone for the emerging Uptown neighborhood.

New apartments designed by architect Stanley Saitowitz bode well for Uptown
Cleveland developer MRN Ltd. has secured financing commitments to build $44 million worth of apartments, stores and restaurants along Euclid Avenue, northeast of Mayfield Road and Ford Drive. After years of planning, University Circle is poised to make a huge stride in attracting residents to a district known for its educational, medical and cultural behemoths.

"It's the project that everybody's been talking about for decades," said Chris Ronayne, president of the University Circle Inc. community development group. "It's at the epicenter of what could be a turning-of-the-page toward a very vibrant University Circle that is truly mixed-use."

MRN's project is a key anchor for Uptown, a mixed-use redevelopment that stretches from Mayfield to East 117th Street and from Little Italy to the Case Western Reserve University campus. Early phases of Uptown represent an investment of more than $150 million. The Cleveland Institute of Art has started a $55 million renovation and expansion along Euclid. The Museum of Contemporary Art Cleveland is raising money for a $25 million building at Euclid and Mayfield. And various stakeholders are planning millions of dollars in additional development.

Several of these projects, including MRN's buildings, have struggled with fundraising and financing hurdles in a rocky economy. MRN, the Maron family's development company, initially unveiled plans for a multi-phase residential and retail project in mid-2008. At the time, homebuilder Nathan Zaremba planned to build condominiums and apartments with the Marons, who are best-known for creating an entertainment district on East Fourth Street in downtown Cleveland.

Barnes & Noble has remained an anchor retail tenant for Uptown, despite project delays and the challenging economy. The bookstore will sit on the north side of the site, in an apartment building steps away from the Case Western Reserve University campus.Nearly two years later, those plans -- to be revealed publicly at a Cleveland design review meeting today -- look markedly different: MRN is now the sole developer, pitching a smaller first phase. There are no condominiums, which are harder to finance than apartments and have pre-construction sales requirements. Downsizing has helped the Marons secure financing and set a schedule, even as other developments in Northeast Ohio and across the country remain stalled.

"It's a very complex project in terms of all the stakeholders that are involved, not only in the community but as potential financiers of this thing," MRN partner Ari Maron said. "It's taken us a little bit longer than we initially anticipated to put all that together, but we're excited to be close."

The $44 million first phase could be finished in late 2011. It will comprise 102 apartments and 56,000 square feet of stores and restaurants in two J-shaped buildings lining Euclid Avenue. Maron would not share rental rates, but he described the apartments as higher-end residences aimed at nurses, doctors, graduate students and professors. Barnes & Noble still plans to open a two-level store on the north side of Euclid.

An apartment building planned along the south side of Euclid Avenue will curve in front of the Cleveland Institute of Art and terminate in an oval-shaped space designed for a restaurant or other unique tenant.South of Euclid, the Marons hope to create University Circle's answer to East Fourth, lined with restaurants and bars. An entertainment-focused street will be tucked between the J-shaped building and one of CWRU's existing Triangle apartment towers, where the university is planning a ground-floor retail renovation.

Future phases of the MRN project could include additional retail, offices and condominiums.

"We feel very strongly that there is a for-sale market in University Circle, so I want to make that clear," Maron said, citing town houses being built on East 118th Street and in Little Italy. "In terms of moving this project forward, it's easier to point to buildings like Park Lane Villa and the existing Triangle buildings and see that there's clearly a market for residential rental buildings."

The Marons are buying land for the project from CWRU and University Circle Inc., the driving forces behind Uptown. Instead of buying the property all at once, the Marons will purchase only what they need for each phase of the project -- another way to make the development financially feasible.

The $44 million first phase of the Maron family's development in Uptown will include an entertainment street, tucked between a new apartment and retail building and one of Case Western Reserve University's existing Triangle apartment towers. The Maron family is best known for turning downtown Cleveland's East Fourth Street into an entertainment district, and this street in Uptown also will be lined with restaurants and bars.KeyBank and FirstMerit Bank have signed on as lenders, and the Cleveland and Gund foundations are providing loans and grants. Community Development Advisors, an affiliate of the Greater Cleveland Partnership, is using federal New Markets Tax Credits to help finance the project. So is Enterprise Community Investment, a national lender. And Village Capital Corp. of Cleveland has committed loan money to the project.

The city of Cleveland approved $5 million in loans for the project in 2008, through a program designed to help developers revive vacant or little-used properties. The city has made no financing announcements about the project, and a spokeswoman did not respond to a request for comment Wednesday.

"It's been kind of a monumental task, really, to obtain these multi-layered financing commitments in this credit environment," said Russell Berusch, vice president of real estate for CWRU. "For that reason alone, we're really fairly sanguine. There are lots of moving parts and a great sense of urgency to achieve a closing and get a shovel in the ground."