By Kevin Kelley
While American Greetings will use its own money to construct its new world headquarters at Crocker Park, the city is prepared to issue up to $60 million worth of bonds to pay for costs related to the company’s move.
Before the cardmaker announced it is delaying actions related to its move to Westlake, details related to the city’s financial obligations were discussed by municipal officials at a public meeting Nov. 8.
As an incentive to draw the company to Westlake, the city has agreed to fund roughly $54 million in public improvements in and near Crocker Park. These include the construction of three parking garages, work on Crocker Road at an intersection at the company’s headquarters and site work on the southern expansion of Crocker Park. A long-planned civic space at Crocker Park would also be on the list of public improvements.
At the Nov. 8 meeting, City Engineer Bob Kelly said bids from four construction firms had been received and reviewed for the public improvements. Turner Construction, with a bid of $54.4 million, was deemed by Kelly to be the best qualified bid. Other companies that bid were Panzica Construction ($59.9 million), Whiting Turner ($60.5 million) and the Albert Higley Co. ($60.9 million). With American Greeting’s decision to delay the project, the public improvement contract may have to be rebid.
The majority of the money for the public improvements will come from Westlake’s issuance of tax increment financing bonds, which generate payments in lieu of taxes from American Greetings.
Westlake Finance Director Prashant Shah described two financing scenarios – one in which the city issues $59.6 million in bonds and another in which the amount is $49.8 million. The final amount will be the lesser one if the city takes advantage of a state infrastructure bank loan of $8.5 million, which Mayor Dennis Clough said is the likelier scenario. The complication, he said, is that the state loan is for 20 years while the maturity of the TIF bonds is 30 years.
Shah reported that American Greetings and Crocker Park officials unexpectedly told city officials they want certain costs, such as legal fees, to be paid out of the TIF bond financing. Several city officials seemed resistant to that demand.
The mayor told West Life it’s a matter of what dollar value of bonds the city wants to issue.
“The more we issue, the more risk there is down the road,” Clough said, adding that he’s comfortable with the upper limit of $60 million.
Payments on the bonds will come from American Greeting’s payments in lieu of taxes, Shah said. If those payments are less than the required bond payments, American Greetings and Crocker Park will be expected to make up the shortfall, he added. If they cannot, the city will have to make payments out of its non-tax revenue stream, which includes money collected from recreation and permit fees.
Shah acknowledged that in the unlikely event the city would have to make bond payments, municipal operations such as recreation department activities could be affected.
The overall benefit to Westlake is that the expansion of Crocker Park will generate an annual net increase of $4.2 million in property tax revenue. A portion of that will, of course, go to pay for the public improvements the city is responsible for. The section of Crocker Park land slated for expansion now generates $48,413 in property taxes.
In addition to the 595,000 square feet of office space American Greetings will occupy, the expansion of Crocker Park will result in an estimated 194,000 square feet of retail space.