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The Suburbanite
  • Canton to invest $3 million in Hercules site

  • The Canton Community Improvement Corporation on Tuesday afternoon approved the economic development plan. City Council will now be asked to approve a $3 million loan for the first phase of the project, which will cost nearly $30 million.

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  • A developer has established private financing and a buy-in from the city to revitalize the shuttered Hercules Engine site.
    Project plans call for 95 market-rate apartments to be built in 125,000 square feet of old factory space at 1036 Market Ave. S during the first phase, which must be completed by the end of 2014.
    Similar plans were set to unfold on the 26-acre site in 2008, but owner Robert Timken of Cormony Development was unable to secure private financing to move the project forward. Timken had hopes of transforming the 600,000 square foot former industrial complex into residential, office and retail space. Plans have also included an exhibition center.
    Now, Timken has a $13.8 million backing from Huntington Bank, and he is asked the city of Canton for another $3 million. The Canton Community Improvement Corporation on Tuesday approved plans for the first phase, a move that allows it to ask City Council to issue a $3 million economic development revenue bond.
    Timken also has $5.5 million of equity, and $3 million issued in 2007 from the Clean Ohio Revitalization Fund to use for the project, according to a budget submitted to the city.
    “It’s been a long time, and I suppose I have a more guarded outlook these days just because we’ve been through so many ups and downs relating to the economy, nationally and locally, and the possibilities of interested parties in one form or another in the project, either as investors or users,” Timken said. “I’m excited and always have been excited for a project like this. I’ve seen projects around the country that have been catalysts for development and I certainly think Hercules has that potential.”
    TAX CREDITS
    Initially, the project was to be done in one fell swoop. It qualified for federal and state historic tax credits that were uncapped. Timken returned to the Ohio Department of Development after the financial markets froze and the project came to a halt.
    The state has placed caps on the amount of the project the tax credits can be applied to. It is now allowing the project to be done in phases. The deadline for the first phase to be completed is the end of 2014.
    “There’s no doubt about it,” Timken said. “We’re going to hit the ground running. Even as we hit closing on the construction loan, we’ve been working to address the issues we can that don’t have to do with our permanent financing.”
    Timken said three other phases are planned and may include commercial, retail and office development. He said the second phase, likely commercial, could change if the residential units are filled quickly. An exhibition center is still part of the plans.
    Timken has selected the construction company Skanska to do the work. Skanska has offered $2.7 million of additional financing if it is needed, Timken said.
    Page 2 of 3 - CITY’S ROLE
    The first phase will be constructed within the brick facility that runs along the northwest corner of the property, where a railroad line and Market Avenue intersect. The state has stipulated that the residential units must be rentals for at least the first five years. They can then be sold as condominiums.
    One-bedroom, one-bath unit apartments would be 700 square feet in size and cost approximately $830 a month, according to documents submitted to the city. Two-bedroom, two-bath apartments would be 1,030 square feet in size and run $1,000 a month.
    CIC Board member Robert Thompson asked if there would be enough support to make the residential component work. Citing two market analyses and Huntington Bank’s financial backing in the project, Canton Service Director Warren Price said the city’s participation is worth it.
    “With the market studies on both the public and private side, it’s my belief that the project for the investment on the city’s side is worth the risk,” said Price, who is also chairman of the CIC.
    Development Director Fonda Williams told the CIC that there are only six other market-rate housing units being built in downtown Canton at this time. He said a new demand for housing by the oil and gas industry and other related businesses improve the chances for success.
    “There’s a tremendous opportunity for us to fill these units immediately,” Williams said.
    Price likened the project to loft-style apartments built in redeveloped industrial complexes on the east side of Cleveland.
    CLEANUP
    Before construction work can begin, the environmental cleanup that started in 2008 must be finished, Price noted. Only $900,000 of the $3 million Clean Ohio Revitalization grant has been spent. Six companies involved in the cleanup quit working in 2009 when they stopped getting paid. That’s when private financing for the project went dry. The contractors filed liens against the owner to recoup a total of $420,000 in unpaid bills. The issue was later settled.
    The site, vacated by Hercules Engine in 1999, is dotted with century-old and World War II-era brick buildings.
    Because a portion of the plans entail residential housing, the cleanup requirements were more stringent, Price said. The state has extended the deadline for the cleanup.
    “If it’s not complete (environmental cleanup) and Cormony has spent $900,000 on remediation with no end result, the city of Canton will ultimately be on the hook for that grant,” he added.
    HERCULES HISTORY
    The crumbling factory complex at the corner of Market Avenue S and 11th Street SE dates to 1915, when Hercules Motor Manufacturers opened for business. During World War II, Hercules became one of the leading truck engine providers to the U.S. military and its allies. The company
    Page 3 of 3 - changed hands several times beginning in the 1960s, until closing in 1999.
    Since the closing, several attempts have been made to revive the property. They include:  
    2000  Eslich Wrecking Co. buys the property and later turns it into the “Factory of Terror” haunted house.
    2004  A proposal to relocate the Pro Football Hall of Fame to the site as part of a “Gridiron District” is rejected by the Hall.
    2005  A group of investors with Broadview Development buy the property.
    2006  A $735,000 state grant triggers a feasibility study of what could be the best use for site.
    2008  Officials with Cormony Development of Rockville, Md., and Ohio Department of Development announce $36 million in tax credits to help develop offices, housing and retail space. Cormony partner Bob Timken is involved.
    2009  Cormony Development’s plan stalls because of the banking crisis, leading to a variety of legal actions.