Tuesday, October 28, 2008
Ameritrust Tower: "We cannot commit $1,000,000 to a project which may never happen"
Last week, developer K&D asked for eight more months to try to purchase the Ameritrust Tower from Cuyahoga County. CEO Doug Price's letter to the county, which I've posted online, reveals that its plans for the tower are increasingly fragile.
That makes the county commissioners' controversial 2005 decision to buy the tower -- described in my June article "Tower Play" -- look even more questionable and risky.
K&D asked the county to waive the $500,000 fee to extend the closing date past Oct. 31. The developer has already paid a $500,000 deposit on the potential $35 million sale.
"We cannot commit $1,000,000 to a project that may never happen," Price wrote in the Oct. 16 letter. County commissioners were expected to waive the fee at their meeting this morning.
Price says banks won't lend because of the economic crisis. But the letter's attachment shows another problem. Five banks decided K&D's ambitious plan to remake the Ameritrust Tower into a mixed-use apartment and hotel complex was too risky. Three financial institutions showed interest, but couldn't proceed because the national credit market has seized up.
Let's hope a bank takes on the K&D project once credit starts flowing again. It'd be exciting and good for Cleveland, bringing life to a key corner of downtown. And it'd be good for county taxpayers.
The county has already lost $6 million on the tower. If the K&D deal fell through, the county's options would be costlier than ever: 1) Selling the tower to someone else, quite possibly for a bigger loss; 2) Getting stuck with an empty building it's spent $42 million on; or 3) reviving plans for a new county administration building at the site -- which my article showed would add millions of dollars a year to the cost of government.