Cleveland Heights to Acquire $600,000 After Renegotiating Mortgage
City officials wait to see whether requirements from an old HUD program guide spending
Cleveland Heights is expecting a $600,000 windfall after renegotiating a second mortgage with the owners of the Kensington Place Apartments, 30 Severance Circle. The funds might have strings attached, however, because the money originally came from a federal program that encouraged mixed-income housing.
On Tuesday, council members voted 6-0 to enter into a new agreement with Kensington Limited Partnership, which owns the high-rise. Councilwoman Bonita Caplan was absent.
Officials said the money should arrive in March or April.
"It's not going into the general fund," Mayor Ed Kelley said after Tuesday night's council meeting. "It's probably going for development, but we have to get a determination about what we can do."
In 1989, the Kensington project received $4.8 million from the Department of Housing and Urban Development through the city as a pass through. In order to qualify for the money, the company agreed to reserve 20 percent of apartments at the complex for low-income dwellers.
Now that 20 years have passed and the company is renegotiating the first mortgage, the city is exercising its option to forge a new agreement. Under the new contract, Cleveland Heights will receive $600,000 and carry a $300,000 loan. If the payment takes 10 years, the city will receive $30,000 per year plus interest. If the developers pay the loan off in eight years, the interest will be forgiven, Councilman Mark Tumeo said at the meeting.
Eventually, the city stands to recoup $900,000. Kelley said the city expects to hear from HUD in the next month about possible restrictions.
In other action, council members agreed to apply for two grants from the Northeast Ohio Areawide Coordinating Agency (NOACA).
One is for $40,000 for a planning study on improving bicycle travel and mass transit between the city and University Circle. The grant application on bicycle travel is a joint effort among Cleveland Heights, Cleveland, University Circle Inc. and the Cleveland Heights Bicycle Coalition. If the application is successful, Cleveland Heights will pay $5,000 in matching funds.
The second application is for $75,000 to study mass transit and pedestrian transportation between Cleveland Heights and University Circle. If that application is successful, the city will pay $18,750 in matching funds, but the mayor said the city is talking to other entities about co-sponsoring the study.
Editor's note: In an earlier edition of this story, it was incorrectly stated that the city received a grant from the Department of Housing and Urban Development. Kensington Limited Partnership received the the money through the city as a pass through.