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Updated: Council To Consider Millikin Lease Proposal Monday

Cleveland Heights City Council will review the lease proposal that involves the city, Mosdos Ohr Hatorah and the CH-UH School Board at today's regular meeting.

This article was originally published Aug. 15. A full agenda for the Aug. 20 City Council meeting is now included with this article.

Cleveland Heights City Council will consider a lease proposal for the former Millikin School building at its regular meeting Monday, Aug. 20.

Mayor Ed Kelley said that the city's law director, John Gibbon, reviewed the document and recommends that council approve the proposal.

"I'm looking forward to a ribbon cutting and welcoming the Mosdos staff, the teachers, the students and the families into Millikin in the not too distant future," Kelley said.

The proposal was drafted by lawyers representing Mosdos Ohr Hatorah, the Orthodox Jewish School that has shown interest in the building and offered to to purchase it, and the Cleveland Heights-University Heights School District, which owns the property.

The non-binding agreement is meant to spell out some of the details of a possible lease before an actual lease is drafted to make sure all interested parties are on the same page. One of the terms is that the school would be leased to the city, and Cleveland Heights would sublease to Mosdos.

According to the district, CH-UH is required to include a “right of termination” clause in leases to be in accordance with Ohio law, which gives CH-UH the power to end the lease at any time. Mosdos wasn't comfortable with that, as its being asked to invest $1.5 million into the building as part of the letter of intent. The city does not have to include that clause, which is why they would be involved.

The Cleveland Heights-University Heights School Board at its regular meeting Aug. 7 at the building. Mosdos has signed the agreement as well.

The proposal indicates that Mosdos would need to make the $1.5 million in permanent improvements to the building within the first 18 months of the lease, said Steve Shergalis, director of business services for CH-UH.

The terms would be for 30 years at $1 per year, Shergalis said. There would be two consecutive options to renew for an additional 10 years at market value, and Mosdos would be responsible for all taxes, maintenance, insurance and utilities.

Many of the details won't be confirmed until an actual lease is drafted, such as what exactly the city's responsibilities would be and how the board would determine "market value" should Mosdos want to renew its lease in 30 years.

The lease proposal doesn't include the entire property, Shergalis said. The land includes a 46,555 square-foot building and a 6,500 square-foot barn area. Alan Rapoport, an attorney representing Mosdos and former Cleveland Heights mayor, said the school district is still interested in keeping the stables as well as some other areas of the property.

School Board President Karen Jones that the district would discuss a long-term lease with Mosdos.

The community attended and meetings off and on since February, urging the CH-UH School Board to the approximately 11-acre property for $550,000, and to make sure a call center didn’t move in.

That sparked a debate over the current value of the building, which has been vacant since it closed as a child care center in 2006, and both parties .

In addition, Kelley confirmed the call center initially interested in the Millikin had a for the former , 3008 Monticello Blvd., at a public meeting in May.

Rapoport said that though Mosdos would have preferred to buy Millikin, they were open to hearing other options.

"From Mosdos' point of view, the bottom line is that they'd like to educate their children in that building. And the different ways of achieving that objective, all of those could be considered," he said.

The private Orthodox Jewish School would like to move its K-8 boys school and boys and girls preschools into Millikin, and sell its boys school on Warrensville Center Road, said Rabbi Baruch Chaim Manies, executive director, in May. The K-12 girls division would remain at its school on South Taylor Road.

And Mosdos would need a approved by both the Planning Commission and City Council.

Mosdos, as part of the future agreement, also needs to demonstrate it will likely raise the $1.5 million for improvements from its donors. The lease could be terminated by the district if that condition isn't met, Rapoport said.

Rapoport said that this agreement could be mutually beneficial — the district would no longer need to pay for upkeep of the building but still own the property, and Mosdos could use the half million they were planning to purchase the building with on improvements.

But there are still many details to be hammered out, he said. And even if everyone agrees to a lease proposal, it does not guarantee that everyone will agree to the final terms of the lease.

“What I’m hoping for, at the end of the day, is that there will be a partnership developed out of this between the school district and the Orthodox community, both who have an interest in educating children,” Rapoport said.

Garry Kanter August 15, 2012 at 05:23 PM
Interesting how just as soon as the appraisals were made public, the two sides had a very prompt meeting of the minds. The CH city council has this complicated Lee-Meadowbrook apartment proposal, and as they are not *required* by law to have an independent market value appraisal (the school district is required to have an appraisal performed), there won't be one. Lemme tell you, not having an appraisal is a wildly flapping Red Flag. That the 3 council members and the law director that I have spoken with each explained to me why an appraisal wouldn't be helpful makes that Red Flag wave even more, and adds more Red Flags to my analysis. In the real world, a unique, complex parcel like that would have an independent appraisal performed. No questions asked. I have no idea how council can proceed, and find merit in any proposal without that guidance.
Garry Kanter August 20, 2012 at 03:51 PM
Another interesting sub-plot involves coucilperson Jason Stein. Mr. Stein spoke passionately at a BOE meeting and elsewhere on behalf of Mosdos Ohr Hatora's interests, being a high profile member of the congrgation. I wonder how he will handle this apparent conflict of interest when he votes on both leases? According to Councilperson Dunbar, there is no provision for "Abstaining". Maybe "recusing" is different. But I'm sure not a lawyer, so don't take my word for it.
Richard Hollis August 20, 2012 at 10:07 PM
Just because the building is being leased to the City does not seem to indicate that the BOE cannot terminate that lease at the drop of a hat just as they could if it were being leased directly to Mosdos.. The City would then be on the hook to Mosdos, I think.
Garry Kanter August 20, 2012 at 10:11 PM
Yes, indeed.

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