by Chris Wimer
For my entire life I have been told stories about how great the downtown area of Sandusky used to be, and this intrigued me enough to try and discover what exactly went so wrong there that has allowed it to decline as it has done. Through a great deal of reading and research, what I have primarily found is a nearly 30 year quest to revive the downtown area by our city government. Many different ideas have been tried, but few of them have worked out as planned, and we see this trend continuing with the recent collapse of the Paper District project and ongoing debate over the Marina District.
You could probably fill an entire blog with information about the city's (often poorly planned) attempts to revive downtown, but what is most clear to me from all of my research and reflected in the plan I sent you is that until we get serious about making tough choices in the downtown area and not worrying about catering to so many different lobbies that exist there the area will never get better.
What follows below are two brief examples that I think excellently reflect this point, and that I think may be of interest to the readers of your blog:
Moving City Hall DowntownTwo of the buildings the city is considering for the new city hall site are located at 234-240 Columbus Avenue. By far 240 Columbus Ave, also called the Kingsbury Block, is the more interesting building. Believe it or not Sandusky's city offices were briefly located there from 1913-1916 after the previous city building, located on the second floor of the market building on the West Market Grounds, was destroyed by fire. Eventually though the city offices did move in with the police station on West Market Street in the building that sat a few doors to the east of the Rieger Hotel, where they were until the late 1950s. The Kingsbury block used to be much bigger and stretched around the corner onto Washington Row, but that section of the building was demolished in the 1920s for the Commercial Banking and Trust Company Building, now the home of Calvary Temple. 234-240 Columbus Ave are of course owned by an out-of-town developer, Marous Development from the Cleveland area. Their involvement with the buildings is equally interesting.
Marous bought the buildings in 1998 from National Micro Computers, the people who use to run the Computerland store in 240 Columbus. At the time Marous was positioning itself to be a big player in the downtown by renovating these buildings for residential/commercial use as well as renovating the Hotel Rieger into a new hotel called Hawthorne Suites with fewer and larger rooms.. The key to the deal, however, was that Marous wanted to land the off-track betting parlor that Ohio recently had allowed for Sandusky, which was to be located on the first floor of the Rieger. We all know who got the off-track betting license, and it was not Marous. Without the license the developer abandoned its plans for the Rieger, leaving it to set as it remains today in the equally bad deal the city made with U.S. Construction Corp. Marous held onto the buildings on Columbus, however, but has made no major improvements to them in their 10 years of ownership. The condition you see the buildings in today is exactly as they were back in the 1990s when Computerland was located there, right down to the boarded up windows. A source told me that Marous finally got around to patching a leaky hole in the roof of 240 Columbus last year, but I think its self-evident that they certainly are not going to do anything major with the buildings on their own at this point.
In 1998 Marous paid $125,000 for both of the buildings on Columbus. They have been listed for sale with a local real estate broker for the past few years at a price tag of $250,000. Considering their condition as well as their lovely view of the county parking garage I am not shocked their have been to takers, although I was surprised when another development company, Signature Development of Florida, expressed interest in the buildings about 2 years ago.
I can only imagine what financial terms Marous wants from the city, but it will probably be expensive. As for the cost savings you are hoping for keep in mind that the Kingsbury building was built in 1894 so the renovation costs are likely to be expensive. The part of the deal I like the least, however, is the kind of message that the city will send to other downtown property owners if it goes forward with its Columbus Ave. plans: let your downtown property sit as a slum for years and you still can get a profit windfall from the city. Is this really the message the city wants to send?
The Rieger LoftsPerhaps the greatest failure of all of the protects championed by former city manager Mike Will, the Rieger Lofts has become a nearly 5 year odyssey in poor planning by the city government. Originally announced in 2004, the conversion of the Hotel Rieger into loft apartments was to be completed by 2006 (check out
http://www.riegerlofts.com/# for more). However, we now stand in 2009 with the hotel continuing to sit in disrepair and facing a new set of challenges placed upon it by its developer Greg Spatz.
When Spatz took control of the property in 2005, after two local foundations threw away over $250,000 purchasing the building, he quickly looked to use historic building tax credits offered by the state and federal government. In order to accomplish this, however, Spatz had the building listed on the National Register of Historic Places. Now with historic protections afforded by the State and Federal Government in place as well as a strong state historic preservation lobby watching the building (Johnathon Sanvick is co-chair of the Heritage Ohio historic preservation group in addition to the project's architect), the city will likely face another Keller Building situation when they ultimately get back control of the building at the end of the year when Spatz's development contract expires.
One last note on this project, both Spatz and Sanvick have submitted requests to the State of Ohio for economic stimulus money to get the project started.
Economic Development and Local Government: An Analysis of Redevelopment Attempts in Downtown SanduskyEconomic development is a service commonly provided by local governments, and today with our nation’s changing economy it has taken on an even greater role in their operations and planning. Economic development can target any area, but perhaps no other economic development area draws as much interest and controversy as do the downtowns of our nation. In the modern U.S. most downtown areas have gone from being a hub of a city’s activity to existing in a state of uncertainty. Since the 1950s, small-city downtown cores have been in a state of perpetual decline. The reasons for this decline are well established and include the 1956 Interstate Highway Act, which helped to route traffic out of downtown areas. Accompanying the highway act was an explosion of commercial development near highways fueled by the growth of major chain superstores such as Kmart, Wal-Mart, and Target. The existence of these new mega-store chains placed pressure on many downtown businesses to either relocate to these new commercial areas or to shut down, and thus led to the collapse of downtown retail districts. With this loss of not only retail but also service businesses, downtowns quickly lost both their appeal and usefulness to residents and became blighted areas in many municipalities (Hipler, 2007).
Downtown Sandusky is an example of an area that was not immune to this trend. For much of its existence, Sandusky’s downtown was a major shopping and entertainment destination for residents throughout the area. With the area’s largest selection of retail stores, entertainment venues, and service businesses, downtown Sandusky enjoyed decades of unchallenged prosperity. The 1950s and 1960s, however, brought the construction of other large retail strip malls in the area that provided an initial alternative to downtown shopping. In the 1970s a major blow came with the 1975 opening of Sandusky Mall and the decision of many major downtown retailers such as J.C. Penney to move to the complex. The 1980s brought more decline with the June 12, 1982 closure of Lasalle’s signaling the end of downtown Sandusky’s existence as a shopping district, while the owners of the Sandusky State Theatre announced their intention to shut down and sell the facility (Hansen and Steinemann, 1991). A successful effort by a newly formed non-profit organization was able to purchase and reopen the State Theatre in 1988, but much uncertainty remained. The 1990s, however, brought some hope for downtown Sandusky with the restoration of the State Theatre as well as the opening of many small stores specializing in antiques and arts and crafts, but economic problems throughout Erie County since 2001 have led to the relocation and closure of many of these businesses over the past six years.
Of course the major interest to come from this description of downtown Sandusky is what the City of Sandusky has done to aid the area. Since the 1980s Sandusky’s city government has made downtown redevelopment a priority, but its policies and their implementation have been a wide-ranging list of ideas that is worth analyzing. A 2001 survey of economic development professionals found that approximately 84% percent of respondents named retail as the leading industry group with the most importance to a municipality’s economic base, and this rating was higher than either service (about 82%) or manufacturing (about 73%) industries (Musil, 2001). Thus, this study will concentrate on analyzing the redevelopment of downtown Sandusky and how this redevelopment meets the four major criteria considered in any real estate development project; location, layout, deal structure, and demographics. We will begin our study with a brief discussion of how the downtown ranks in these four areas. From this analysis, we then will offer some suggestions as to what steps the City of Sandusky should take to revitalize its downtown area. Finally, we will consider the current state of the downtown and what importance it will have in the near future.
Downtown Sandusky—An Analysis
As noted above downtown Sandusky has been a redevelopment priority of the Sandusky city government since the 1980s, but just how effective have their redevelopment policies been to the area? In this section, we will analyze the redevelopment of downtown Sandusky based on the four major areas key to any real estate development project in order to gain a better understanding of the accomplishments that have been made in the area and the challenges it still faces.
Location
If you have listened to speeches given by any Sandusky government official in the past few years, all are quick to note that downtown Sandusky’s greatest asset is its waterfront. Under the leadership of former city manager Mike Will, the City of Sandusky has made promotion of the area’s waterfront a priority in its economic development planning. Projects such as the Sandusky Bay Pathway and a transient marina in the Paper District are just some of the ways that the city is trying to improve the waterfront for both visitors and residents, but the ultimate benefits of these projects remain to be seen.
In many ways, however, the downtown’s waterfront is also its greatest drawback. With Sandusky’s waterfront initially being developed in the early 1800s, the area quickly became isolated as urban growth expanded the city completely around the downtown area. This sprawl was not an initial problem for the downtown, but the development of the Ohio Turnpike and State Route 2 in the 1950s and 1960s provided much easier access to a then undeveloped area; U.S. Route 250 in Perkins Township. Today Route 250 is easily accessible from both freeways and has been designed to handle large amounts of traffic. Since most modern commercial businesses make easily accessible sites a priority in their initial development planning, this has led to the growth of a major commercial district along the route.
In contrast downtown Sandusky is virtually isolated from all major traffic arteries due to the existence of large residential neighborhoods that surround the downtown area. Accessing the downtown area also is complicated by Sandusky’s very uncommon street layout. A questionable decision in the 1800s to plot the city’s major street system in the shape of the Masonic emblem has haunted the city in the age of the automobile by leaving it with angled streets and confusing intersections that complicate traffic flow. This problem has not been addressed by the city, mainly due to the substantial cost and amount of work that would be needed to make any major changes to the city’s street system. Thus, all redevelopment efforts in downtown Sandusky have been hindered by its location, and this will remain a major challenge for the city as it continues redevelopment efforts in the area.
LayoutAnother element of any major real estate development project is its layout. The massive growth of the U.S. retail and services industry has made a building’s layout a major concern of virtually every business. An informative example of this trend can be found in the criteria used by a major company such as CVS/pharmacy, which requires a free standing store size of 12,900 square feet with a traffic control signal on the site as well as a highly visible location where a pylon sign can be constructed (CVS Pharmacy, 2007). These store layouts are very easy to construct in most modern commercial areas such as Route 250 but are generally much harder to construct in downtown areas, where the layout of existing lots and buildings do not conform to modern construction requirements. For this reason, the layout of virtually all buildings in downtown Sandusky is a major challenge in their redevelopment.
Another notable problem facing downtown Sandusky is the lack of new construction that exists in the area. As most people will commonly note, residents and visitors to any area have a substantial interest and desire to experience “new,” especially new places. Since the golden age of growth in downtown Sandusky occurred in the mid 1800s, many buildings in the area are large multi-story structures over 100 years old. The substantial age of many downtown buildings is notable since buildings can be important and meaningful symbols of a community, as the State Theatre is for many residents of Sandusky (Rypkema, 2003). The historic status of many downtown buildings, however, also has been a controversial issue in the downtown’s redevelopment. The formation of the Sandusky Old House Guild in the 1970s led to a major interest in the city’s historic buildings. This interest was culminated in 1981 with the filing of a National Register Multiple Resource nomination that placed 95 Sandusky buildings and other structures on the National Register of Historic Places; a national list of historically significant sites in a community (Damm, 1989). Since then many other Sandusky buildings have been added to the listing with the largest concentration of these properties being in the city’s downtown area, and the City of Sandusky has consistently promoted its “historic” downtown area in several ways including emphasizing this distinction as part of its redevelopment and completing a streetscape program designed to evoke the area’s historic nature.
The outcome of this historic distinction, however, may be a burden on the downtown area as well as a benefit. While some downtown buildings have been carefully cared for and restored, others are in varying states of disrepair. The historic recognition of many downtown buildings and in some cases entire blocks of the downtown also has limited the changes that the city can make to the area. Making changes to any recognized historic structure in the downtown can require plan review by both the Downtown Design Review Board and the Ohio Historical Society, thus adding more layers of bureaucracy to the approval of any downtown real estate project. Both of these groups also have established reputations for being very particular as to what changes are made to the design of older buildings in the downtown area, and thus can make potential redevelopment projects in downtown excessively expensive for investors. The Old House Guild also has remained a very powerful lobby group for downtown preservation, with the city recently discovering this in its attempt to demolish the historic but dilapidated Keller Building. The Sandusky city government also made the questionable decision of making its downtown a state and federally recognized Main Street community that also advocates for the preservation of historic buildings.
The amount of protectionism that has developed around downtown Sandusky is a major concern for its redevelopment. From a business standpoint, the downtown area becomes undesirable if an investor is forced to spend substantial amounts of money to preserve a current downtown building, especially when Route 250 lacks all of the historic protections afforded to downtown Sandusky. Buildings on Route 250 are commonly demolished and replaced with new construction, while new construction in downtown Sandusky has been very limited to just a few buildings. The issue of preservation versus demolition of downtown buildings is likely to continue as current redevelopment efforts move forward and some downtown buildings fall into extreme disrepair, leaving the city forced to choose sides in this issue.
Deal StructureA third and very notable component of any real estate development project is its deal structure. Virtually all real estate investors will tell you that any potential purchase or sale of a property can hinge on the development of a deal suitable to both parties, and the need for suitable deals for real estate investors is no less important in downtown development projects. A notable key of any downtown redevelopment is the role that cities must play in helping to facilitate the transfer of downtown properties from current owners to investors interested in the area. As Mark Hinshaw notes in his article “Re-Forming Regulations:”
It’s especially important for cities to help assemble property. Cities that have seen immediate results in their downtown have used the acquisition and resale of strategic parcels to jump-start new development (2006).
In the case of downtown Sandusky interest in helping to facilitate deals for the redevelopment of downtown properties has varied over the past 30 years. In the 1970s, the City of Sandusky engaged in a project that purchased and demolished a number of run-down buildings in the square block bordered by Water, Jackson, and Market Streets in order to increase parking in the downtown area, but not until the late 1990s was this area considered a prime site for redevelopment. Efforts to redevelop the area, however, have been shelved as Sandusky considers relocating its city hall to this site as part of the Marina District project.
In a similar fashion the city of Sandusky purchased or was given several dilapidated buildings along Columbus Avenue in the 1980s and demolished these buildings in 1991 with the goal of creating a new redevelopment area in the downtown, and many residents still remember the “hole” in the ground that existed for many years after this demolition. Unfortunately, the desire by Erie County to convert the former Lasalle’s store into county office space led the city to agree to the construction of a parking garage on the site that was completed in 1996. To date, this garage has been underutilized and also an unattractive eyesore on the main street of the downtown area.
More recent attempts by the Sandusky government to facilitate redevelopment have met with some success. In the early 2000s the city successfully completed assembly of several abandoned factories and other parcels along Shoreline Drive for the construction of the Paper District development, acquired the former Sanduskian Hotel in order to aid its conversion into an apartment complex, and have begun to negotiate for the controversial redevelopment of public property in the Battery Park area. Nevertheless, the city has virtually ignored the idea of assembling properties in the core downtown area for redevelopment. Another major concern is the fact that sale prices for many downtown properties have risen substantially in the past 5 years. Much of these price increases may be due to the “hype” associated with both the Paper District and Marina District projects by local media outlets. As Gibson notes in his article:
local media coverage thus tends to magnify the importance of ambitious redevelopment projects to the regional economy and to gloss over the social and economic costs of redevelopment in favor of discussing the symbolic value of ‘turning around downtown’ (2004).
Thus, local media hype can play a negative role in the potential deal structure of any downtown redevelopment project, and this idea likely will be a major concern for Sandusky; especially with the large number of potential development sites that exist along major arteries in Perkins Township which continue to draw more interest from real estate developers.
DemographicsA final concern in any real estate development project is the demographics of the area in which the project will exist. Demographics have the power to make or break a project, and thus are carefully studied by all potential developers. Downtown Sandusky is a prime example of an area that has seen major demographic changes in the last 50 years. With the decline of manufacturing in the city as well as the rise of new residential areas in Perkins Township, the downtown area and the neighborhoods which surround it now have an income demographic which is undesirable to most modern retail and service businesses. In the past, most housing projects in the downtown area have been aimed at those people either on fixed incomes, such as the Viewpoint and Harborview senior housing complexes, or to aid people in need of housing assistance such as Bayshore Towers and the many homes in the downtown area either owned or accepting of Erie Metropolitan Housing (Metro) funds. For this reason, the current city administration has made demographic changes in the downtown area a centerpiece of its redevelopment. A key part of this demographic change has been the construction of new housing options in the downtown, most notably the Chesapeake Lofts condominium project in the Paper District. In many ways the Paper District was the catalyst that has led to the development of condos in a number of downtown buildings. Condominiums also are proposed as a major component of the Marina District advocated for Battery Park (Schell, 2007).
The city’s rationale for developing of all of these condos in the downtown area is the desire to attract new residents of a higher-income demographic into the downtown who will encourage the opening of new businesses that they will patronize, and a GEM-commissioned report discussing the state of economic development in Erie County has emboldened the city’s support for this idea by noting that many younger professionals:
First decide where they [want] to live, then look for a job in that area. Young people seek locations that are dynamic, supportive of creativity and new ideas, and full of amenities to satisfy their lifestyles (Angelou Economics, 2007).
The ultimate benefits of this “condo explosion,” however, are questionable. Previous experience in other communities show that large scale development of downtown housing does not always lead to the development of a new downtown community of businesses. A study of downtown Vancouver, Canada found that local government support for converting excess office space into housing in the downtown area had led to the creation of a “dormitory suburb” filled with a:
golden global class temporarily parking their investment dollars, linked with a huge cohort of Canadian baby boomers planning to spend their final years in Vancouver […]. Estimates are that one-quarter of downtown purchasers are international speculative investors and another quarter are Canadian non-residents who rent out their apartments (Boddy, 2006).
The outcome of condo development in Vancouver is in stark contrast with what the City of Sandusky hopes to accomplish in its downtown. In fact, the city continues to increase its commitment to this method of demographic change with the strong support of current downtown businesses. Plans for the Paper District, for example, have gone through a subtle evolution that has added larger and larger numbers of condos to the project while removing proposed commercial retail space and a potential indoor waterpark, thereby turning the project from a mixed-use development into more of a residential development. It also is worth noting that the same GEM report which supported the need to redevelop downtown to appeal to younger individuals also noted that Erie County’s number of options for entertainment was one for every 1,250 residents and that this ratio “is nearly twice as strong as the nearest benchmark community, and almost four times that of [two other benchmark] counties (Angelou Economics, 2007). Thus, the ultimate benefit of Sandusky’s large focus on condo development remains questionable in how much it will actually help the downtown area.
SummaryIn considering location, layout, deal structure, and demographics, we have seen the major items considered in any major real estate development deal. As we have seen downtown Sandusky has a number of strengths and weaknesses in each of these areas. The downtown waterfront is a major asset for the city, but it is also a drawback due to the fact that it is not very accessible by automobile. The outdated layout of many downtown buildings also poses a challenge for drawing new retail and service businesses into the area, especially with the large focus on historic preservation in the downtown. Recent attempts by the City of Sandusky to assemble property in the downtown for redevelopment have been successful, but the rising prices of downtown properties and a lack of property assembly in the core downtown remains an issue. Finally, the current city government through condo development has heavily stressed demographic changes, but the ultimate effect of this condo construction and its benefit to downtown remains questionable.
From this analysis, we have gained an understanding of the redevelopment policies that have been enacted in downtown Sandusky with varying degrees of success and failure, but the ultimate question remains, what should be done to revitalize downtown Sandusky? Based on this analysis, we would like to offer several ideas. First, the Sandusky city government should work to acquire more properties to aid in the redevelopment of the downtown area. Although the city has made strides in the Paper District by acquiring properties for redevelopment there, the core downtown area continues to suffer as current property owners act as middlemen looking for windfall profits by selling their real estate. The city’s unwillingness to target the core downtown area by buying properties there for redevelopment also has left it with few other sites to consider, such as Battery Park. In defense of the Marina District project, the city even notes that locating the development across the street “would mean the acquisition of large numbers of properties for any development to make sense” (Schell, 2007). In reality the city could have acquired a number of properties throughout the downtown area during the last 10 years but chose not to do so, instead focusing its efforts on the waterfront to the detriment of the core downtown. Thus, a large-scale acquisition of core downtown properties for redevelopment is a highly recommended course of action for the city government, but this action is likely to be ignored due to current budgetary issues that face the City of Sandusky.
Second, the City of Sandusky must develop a policy for downtown Sandusky where it engages the local historic preservation lobby in order to preserve some structures, but also makes it clear that not every downtown structure can be saved. As noted above, historic preservation is very useful when buildings hold a symbolic meaning for a community. The preservation of these symbolic buildings in Sandusky has not only evolved from a grassroots effort to a powerful government lobby but also been expanded to encourage the preservation of nearly every building in the downtown area. Thus, the Sandusky city government must engage and work with these preservationists while making it clear that some buildings in the downtown area, although historic, are also in a very dilapidated condition and should be demolished. For this reason, the city should change its focus from a broad-based preservation of downtown to only maintaining and preserving those structures that are considered important to the community as a whole.
Third, the City of Sandusky should reconsider its current approach of condo development to facilitate demographic changes in the downtown area. Currently the city has focused its attention on the development of housing downtown for a higher-income audience, and this point is illustrated in the condos currently under development downtown with prices averaging in the $200,000 to $300,000 range. As the experience of Vancouver illustrates, this approach may lead to results very different from what a city would like to accomplish. The city government must be aware of the mostly middle-income demographic that is present not only in Sandusky but also in the greater Erie County area. Although this current demographic makeup is threatened by the loss of the county’s manufacturing base, a targeted development approach in the downtown area which sought to appeal to a wider income rage instead of focusing on a high-income demographic base would likely be more successful in aiding the long-term redevelopment of downtown Sandusky. Thus, future residential and retail projects in the downtown should be targeted to appeal to this wider range of incomes.
Finally, as the city government continues to plan the redevelopment of downtown Sandusky, it should consider the possibility of targeting development projects in the area to appeal to local residents rather than the current primary focus on both tourists and out of town residents. One notable reason for the current decline in small downtown retail stores was their specialty products which mainly appealed to niche markets. Although antiques and arts and crafts do have a consumer base, this base is not large enough among local Sandusky residents to support a resurgent downtown retail district, and a current trend of downtown businesses appealing to a higher income audience will only alienate local residents who find these businesses too pricey and ornate for their patronage. The future of downtown must include the establishment of retail and service businesses which will enjoy the support and business of local residents in order to prevent the “winter doldrums” that affect many downtown businesses. A good recommendation in this area would be to create a mix of both independently owned as well as corporate branded businesses in the area. This would accomplish a goal of offering some special niche stores within the downtown as well as stores appealing to a broader-based audience, and thus giving the downtown something to offer to both local residents as well as tourists visiting the area.
Throughout this analysis, we have attempted to show that economic development in a downtown area is a complex and sophisticated process which can involve numerous people with varying interests. Downtown Sandusky is just one of many examples of downtowns throughout the U.S. facing these challenges, and it is up to local governments to address them to the best of their abilities as they try to revitalize these major parts of their cities. In the case of downtown Sandusky the outcomes of the city’s redevelopment efforts have varied greatly over the past 20 years, with some successes and some failures, but perhaps at no point in time has economic development in the downtown area endured so much hype and controversy as now. The Battery Park Marina District remains at the center of this controversy, and this project will likely continue to stir debate as the city works toward negotiating a development agreement for the site. Another point of interest surrounding Sandusky’s downtown is the amount of attention being devoted to it by the city government, especially with Sandusky losing so many manufacturing jobs in the past 5 years. It is likely that downtown development will be a major issue in the 2007 elections for a controlling number of seats on the Sandusky City Commission, and the outcome of this election could well determine the importance of economic development in the downtown area until the end of the decade. Each of these issues will be important in the future of downtown Sandusky, and their ultimate outcome remains to be seen. Nevertheless, Sandusky itself, like its downtown, is at a crossroads. It will be interesting to see how the government of Sandusky plots its path forward from this point, and there can be no doubt that the path taken by Sandusky both for its downtown and for the city as a whole will heavily impact its future.
References
Angelou Economics. “Report: Erie County Situational Analysis and Strategic Implications.” February 2007.
Boddy, Trevor. “Downtown’s Last Resort.” Canadian Architect. August 2006. Vol. 51, Issue 8, pp. 20-22.
CVS Pharmacy. “New Store Location Criteria” 2007.
http://www.cvs.com/corpInfo/realestate/new_store_criteria.htmlGibson, Timothy A. “Covering the World-Class Downtown: Seattle’s Local Media and the Politics of Urban Redevelopment.” Critical Studies in Media Communication, December 2004. Vol. 21, No. 4, pp. 283-304.
Hansen, Helen and Virginia Steinemann. From the Widow’s Walk: A View of Sandusky. October 1991.
Damm, Ellie. Treasure by the Bay: The Historic Architecture of Sandusky, Ohio. Associated University Presses, Inc., 1989.
Hinshaw, Mark. “Re-Forming Regulations.” Planning, December 2006. Vol. 72, Issue 11, pp. 14-19.
Hipler, Harry M. “Economic Redevelopment of Small-city Downtowns: Options and Considerations for the Practitioner Part 1.” Florida Bar Journal, January 2007. Vol. 81, Issue 1, pp. 39-42.
Musil, Thomas A. “How Economic Developers Evaluate Project Impacts.” Site Selection Magazine, March 2001.
http://www.siteselection.com/issues/2001/mar/p146Rypkema, Donovan D. “The Importance of Downtown in the 21st Century.” Journal of the American Planning Association, Winter 2003. Vol. 69, Issue 1, pp. 9-15.
Schell, Scott J. “Marina District at Battery Park Project FACT SHEET.” March 1, 2007.
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If the city really wants a revitalized downtown Sandusky, then its leaders must face several truths, however unpleasant, about our downtown area.
Downtown Buildings: No Price too High
For me this truth came while assisting a friend looking at possibly purchasing a commercial structure downtown with the intent of living on the upper floors while leasing the ground level space. Together we compiled a list of several available downtown buildings and began calling realtors to inquire about them. What we found was in many ways shocking.
One of the first properties which we inquired about was the former Computerland buildings next to Calvary Temple on Columbus Ave. Although the buildings do need substantial work they have potential, but that was only the case until we heard the price: $250,000 for the structures. A quick glance at the building’s Erie County property tax record shows that their current owners, Marous Development, only paid $125,000 for them in 1998. Thus, this current price represents a supposed 50% increase in the building’s value even though their current owner has made no substantial improvements to them during its nearly 10-year ownership, and their condition of deterioration would require substantially more than $250,000 to repair.
The case of the Computerland buildings is a small example of an ever-growing problem in downtown Sandusky. Prices of buildings there are skyrocketing, often for no good reason other than the real-estate hype that has invaded the downtown area due to projects such as the Paper District. The problem with these markups is that they are in most cases, highly unrealistic and likely to hurt the entire downtown in the long run. Contacting the sales representatives of many downtown buildings, the often quoted price was more than $200,000 for a building. Of course, a few reasonable properties were listed, such as the building currently housing Cabana Jacks on Columbus Avenue. The price of $185,000 was reasonable considering the building needs substantial work on both its exterior and upper floors. Then, however, the shocker came again in the lease Cabana Jacks holds on the ground floor. The bar is paying a bargain-basement rent of $450 a month, a likely price for a single two-bedroom apartment in Sandusky but outrageous for a commercial property. The fact that the building’s owner is forced to honor the lease for the next 24 years was even more disturbing.
At this point you might be asking exactly why the city would care about this situation, and the answer is simple. Outrageous prices and strange leases such as these discourage investment in the area, especially if investors such as my friend are forced to pay through the nose for a property that will need substantial work before it is even in a condition acceptable for occupancy. Both my friend and myself and examined the core downtown area in detail, and there is potential in the downtown for redevelopment. The nature of this redevelopment, however, is where the current reality of the real-estate market and the property owners of downtown Sandusky go in very opposite directions. While a number of small-scale projects in the downtown area are currently being attempted, the true future of the downtown area will depend on whether or not a large scale redevelopment of the downtown can be achieved involving multiple buildings. Having numerous business and property owners in the downtown may have worked in the 1920s, but it does not work today. Consider the investment made by the current owner of the Weber building, Pamela Frisch. Ms. Frisch is the third owner of the Weber building in 5 years, but you must consider the progression of increasing prices paid for the building over this period of time. The building was first sold for $130,000 in 2003 only to be flipped again by its out-of-town owner for $195,000 in 2005; an increase of $65,000 or 67% more for the building even though it had no tenant at the time. Enter Ms. Frisch, who paid $234,900 for the building early this year, the only major change made to it being the fact that the ground floor had been gutted by the second owner for a proposed bar that never was built. With Ms. Frisch’s purchase the building’s value rose another 83%, or $39,900, meaning that the building supposedly had a 150% increase in value in 5 years. Add in the investment for her restaurant to be constructed and you clearly can see why she is making such a large investment in our downtown area. While I wish Ms. Frisch the best of luck with her project, it must be noted that most investors are much more risk-adverse when it comes to scouting potential projects.
A final important note on this point is the fact that virtually all of the real estate agents touted how all of the downtown buildings for sale easily could be converted and sold as condos, and quickly pointed to the other “successful” condo projects downtown. A quick glance at property tax records and websites for both the Hubbard Building and Lakeview Condos, however, showed that both developments still have a number of units available, which begs to question if it is wise for any more downtown buildings to be converted to condos when demand is clearly not meeting current supply.
Downtown Design Review, a Lakefront Tragedy
Perhaps as disturbing as this massive increase in prices is the fact that the city is now considering re-establishment of the Downtown Design Review Board. Although it is no fault of the current city leaders, we must be aware of the historic nature of the downtown area and the challenges it poses. You have learned already with the debate over the Keller Building that a segment of the city’s population does support historic preservation downtown. What these preservationists do not want to admit, however, is that it may be getting too late for some buildings to be saved. A quick walk downtown shows a number of buildings in deteriorating conditions, with some such as the Keller Building in need of immediate attention if it is to be saved.
Numerous buildings downtown are in a rapid state of deterioration, which poses an immediate problem for the city. Not only are the boarded up windows and locked storefronts a bad image for the area, but also they are potential liabilities for the city in the form of lawsuits if someone is injured and finds the city at fault for not making these buildings meet current city codes. The collapsed roof on the Keller Building is a clear example of the unsafe condition of many downtown buildings, but it is certainly not the only dilapidated structure in the area. Buildings on Water Street, Market Street, and Columbus Avenue also fall in this category of deterioration. Some of these buildings do house businesses, and a prime example are the buildings housing Daly’s Pub and Cabana Jacks which have been maintained on the street level but not on their upper floors. If the city does not address this problem of deterioration soon, it is likely that many of these buildings will have no other option than demolition that would not only anger local historic preservationists but also force the closure of some businesses in the downtown area that occupy these dilapidated buildings.
Going forward the city will have to find a way to balance these two issues, historic preservation and new development, if downtown is to become successful. It is clear to me that not every building downtown will be able to be saved from demolition, as some are just so far gone it would be wasteful to put any money into them. The Keller Building has been in a dilapidated condition since the mid-1990s, but previous city leaders chose to sit on their hands and do nothing about its ever-worsening state. Now 10-years later the city is forced to broker a deal to save the building even though it will require millions of dollars in improvements for it to again become a viable structure. The Downtown Design Review Board, however, would only make this situation worse. If the downtown is to get any better new construction must be allowed and necessary changes to existing buildings cannot be the subject of endless debate that will turn off investors and stall projects.
Final ThoughtsIn a summary, here are just a few suggestions for actions that the city might want to take in regard to the core downtown:
Begin exploring the possibility of buying and assembling downtown properties to create a “land bank” of sorts for the downtown area. As noted above the future of downtown will likely depend more on large scale redevelopment efforts rather than individual projects. The city should explore grant opportunities that could be used to purchase underused buildings and then resell them at more realistic rates.
Do not ignore the need for national chain businesses in the downtown area. It is unfortunate, but the reality of today’s America is that more people tend to visit chain-oriented nationally-known businesses than small independent stores. Attracting some of these businesses to the downtown area is a must for its success, but as a part of this the city must be willing to realize that these companies have specific needs for developing in an area, needs that may not match the current way things are downtown.
Do not re-establish the Design Review Board. It is already clear that there are far too many committees and boards with a say in the downtown area. From the downtown parking committee, to Sandusky Mainstreet, and the Bayfront Corridor Committee, downtown Sandusky is filled with numerous interest groups that present a segmented and unclear approach to the redevelopment of the area. It is past time for the city to address this problem and re-establish itself as the clear authority on what will be done to improve downtown. As for concerns for historic preservation, an engagement of the Old House Guild with developers will easily serve the purpose of the Design Review Board.
People living downtown are great, but don’t rely too much on condos. As noted above a number of the condos recently constructed downtown remain on the market. With the downturn in the housing market, adding more condos to the already large supply may not be the best move for the area. Another major concern is the request by many owners in the Chesapeake Lofts to rent their condos on a weekly basis, which basically would create a condo-hotel concept there in which the owners of the condos rent them out on a weekly basis as glorified hotel rooms to area visitors. This may be good for the short-term interests of the owners but bad for the long-term interests of the downtown, since it will lessen the number of permanent year-round residents in the facility. For this reason, it is time for the city to consider the need for greater office and commercial development in the downtown area.
