Economic reports contradict latest TOH plan

As a 35-year resident of the Cedar Fairmount neighborhood, across Cedar Road from the Top of the Hill (TOH) proposed development, I was surprised to read a Jan. 25 article in the Plain Dealer, “Cleveland Hotel Occupancy in 2018 Rebounds, Exceeds Republican National Convention Year”, which noted, “Hotel occupancy—that’s the percentage of hotel rooms that are filled—was 69.3 percent in 2018 for downtown Cleveland and University Circle. . . . That’s up from 66.5 percent in 2017, and the highest since 2015, before the city added several new hotels in anticipation of the RNC.”

My surprise arose from my attendance at a 2018 community meeting on TOH, when we were told by the city that the developers, Flaherty and Collins, had dropped the “nationally branded or boutique hotel” and office space from their original proposal submitted to the city, which formed part of their being chosen to develop this city property. A very low occupancy rate in hotels in University Circle and downtown Cleveland was cited as the reason for the change.

Residents in my neighborhood had applauded the prospect of adding a desirable hotel and office space for their potential to provide the city with attractive architecture and an excellent income from taxes on hotel rooms, as well as higher wages on jobs not in the service or retail sectors. We also know how hard it has been, historically, to find lodging in the area for out-of-town guests.

The developer’s explanation for the change cited “potential competition from existing and potential future hotel uses located ‘down the hill’ and difficulties in meeting sustainable occupancy rates.” The developer concluded that locating a hotel now at TOH would require the city to subsidize the project to the tune of $6 to $8 million, which is not supported by the budget.

In light of news about desirable levels of occupancy and room rate increases in downtown Cleveland and University Circle, this assessment needs to be revisited, and a more realistic view of the risks analyzed. According to the Plain Dealer article, downtown and University Circle added four new hotels in 2016 for a 17-percent increase in room supply, yet both 2018 hotel occupancy and overnight rates increased over previous years.

Evidently, there is sufficiently high demand for both hotels and office space in University Circle and Cleveland. According to the article, “The occupancy rate increases are also a result of a growing, healthy economy, according to Laurel Keller, a senior vice president with Newmark Knight Frank, who noted the strong correlation between decreasing office vacancy rates and hotel demand. Cleveland is experiencing its lowest office vacancy rate in more than 17 years. Keller said the increase in both hotel occupancy and overnight rates [up 4.8 percent from 2017] should lead to additional supply growth. Seventy-percent occupancy, she said, ‘is a magic number for developers,’ and the sign of a healthy hotel market.”

I believe including a hotel and office space in the TOH mix would help mitigate the city’s inability to collect taxes on the incomes of “empty nesters,” mostly retirees who will likely represent a large percentage of people moving into the high-end luxury apartments at TOH. Rents starting at $1,200 a month are beyond the reach of most millennials that Flaherty and Collins had in mind originally.

Now, at the “gateway to Cleveland Heights," we no longer have the originally proposed 120-room nationally branded hotel or 55–80 room boutique hotel, office space with an open and welcoming scale (about six floors), and lots of green space. Instead, new plans show a—some would say—unattractive, 10-story, long, grey wall of apartments facing Cedar Hill and Cedar Road.

Many incremental changes initiated by the developer during the past year, over voiced and written objections from Cleveland Heights residents, mean TOH differs radically from the original proposal. That original plan, after so many changes, more resembles a Trojan horse than a clearly thought-out plan. I believe the city is losing income, as well as our best shot at presenting a positive statement about the city. Top of the Hill needs a reboot.