Norwalk Commons on hold as developers search for financing

NORWALK Bob Evans might not have new neighbors for a while. Construction at Norwalk Commons, the 93-a
Cory Frolik
May 24, 2010

NORWALK

Bob Evans might not have new neighbors for a while.

Construction at Norwalk Commons, the 93-acre mixed use development in the northern corridor of the city, has been put on hold as developers try to find financing to pay for the next stage of the project, officials said.

David Conwill, chief development officer with Pride One, said plans to build the Holiday Inn Express stalled earlier this year because of the credit crunch.

Conwill said the recession -- brought on largely by the troubles in the mortgage market -- caused banks to slash available lines of credit to even the most reliable customers, which stopped the hotel project from going forward. Hotels can't be built without having money to build them.

"There's a lending crisis right now in this country," he said. "National City Bank -- done, no more lending. Huntington National Bank -- done, no more lending. FirstMerit Bank -- done, no more lending."

Between land, construction, engineering and architectural expenses, the entire hotel project is estimated to cost about $6.2 million, according to Pride One.

Conwill said he is lining up about $4.9 million from Westfield Bank, which has financed most of the Commons, but needs the rest from investors.

In an Aug. 7 e-mail to Norwalk Mayor Sue Lesch, Conwill wrote he had secured commitments on all but about $500,000 of the "$1.15 million in equity capital" needed for the project.

Conwill said this week he is now only about $400,000 shy of the goal.

With the help of WSOS, Pride One hopes to acquire a revolving loan fund grant to get the last bit of equity it needs.

According to the Council of Development Finance Agencies, a revolving loan fund is a "gap financing measure primarily used for development and expansion of small businesses."

Ben Kenny, WSOS community development coordinator, said he has not received an application from Pride One yet, but the grant process is always the same.

"In order to qualify for a loan from the fund, they would have to create a certain number of full-time equivalent jobs," Kenny said. "Whatever the project is, it would need to create a job for every $25,000 loaned out. And because the RLF money comes from a community block grant, which has a national objective to benefit low- to moderate-income people, the majority of the jobs would have to go to people who have low to moderate incomes at the time they are hired."

Kenny said the hotel project sounds like it could need the city of Norwalk or other local government to apply for a community block grant from the state.

In that case, the government would receive the grant and be in charge of doling it out to the company.

Conwill said he is confident he will soon secure the funding for the hotel, meaning construction could begin in 90 to 120 days.

But nothing is certain.

"Hopefully by the end of the year, we'll be digging footers out there. Of course, it might be a bad winter and it'll have to wait until next spring," Conwill said. "At this point in the game, with the economy the way it is and where banks are at, if I break ground in March, I'm thrilled."

A January e-mail from Conwill to Mayor Lesch shows he claimed construction was to begin May 1.

It's certainly been a rough year for Pride One, and not just because of the setbacks with the hotel.

The Norwalk Commons was supposed to welcome an Applebees, but the restaurant chain announced it isn't opening any new stores this year in Ohio. The plan fell through, leaving Pride One searching for another restaurant to take its place.

Applebees was supposed to be part of the Norwalk Commons' tax increment financing deal, which allowed businesses on four parcels of land in the development to pay taxes toward the sewer upgrades, road and traffic light improvements.

Bob Evans was also part of the tax increment financing deal and moved into the Commons this summer.