CLEVELAND — City officials say a major manufacturer eyeing the I-X Center could bring 700 jobs to the building starting next year — if, that is, Cleveland edges out the competition.
A few details about the potential tenant surfaced during a Cleveland City Council committee hearing Wednesday morning. Officials stressed that no deal has been signed. Citing confidentiality agreements with site selectors, they won’t identify the business yet.
Jennifer Scheel, the city’s executive attraction officer, said Cleveland is competing with one other city at this point for the opportunity, which involves $72 million in payroll.
“These are really good jobs,” she told council members. “I’ve had the pleasure of visiting the company and seeing the diversity on the floor. … They also are into local hiring, local promotion.”
And, she added, “they would not even take up half of this facility.”
Scheel said the 2.2 million-square-foot I-X Center is one of just a few buildings in the region with the available space and infrastructure, including overhead bridge cranes for lifting heavy equipment, to suit the company’s needs.
City officials first alluded to a large potential deal during a council meeting in early June. But Wednesday was the first time they mentioned the number of jobs involved — and the possibility that a tenant might be ready to move into the building next summer.
The city owns the I-X Center, but it’s leased to — and controlled by — a joint venture between Industrial Realty Group and Industrial Commercial Properties LLC. The building closed in March after decades of serving as a venue for major consumer shows.
The real estate developers have been working to lure businesses to the property. But over the last year, city officials realized they needed to clean up some financial snarls first. That’s what Wednesday’s council committee hearing was about.
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Today, the neighboring city of Brook Park gets 60% of the income tax revenues from anything that happens at the I-X Center, nearly 37% of the municipal property tax revenues, more than a third of the admission-tax revenues — and all the parking revenues.
The cities entered a tax-sharing agreement in 2001 as part of a settlement to end a nasty battle over land near Cleveland Hopkins International Airport. At the time, Cleveland had purchased the I-X Center with plans to tear it down to make way for a new runway at Hopkins. That runway project never happened.
But the settlement agreement, which says tax-sharing at the I-X Center must continue until the building gets torn down, is still in place. And that revenue-splitting setup makes it tough for Cleveland to offer tax breaks or incentives to any tenant looking at the site.
In May, Cleveland Mayor Justin Bibb and Brook Park Mayor Edward Orcutt reached a deal to scrap the tax-sharing agreement — and end a protracted legal fight over some nearby land in Brook Park.
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Under the revised agreement, Cleveland will get to keep all of the tax revenues from the I-X Center and a nearby business park, which is also subject to tax-sharing today. That means the city will receive all the upside from new development.
In the case of a tenant with $72 million in annual payroll, that would mean $1.8 million in income-tax revenues.
Today, under the tax-sharing agreement, Cleveland would get only $720,000 of that. Brook Park would be entitled to $1.08 million.
In exchange for ending tax-sharing, Cleveland will give Brook Park 34 acres of vacant land — former residential property in Brook Park that Cleveland acquired for the airport expansion that never happened. And Cleveland will pay Brook Park $650,000 a year for 33 years in lieu of tax revenues, along with $2 million up-front for legal fees.
Brook Park City Council recently approved the revised settlement.
Cleveland City Council is set to vote on the agreement July 15. The transportation and mobility committee advanced the legislation Wednesday in a 4-to-1 vote.
Scheel said there’s no guarantee Cleveland will win the 700-job prospect. But she's hopeful. And the city's seeing interest from other manufacturers.
“We are missing out on deals that we don’t even know about because we’re not ready,” she told council members, stressing the need to move swiftly.
Cleveland previously pursued a manufacturer in the aerospace industry for the I-X Center but lost out on that deal, she said. “There are some cities that are able to just write checks to buy companies. We’re not in that position,” she said.
During a recent interview with News 5, Matt Dolan, the CEO of regional economic development group Team NEO, confirmed that there are serious conversations under way with several prospective tenants.
Citing non-disclosure agreements, he wouldn’t discuss any details.
“Look, you have a large building close to a major city, next to a major airport. It’s a very attractive property for potential businesses to go there,” he said.
But for now, the I-X Center is sitting empty. And the people behind the Cleveland Auto Show, the Great Big Home and Garden Show and other popular consumer events with long histories at the I-X Center haven’t given up hope of getting back into the building.
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Last week, two major event producers told News 5 about behind-the-scenes talks about Haslam Sports Group, the owner of the Cleveland Browns, leasing space at the I-X Center to bring the shows back. The goal would be to keep the shows in place for the next few years before moving them to the team’s new, enclosed stadium in Brook Park.
The stadium is expected to open in 2029.
A Haslam Sports Group spokesman confirmed that the organization has been talking with event promoters but would not discuss the details of those conversations.
Stu Lichter, founder and chairman of Industrial Realty Group, has not responded to inquiries from News 5 about the I-X Center.
It’s unclear whether a manufacturing tenant and shows could coexist. A few years ago, Industrial Realty Group and Industrial Commercial Properties installed huge walls at the I-X Center to split the building’s main floor into a downsized event hall and industrial space, which the companies marketed for lease but never filled.
Tom McNair, Cleveland’s chief of integrated development, told council members the city has no control over leasing in the building.
But before they spend millions of dollars on renovations, the real estate developers want the city to give them a significant master-lease extension — from 13 years to 49 years. Council gave the Bibb administration permission to extend that lease last summer.
City officials haven’t followed through on that yet. They’re not willing to tack more time onto the lease without a substantial tenant in hand.
“We have told them, look, if you only bring us trade shows, the odds of us giving you a lease extension on it is relatively limited because that doesn’t maximize the value of the building to the city of Cleveland,” McNair told council members.
“But they operate it for 13 more years,” he said of the developers. “They can do that if they so choose. They could operate trade shows and also bring an industrial tenant that may necessitate a need for a lease extension. And we can have that conversation. But I think it’s important to note, that is not our decision at the moment.”
Michelle Jarboe is the business growth and development reporter at News 5 Cleveland. Follow her on X @MJarboe or email her at Michelle.Jarboe@wews.com.
