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Flats East Project ready To Roll

Wednesday, December 22, 2010 at 5:09 PM

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A plan to redevelop the old entertainment district in Cleveland's Flats looks like it's finally moving forward. The East Bank development project at the mouth of the Cuyahoga River is to be bankrolled by what's being called the most complex financing arrangement in this region's history. Ideastream's Bill Rice looks back on the demise of the old Flats East Bank and the beginning of the new.

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{Back in the 1980s and 90s Bert Wolstein was a principle investor and landowner when the Flats was developed as an entertainment venue, becoming landlord to numerous franchise restaurants and bars along River Road on the east bank.  Wolstein made his fortune as founder of the commercial real estate company Developers Diversified, but the Flats investment was strictly a family enterprise.  For awhile the district boomed, but as Wolstein’s son Scott puts it:  It all went south in a hurry.

Wostein:  “We had other landowners and property owners and businesses surrounding us, you know, who were going for the cheap buck and bringing in a very bad element to the area.  So ultimately we decided that in order to do this right for the city, we needed to control the entire district.”

That was in the first years of the new century.  Bert Wolstein died in 2004, but the family carried on that mission, buying out those other landowners - some of whom were reluctant sellers - and closing down the entire district.  What was once a destination party spot with a national reputation became a virtual ghost town.

Redevelopment designs were drawn up, and infrastructure work was well underway when the economic crisis hit in late 2008, drying up the financing and putting the project on hold. 

Now, the Wolstein Group and Fairmount Properties have closed on a new financing deal that involves some three dozen different funding sources - an arrangement Scott Wolstein says is unprecedented in this region - and perhaps in the country. 

Wostein:  “It’s a testament to the dislocation that we suffered in this financial crisis that required us to be so creative in trying to put together financing for a project of this nature.”

With much of the infrastructure work complete, Wolstein says construction can begin immediately.  The financing covers the first phase of the Flats East Bank project, which is priced at 275 million dollars and includes an office tower, a hotel, retail and entertainment, and waterfront boardwalk a 14 acre park.  Tenants, including the accounting firm Ernst and Young and the law firm Tucker Ellis and West, are expected to move in by 2013. 

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Economy, Regional Economy/Business - News

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