What will it take to get to Hollywoodland Ohio? Start with $200M
If the developers proposing a $1.3 billion “super development” project in Middletown are able to get approval from the city council, they still will need a massive amount of funding to build it.
Main Street Community Capital LLC, which this week revealed plans for Hollywoodland Ohio, is required as part of the proposed agreement with the city of Middletown to commit $200 million in equity in the private portion of the development. Main Street partners David Rachie and Rob Furst said they have not yet started raising funds for Hollywoodland; they say they’re waiting for a guaranteed maximum price from their contractor, Gilbane.
Middletown owns 12 acres along the Great Miami River, which would be transferred to the developer for $1. The city also has the remaining property needed for 50 acres under options, which also would be transferred to the developer.
After construction drawings are readied over the next year, Gilbane would then be able to verify a guaranteed maximum price, at which point Furst said they’d attempt to start raising money from investors.
Jim Palenick, Middletown city manager, brought Rachie and his team to the city. Middletown has been looking at a series of projects to redevelop land fronting the Little Miami River and had worked with Rachie and his former firm, Gatehouse Capital, on a planned hotel and convention center in Racine, Wisc., where Palenick had been city administrator.
Rachie said his firm was attracted to Middletown because of its “mothballed” land, and its location.
“We like rebuilding Main Streets and old downtowns,” Rachie said.
Main Street Community Capital is partnering with DLR Group, an Omaha, Neb.-based design firm as its architect. Gilbane, based in Providence, R.I., would build Hollywoodland, with Greenfire Management Services. The Producers Group, a provider of production and design services for destination attractions, also is part of the team.
The developers estimate Hollywoodland will cover 1.5 million square feet, but that is subject to change as it moves forward. Rachie said all the partners have been involved in more than $1 billion worth of projects at various firms.
If the city agrees to move forward with the development agreement, Rachie said it will take about 18 months to break ground. During that time, the development team will be working on demolition, remediation and design of the project.
In addition to the $200 million in equity, Main Street Community Capital plans to arrange $1.1 billion in bond financing. Payments on the bonds would be funded by annual contributions by Main Street Community Capital and project-generated taxes and fees.
To help make the project a reality, the developers and Middletown will look to use tax-increment financing, a new community authority and Ohio development tax credits. The land’s location is within a federally designated Opportunity Zone, and Middletown Port Authority has the capacity to grant sales tax exemptions on building materials.
If the plans get city council approval, the city plans to provide a 30-year, 100% property tax exemption. It also plans to create a new community authority, which will levy project-based increments of sales tax, room tax, ticket tax, parking fees and a per-square-foot assessment on commercial properties. All revenue produced will be dedicated to first repay project-backed revenue bonds for the publicly owned improvements in the project.
Under terms of the agreement, the city would own a planned more than 32,000-square-foot convention center with a grand ballroom, junior ballroom, breakout spaces and banquet facilities, as well as an underground parking facility with at least 3,000 spaces.
Palenick said the city will lobby to amend Ohio’s transformational mixed-use tax credit. That tax credit is based on the population size of the city where the project is located.
Rachie said no local tax dollars will go into Hollywoodland. The city has already spent $250,000 from its general fund to complete the feasibility and due diligence effort.