Committee advances amendment to county loan for Playhouse Square's Lumen project

The Cuyahoga County Economic Development and Planning Committee voted to send to the full council a resolution that would amend a county development loan to Playhouse Square Foundation for the Lumen project, extending the loan maturity to Sept. 13, 2028 if the foundation pays $3.5 million by Sept. 30, 2025.

County staff told the committee the measure would not add new county funds but would change the repayment schedule for existing debt. "The modification is simply no additional funds, just 3 more years after the payment of 3 and a half million dollars," Brian Edwards, portfolio manager in the Cuyahoga County Department of Development, said. He said the remaining $1.5 million would be amortized over three years at 8.5 percent.

The amendment applies to contract No. 4663, part of an original $10 million development loan for Playhouse Square Foundation and the Lumen and Playhouse Square project. Committee materials and staff presentation stated a $5 million balance remained on the loan after a 2024 paydown. Under the proposed amendment, the foundation would pay $3.5 million on or before Sept. 30, 2025; the $1.5 million balance would then be repaid over three years, with annual principal-and-interest payments the county estimates at roughly $587,000 per year.

Brian Edwards said the loan is secured by a pledge and assignment of the Playhouse Square endowment and a county control agreement. "We have a first position lien on that and are in complete control of that. So, our loan-to-value ratio is at 8.8 percent," Edwards said, noting the endowment is more than $17,000,000.

Nathan Kelly of Playhouse Square Real Estate said the foundation initially planned to sell the Lumen after stabilizing it and use proceeds to retire debt. "COVID and interest rates changed the performance of the asset and our ability to sell it at a number that we'd like, so we've delayed the sale," Kelly said. He told the committee that Playhouse Square paid $5 million toward the loan last year and that, if the foundation can delay full repayment, it plans to use funds to begin predevelopment work on the historic Greyhound station block in downtown Cleveland.

Committee members asked about occupancy and market conditions. Kelly said the Lumen is a newly built residential property of approximately 319 apartments and that occupancy had returned to about 90 percent after earlier relocations related to a flood; leased rate was reported as 95 percent. Kelly and county staff said ongoing high interest rates and recent increases in downtown residential inventory have reduced prospective sale prices, and that lower interest rates or better market conditions would increase the potential sale proceeds.

At the end of the discussion the committee chair moved the item to the full council for second reading; the motion was seconded and carried by verbal aye votes in committee. No additional county funds were requested in the amendment and staff said the county's security interest and underwriting metrics indicate the extension carries limited risk to county finances.

The committee advanced the resolution to the full council for second reading. The committee record indicates the matter could return to committee on Aug. 5 if additional committee action is needed.