A fast-growing insurance company is the anchor for a new iteration of a mixed-use plan to redevelop the former Lakewood Hospital site.
Lakewood-based Roundstone Insurance plans to move its headquarters to the project, a $90 million-plus development that’s also slated to include roughly 200 apartments, upward of 29,000 square feet of ground-floor commercial space, a 540-stall garage and a public plaza.
The proposal, outlined in a package headed to Lakewood City Council, is a fresh version of a development plan five years in the making. Developers Casto and North Pointe Realty aim to break ground this year and to complete much of the project, including the office building, in 2024.
Casto executive Brent Sobczak and Mayor Meghan George recently signed a term sheet that lays the groundwork for a more detailed development agreement.
Lakewood City Council is scheduled to review that term sheet, and the new plan, on Monday, April 4.
City officials and residents have been discussing the future of the 5.7-acre block since at least 2015. The city-owned hospital, operated by the Cleveland Clinic, closed in 2016. The Clinic opened a new family health center next door in 2018. The old hospital was razed the following year.
Since then, a high-profile slice of the densely populated suburb’s downtown has been sitting vacant. Now Columbus-based Casto and North Pointe, of Mayfield Heights, hope to bring activity back to the block bounded by Detroit, Belle and Marlowe avenues.
“We are thrilled as co-developers of this project with Casto,” Scott Simon, North Pointe’s president, said during a phone interview. “With the partnership that has existed between our development firms, with Roundstone as our key tenant and the city of Lakewood … that kind of partnership is both rare and significant.”
Roundstone will buy its 65,000-square-foot space, spanning three floors of a four-story building. Casto and North Pointe, through a joint venture, will keep the ground floor.
The health-insurance underwriter has been looking for new offices for more than a year. Roundstone currently owns and occupies a 23,000-square-foot former church on Detroit, a half-mile west of the project site. That space isn’t large enough to accommodate the company’s existing 120 employees — let alone a workforce projected to surpass 200 people within a few years.
City officials connected Roundstone and the Casto-North Pointe team last year, leading to a marriage that will keep a major employer in Lakewood and support new office construction as part of a project reshaped by the coronavirus pandemic and the passage of time.
“Roundstone owning the building, wanting to own their space, that’s probably been the main thing — the only thing — that’s kept an office use as part of this project,” said Shawn Leininger, the city’s director of planning and development.
Founded in 2003, Roundstone caters to small and middle-market clients. The company’s model enables employers to join forces, share risk and self-fund their insurance. Roundstone’s average employee makes $85,000 a year, said Mike Schroeder, the president and CEO.
The company’s workforce is hybrid now, with some people working on-site and others at home. Though Schroeder expects to maintain that hybrid arrangement, he believes there’s value in bringing employees together in an office. Roundstone needed contiguous space, with room to grow, in a walkable area with easy access to dining and other amenities.
“We didn’t want just some box out in the ‘burbs somewhere,” he said.
If Casto and North Pointe start construction in late 2022, Roundstone could move during the first quarter of 2024, Schroeder said. He plans to rent out or sell the company’s current space.
An early site plan prepared by Dimit Architects shows that the redeveloped block also will include four apartment buildings, decreasing in height as the site stretches south from Detroit. Those buildings could hold 202 apartments, mostly one- and two-bedroom units.
The parking garage would rise just south of the office building. It would serve Roundstone, the apartments, ground-floor retail tenants and the Clinic, which has rights to 75 spaces under an agreement with the city. The garage also would serve as public parking.
The plans include a residential amenity building, for the apartments, with an outdoor pool. Land at the southern end of the site is earmarked for two single-family, for-sale homes.
Along Detroit, Casto and North Pointe plan to create a large public plaza. They also hope to preserve the facade of the historic Curtis Block building, the lone structure left on the site. A five-story apartment building, with first-floor commercial space, would rise behind the facade.
Leininger said the inside of the city-owned Curtis Block has deteriorated. But the facade is in decent shape, and the community has charged public officials with finding ways to preserve and acknowledge the block’s history.
“This has been a very public site for a number of years,” said George, who expects public meetings about the new proposal to occur throughout the summer and into early autumn.
The term sheet requires Casto and North Pointe to finish the offices, retail, commercial and garage portions of the project by Dec. 31, 2024. The public plaza also must be complete by the end of that year. The deadline for wrapping up the residential buildings is Dec. 31, 2025.
To help cover costs including public parking, the community space and the Curtis Block facade preservation, the city is considering a tax-increment financing arrangement. Such a deal would redirect new property-tax revenues generated by the project to paying for construction.
The apartments will qualify for 100% property-tax abatement for 15 years, under a city program that requires 20% of the new units to be “affordable.” Based on the conceptual plans, that means 20 or so units would be reserved for tenants making up to 120% of area median income, and 20 more units would be set aside for tenants making up to 80% of area median income.
Lakewood is looking at other potential funding sources, including programs offered by the Ohio Department of Development and JobsOhio, the state’s private nonprofit economic-development corporation.
The city also has sketched out the framework of a deal with Roundstone to provide a $1.5 million grant over eight years, to help pay for the office building. In exchange, Roundstone will have to meet minimum thresholds for job retention, job creation and payroll at the project.
“It was very key to make sure that Roundstone remained in Lakewood,” George said, noting that the company is poised to become one of the city’s top private-sector employers.
The city has been working with Casto and North Pointe since 2020, after negotiations broke down with the first developer tapped to tackle the old hospital site. The city sought proposals from developers in 2017 and originally picked Carnegie Management & Development Corp., based in Westlake, to build a mixed-use project called One Lakewood Place.
But Carnegie and the city parted ways in early 2020, clearing a path for Casto and North Pointe — the runners-up — to step in. If Lakewood City Council approves the term sheet, officials and the developers will spend the next few months hammering out the details.
“We have a passion for these kinds of complex, mixed-use projects, and the agreement will achieve a well-planned vision to add public space, housing, office and vitality to Lakewood’s central business district,” said Sobczak, president of Casto Communities, in a written statement. “We are excited to get under way and look forward to being a strong corporate partner in this great city.”