Construction of the mixed-use retail and housing development Arcadia is underway at 3393 Warrensville Center Road, but the district will not fully benefit from the property tax it generates.
The 2.4 acre chunk of land across from Shaker Rocks was once the site of a Buick dealership and has been an empty lot since 2015. The development is set to open in 2026 and will be the home to 250,000 square feet comprising 141 housing units and 15,000 square feet of retail and office space.
According to Laura Englehart, director of economic development in Shaker Heights, Arcadia’s developer, Metropolitan Holdings, will be paying a version of tax called a TIF, or tax increment finance agreement. The developers will pay the full tax for building on the land, but their tax payments for improvements will be in the form of PILOTS, or payments in lieu of taxes. Those PILOTs will be paid to the city, then 82 percent of that money will be returned to the developer. The remaining 18 percent of the PILOT will be distributed to Shaker Heights schools. This arrangement will continue for 30 years.
TIFs are a type of tax abatement. Tax abatements exempt developers, or homeowners, from having to pay taxes on their property, or reduce the amount of taxes paid, for a set period of time, in order to propel economic development. So, if a new property in a particular city is expected to generate large streams of revenue from renting homes or housing businesses, the owner of that property may be given a tax abatement by the city as encouragement to build it there.
Englehart said that the length of the Arcadia TIF agreement and the amount returned to the developer is based on the cost of construction and loans borrowed for the development.
“The developer is taking out significant loans to construct the project, and without the payments in lieu of taxes, they wouldn’t have been able to construct the project,” Englehart said.
In November, Shaker Heights voters approved Issue 51, a 9.9-mill operating levy to be used for funding day-to-day operations of the schools. The levy will increase property taxes for homeowners by several hundred dollars per year.
“Economic development is really critical for the future of our city and for how we’re planning for our continued success,” Englehart said. “Some of that development cannot be done without these incentives.”
Superintendent David Glasner said that the overall economic development of the community is in everyone’s interest. “We work closely on these issues with the city as part of the Forward Together initiative, and the city is supportive of the school district on issues related to our future growth and well being. We review a variety of tax abatement requests and our Board of Education, when required, takes action on these requests,” he said.
Englehart said that prior to Arcadia construction, the vacant lot had generated no tax revenue, and Arcadia will come with several benefits, including “added vitality, new housing options, some affordability included in our housing costs, continuing the expansion of the Van Aken district, attracting and retaining our residents. All of the benefits I’ve mentioned would not be attained at all [without the TIF], and we are creating new revenues in the process. The full property tax revenue will not be realized until the term of the incentive ends, but it would not have happened without the TIF.”
The 82/18 percent split was worked out with Metropolitan Holdings after the city sent out a request for proposals outlining objectives for the development, and received proposals in turn from development firms.
“When Metropolitan was selected, they were very upfront about how they would have to put the financials for the project together, and it would likely require a gap-filing subsidy,” Englehart said. “And so we looked at their numbers and what that gap was, and how the city could assist in filling that gap by providing the TIF.”
According to Englehart, Metropolitan Holdings’ design for Arcadia will include 141 housing units, 25 of which will be set aside for homeowners earning 80 to 100 percent of Shaker’s $97,721 median household income in 2023. Eighty percent of the city’s 2023 median income is $78,176. The building will include a parking garage on the first floor and office space on the second floor, some of which will be assigned to the architect of the project.
Said Englehart, “This project is going to add significant amenities and continue to increase the vitality of the Van Aken district, and add new housing options for our residents. We’re excited that we’re able to support those projects and the future of our community.”
A version of this article appears in print on page 4 of Volume 96, Issue 3, published Dec. 15, 2025.
