City leaders are heavily discounting land to keep Akron’s first new housing development in decades economically viable for homebuilders and buyers.

Mayor Dan Horrigan’s planning and development staff convinced City Council on Monday that 6.6 acres of tall grass and trees on Diagonal Road should be sold to B.R. Knez Construction Inc. for $1 instead of the $206,000 price set in July. The two empty lots near the Akron Zoo would become one of four housing subdivisions planned for the city. Each subdivision presents the same challenge as developers struggle to build homes on tight budgets.

The city chose Knez's plan to pack 51 homes (about 10 to 15 an acre) on the undeveloped land over another proposal to build apartments. The 1½- to 2-story houses of up to 2,600 square feet at the Crossings at Auld Farms are being marketed between $179,500 and $279,900, or 10 times what many homes have recently sold for in the neighborhood.

The pricing is already on the high end. But Knez and its builder, K. Hovnanian Homes, underestimated the costs of installing roads, sidewalks, a stormwater retention pond and other infrastructure features. So they've appealed to city administrators, who have asked City Council to vote next week to sell the land for $1 to Triban Investments LLC, a land holding company used by Knez.

Gillian Hall, the new vice president of Land Acquisition at Knez, said she could not yet say when the first home will go up, but she confirmed that the company’s first housing development ever in Akron — an initially estimated investment of $12 million — had become too expensive to hit target sale prices.

Knez is also planning a mix of 156 homes and townhouses near Nesmith Lake in Kenmore at the city-owned Guinther Park site, which is appraised at $237,200. That deal hasn’t come before council, yet.

Ryan Homes has agreed to pay the city $400,000 to build 27 town homes and 27 ranch homes on shovel-ready lots on Hickory Street in the Merriman Valley. And Alpha Phi Alpha Homes, a nonprofit developer, is waiting for the city to demolish Perkins Middle School in West Akron before it begins a 90-home development along the golf course.

Jason Segedy, Akron’s director of Planning and Urban Development, said developers have not sought $1 deals for the Lake Nesmith, Hickory Street or Perkins Middle School lots.

There’s no price negotiated yet for Guinther Park, where single-family and town homes sandwiched between modest homes and apartments would start at $109,500 for the town homes to $209,900 for the single-family homes.

Perkins Middle School could cost $500,000 to demolish. But Segedy said it would be unreasonable to add that entire cost to the $600,000 the land is worth. And the city will want to get as much of its money back as possible on the idle Hickory Street allotment, where new sewers, sidewalks, electric lines and street lighting went in on the taxpayer's dime before the housing market crashed.

It likely will take decades for the city to recoup the money it's spent on the Diagonal Road project through property taxes.

The land included the high-end estates of families tied to the industrial beginnings of Akron. The city purchased 630 and 642 Diagonal Road in 2005 and demolished the mansions on them with a $410,000 federal grant. No local taxes were used, said Segedy. Councilwoman Linda Omobien quickly countered that, though that may be true, the federal funding could have been used for something else.

The value of the new homes will also generate no property taxes in the first 15 years they are occupied, according to the residential tax abatement program Horrigan passed in 2017. The land, now selling for $1, will be the only part taxed during the abatement period.

Despite the lower price and deferred taxes, City Council members are supporting the new deal in the interest of reviving a housing market that's been dead in Akron since 2007.

“The [Crossing at Auld Farms] project means a whole lot to Ward 3,” Council President Margo Sommerville said of the “stable, beautiful neighborhood” she represents. “If we’re going to be really serious about increasing our population in Akron,” Sommerville continued, “we have to be willing to do what’s necessary to make this project happen.”

Reach Doug Livingston at dlivingston@thebeaconjournal.com or 330-996-3792.