Posts Tagged Frank Jackson
Wolstein Picks Up $1.4 Million on Stalled Flats Project
Posted by Roldo Bartimole in Economic Development on May 14th, 2009
May 14, 2009… The Wolstein East Bank project is in limbo but that hasn’t stopped the City of Cleveland from feeding Scott Wolstein $1.4 million for land for a future walkway and park along the Cuyahoga River in the Flats.
The city, via two government grants, has paid Wolstein $1,417,000 for less than a half acre of land, according to a document made available to me by the city.
The Wolstein Group and Fairmount Properties – the developers – have been promised tens of millions of dollars in government subsidies in legislation passed during a hurried City Council session in May of 2006. Council President Martin Sweeney gave members a 57-page document one working day before the legislation was passed.
It’s so easy to get money from government that I don’t know why there isn’t more development in Cleveland. Oh yeah, there’s no market for it.
That doesn’t stop the flow of freebies to developers, however.
Nothing has been built at the Wolstein development although there is work being done – all government infrastructure construction. The project itself is stalled.
Developers Diversified Realty Corp., Wolstein’s main firm, has been having financial difficulties dealing with debt. It was reported this week that German investors have bought some 30 percent of the firm’s stock.
Officials in Mayor Frank Jackson’s administration say that the city will build a park there someday. No price has been determined, they said.
However, a funding source is known. City general obligation bonds will be used to finance the work along with diverted taxes from Wolstein’s project via a TIF (Tax Incremental Financing) deal – if it is ever built. The TIF takes property taxes from the development that ordinarily would go to the Cleveland schools (about 60 percent), county, city and city libraries and uses them instead for the city park.
The $1.4 million all goes to Wolstein developers. The cost of a walkway along the river and the park is unknown at this time, according to City Planning Director Bob Brown.
On the west side of the Flats private owners have provided public walkways without cost to the city.
The only work being done at the Flats development is government funded sewer and electrical work.
In a February 5th letter, Daryl Rush, director of the city’s Dept of Community Development thank the National Oceanic and Atmospheric Administration (NOAA) and the Ohio Department of Natural Resources ODNR) for funds to pay for the .4647 acres. The area runs along the Cuyahoga River. NOAA and ODNR each contributed $708,500.
Rush said in his February letter that the land had been acquired.
This will primarily serve residents of Wolstein’s project, if he ever builds the $230 million mixed-use development of retail, commercial, office and for-sale and rental housing.
Don’t hold your breath.
You may remember the long list of government subsidies promised by various levels of government for the Wolstein project.
If you don’t, here are some of the freebies legislated for Wolstein:
- The Cleveland-Cuyahoga County Port Authority will provide $11 million in loans.
- City of Cleveland will provide $6 million in Core City loans.
- Cleveland Public Power will provide $3.4 million in free services.
- Cleveland Water Division will provide $740,000 in infrastructure costs.
- City of Cleveland will provide another $1 million in general obligation bonds.
- The County, City & Cleveland Schools will forgo $11,140,000 in property taxes under the TIF program.
- Cuyahoga County will provide $1 million in subsidies.
- The State of Ohio will provide a grant of $3 million for “environmental remediation,” matched by a loan from the County of $1 million.
- Tax exempt Parking Revenue Bonds estimated at $8,540,000 will be repaid from city parking facility revenues.
- Tax exempt infrastructure bonds estimated to be $9 million are secured by annual payments by the Northeast Ohio Regional Sewer District.
- The sum of approximately $4,550,000 will be made available through the Federal Highway Administration.
- The federal government has appropriated and the city shall obtain and make available when required for eligibility project costs a grand of $1.4 million from the U. S. Dept. of Commerce National Oceanic Atmosphere Administration. (MARK THIS DONE!)
- All rental and condominium units (some 300) will be tax abated at 100 percent for 15 years. No cost estimate given.
- The city agrees to enact legislation as necessary to amend and extend the CRA residential tax abatement program to assure that all residential improvements are available at the full 15 years at 100 percent. No cost given.
- The Greater Cleveland Regional Transit Authority (RTA) will construct a transit station on the RTA Waterfront Rail Line for the project “… all at no cost or expense” the Wolstein’s project. No cost figure given.
This is too disgusting and I’m tired of typing. If you want to read the entire list of these give-aways, I suggest you go to: http://www.lakewoodbuzz.com/RoldoBartimole/RB%2005-03-06_Flats_Deal_Disgrace_Lakewood%20Ohio%20Roldo%20Bartimole.html
Are some worried about Socialism? Hell, wealthy developers have a franchise of it here in Cleveland.
Cleveland Got Short End of Med Mart Deal
Posted by Roldo Bartimole in Economic Development, Politicians on May 8th, 2009
May 7, 2009… Who got screwed on the Med Mart deal? Well, you did as taxpayer, definitely. However, so did the city despite the $20 million deal for its properties – 18.5 acres of prime downtown land.
The $20 million was hailed as a victory for Mayor Frank Jackson. I’ll bet this $20 million shot in the city’s fiscal arm will be used up in a year or two by the Jackson administration.
Perfect example. Mayor Ralph Perk sold the city’s sewer system for $32 million back in the 1970s, and used up the money in a couple of years. He did the same thing when he sold the Cleveland Transit System to its present regional system (RTA).
Mayors, always short of revenue, spend any revenue infusion quickly and often to keep patronage going. One-time infusions of money make for bad policy decisions. The money gets spent fast and usually not wisely.
Wouldn’t it have been better if Mayor Jackson insisted on a deal that kept revenue coming to the city year after year?
Why didn’t he offer to lease the property to the County? Of course, that might have cost the County Commissioner’s choice to run the new development some money.
There’s not much thinking that goes on at City Hall. It’s typical of administrations to take a quick revenue fix. That’s what the Jackson Administration did. He’ll grab the money and run. But it won’t go very far.
“I think the mayor was a tough bargainer,” Tim Hagan told Erick Trickey of Cleveland Magazine. “He did have something of value to the project: that is Public Hall.”
Only Public Hall had value? That’s laughable.
Hagan, of course, had reason to pat Jackson on the back. Hagan got what he wanted.
Hagan has been steering this disaster from the beginning. He forced the one-quarter percent increase in County sales taxes without public input or vote. (You can see past postings here that go into how stinking this deal really is and who profits from it.)
“Today, the public makes an investment in the future of this city, county and the region,” happy Hagan said at the City Hall announcement with Jackson. Of course, the region isn’t paying a penny in this some $1 billion (with interest) deal.
The PD reported: “Jackson said the transaction is a big step toward a grand regional project to capitalize on Cleveland’s global medical prominence. Once again, regional project paid for by Cuyahoga County taxpayers alone.
What else would he say? He made the deal.
The $20 million has some big holes in it for the city. As the letter of agreement by the county to the city notes the city will lose property taxes and parking meter revenue. No cost figures are given for these losses. It’s not convenient to be too open.
One big cost to the city may be its school system. It has to make the schools whole, supposedly.
The city is responsible to make the Cleveland schools whole on property taxes. In other words, the city would be responsible alone – the County has no responsibility – to make up the property tax revenue lost by the city’s schools.
This signals Hagan’s intention of providing a tax haven for MMPI, a private business.
The school system actually would lose the most revenue as it gets some 60 percent of the property taxes on private land. The County and City also lose revenue. The deal says, “The city would be responsible for making up any property tax shortfall, if any, to the City of Cleveland School District as a result of the purchase of the property from private land owners on St. Clair Avenue.”
It gets worse.
“The City agrees to support the County as it seeks tax abatement for the entire Convention Center complex before ANY PUBLIC BODY or regulatory authority, including the GENERAL ASSEMBLY of the State of Ohio (my emphasis added).
What that suggests to me is that Tim Hagan and Mayor Jackson will go to the state legislature to not only have the project tax abated but TAX EXEMPTED. It will NEVER EVER pay property taxes in that case.
Hagan and former Mayor Michael White did the exact same thing for then Jacobs Field and Gund Arena. They flew down to Columbus in a private corporate jet and lobbied successfully for a full tax exemption. Now any sport facility constructed in the state by a government entity pays no taxes. This scheme has cost the Cleveland schools tens of millions of dollars in property taxes since.
So it isn’t abatement. It’s exemption. They never pay a penny of property taxes on the buildings EVER.
This means not only the convention center but the medical mart, a private business of MMPI (Merchandise Mart Properties, Inc.), will not pay property taxes on its business operations. Thank you, generous Tim Hagan, the man who has given away more tax revenue than any politician in Cuyahoga County’s history.
Hagan, known as Tax’n Tim, is also king of tax give-aways.
I think another strange part of the agreement states, “The County urges the City to apply $2.5 million of the purchase price to the restoration of Perk Park in downtown Cleveland.” The park was developed in the early 1970s by Ralph Perk. It sits behind the Ohio Savings Building, built by the Carney family. The irony, of course, Hagan married into the Carney family, which became his political birthright in Cuyahoga County.
The deal also calls for the $20 million to provide for the city’s need to relocate employees now house in the Convention Center. They include the Dept. of Parks, Recreation and Properties, the Division of Parking Facilities, City Cable operations, its Photo Lab and the Dept. of Consumer Affairs.
How much will that cost to relocate these departments?
No price tag is put on the cost to move and house of these significant city resources that now reside in the city’s facility. They must move. The move will cost and the new digs will cost this year, next and so on.
It does say that the “cost of relocating these employees and their equipment in significant.” What it doesn’t do is give a price, which will be ongoing. The city, of course, assumes this burden.
The agreement also calls for the County or MMPI to hire “at least” 10 of the city’s full-time Convention Center employees. However, the city has 27 full-time employees so that suggests some of that $20 million might be going to pay the wages somewhere of up to 17 full-time city employees.
Again this could be an ongoing cost, not just a one-year cost.
No mention, of course, about paying these employees who now enjoy city pay scales and benefits.
The city also has a list of some 100 part-time employees at the Convention Center. Depending upon the size of the event, the city employs 20 to 30 extra people at events. No mention of what happens to them.
There is no mention of paying the city for events that are already scheduled at the Convention Center. The center has 43 schedule events for 2010, some as small at 10 but others in the 3,000 to 4,000 attendee range.
All in all, that $20 million now looks skimpy for 882,270 square feet of space (443,040 square feet at Public Auditorium and 451,130 at the current convention center, including the grand ballroom).
Anyone want to buy a bridge? See Tim Hagan.