Posts Tagged Jacobs Field
Abatement on Trial, But the Vote was Rigged
Posted by Roldo Bartimole in Economic Development, Media on August 10, 2009
August 10, 2009… Mayor Michael White almost helped derail tax abatement in the late 1990s, when his brutal attacks to portray Cleveland teachers as greedy backfired.
White’s nasty nature almost cost him the issue.
The Cleveland Teachers Union counterattacked against White. The union took to the streets and collected an amazing 33,000 signatures to put the issue of curtailing tax abatements on the ballot.
Let’s set up the situation.
The Teachers Union faced contract talks in the summer of 1996. White took a lead role in trying to embarrass teachers into pay cuts. Rather than a small raise, White hoped to bludgeon the teachers into a 10 percent salary giveback.
It was a take-no-prisoners battle.
White tried to paint the teachers as money-grubbers. And he used strike-breaking tactics to try to subdue them. He even brought in strike-breaking goons from Detroit who had just fought in a bitter newspaper strike there. The goons were to cost $65,000 a day. Their job: keep the schools open despite the strike. Cleveland students, backing their teachers, revealed these “security” people were bringing sleeping cots into the schools for the showdown. One student testified the guards had automatic weapons.
White heated up the situation with a talk at the City Club. In this speech, he labeled the teachers lunatics, telling the audience, “The inmates (teachers) will be running the asylum.”
Then he made the absurd charge that teachers were driving Lexuses, Cadillacs and BMWs. “That is why when you go into the basement of the Cleveland School (administration) building you see all these Lexuses and all these Cadillacs, all these Ranger Rovers and these Mercedes Benzes. If I made that kind of money I’d buy one, too,” the mayor said. He was way off base. (White’s $98,336 salary was actually double that of the average teacher and his Crown Victoria was taxpayer provided.)
Rich teachers? No, a badly mistaken mayor. He had assumed vehicles in the school administration basement parking facility belonged to teachers. They actually belonged to school administrators and visitors.
Attila the Hun was on the warpath.
TEACHERS STRIKE BACK
With corporate help, White ran ads in The Plain Dealer charging teachers with working only 4.5 hours a day. “That’s like saying football players only work two hours a week,” a union leader retorted.
The Teachers eventually settled for a three-year contract with a 3 percent raise in the third year. Not exactly a greedy bunch.
But the bitterness wasn’t settled. Mayor White has angered and alienated the teachers and their activist union.
Teachers had watched White help to give property tax exemptions to the baseball stadium, the basketball arena and the football stadium. They knew it was mostly school money White gave away. Millions and millions of school dollars. The drain continues today.
So the teachers struck back. They picketed Jacobs Field with banners saying, “Children First, Stadiums Second.” They also marched at Key Center where Dick Jacobs had gotten a tax abatement of some $120 million over 20 years.
The union, however, was out-maneuvered by White and Council President Jay Westbrook. The union believed it had qualified for a November vote. Council instead moved quickly to force a vote in August. Teachers, on recess for the summer, weren’t ready for a quick, tough campaign.
That was only the start of the war by politicians and the news media against the teacher and an abatement cutback.
PLAIN DEALER DEALS FROM BOTTOM
The Plain Dealer, of course, lined up with White. Brent Larkin, the PD’s editorial boss, led the PD’s scare attack, writing, “If (Rich) DeColibus (union president) wins we’re talking about moderate-to-low skilled Clevelanders who will not have jobs and whose children will suffer.” Even though it was White who was draining revenue from the schools.
White was only beginning. He used the full raw power of City Hall to distort the issue and frighten voters.
I wrote at the time of White’s tactics: “We saw it when Mayor Mike White used the power of the city to do whatever the hell he wanted in opposing the tax abatement issue. Public money, public facilities, city employees. It didn’t matter. Ministers on the foundation payrolls crying the corporate line. A newspaper (PD) with the integrity of mafia don showing its colors, attacking state representative Dan Brady but allowing White’s continuing use of public employees and funds for his personal political (aims) to go without editorial comment during the campaign.
HELP IN RIGGING THE SYSTEM
“Community groups which receive hundreds of thousands of dollars, even million of tax dollars, danced to the Mayor’s puppet tune. Mark McDermott, director of the Cleveland Housing Network, appeared with White to campaign against the tax abatement initiative by claiming it hurt poor people. The Cleveland Neighborhood Development Corp., afloat on federal dollars, ran a full page ad featuring White and Westbrook, the two key people who run on much of what CNDC gets.
“McDermott, who is in the business of helping low income people with housing, had to be thinking about the fact that his organization gets $2.9 million via City Hall. And that his 16 housing corporations in the network get tens of thousands of dollars more from City Hall. The organizations eventually voted to support White’s campaigning.
“The ties that bind community groups to City Hall via federal funds are tight and demanding.”
FOUNDATIONS LINE UP, TOO
I went on: “The power to spread tens of millions of dollars each year combined with the extortionist buy-off capacity of Cleveland’s powerful foundations, particularly the Cleveland and Gund foundations, and Cleveland Tomorrow (now Greater Cleveland Partnership) – the corporate powerhouse – combined with the corruptive complicity of the Pee Dee and, of course,… makes a mayor like White powerful and dictatorial.”
White always played that role well.
The distortion of the teacher union’s attempt to reign in abatements reveals how the private and public sectors – greedy business people and their puppet politicians – work together against the common good.
The fact is that the abatement issue would not have ended tax abatement.
As I wrote in the Free Times at that time:
“Some truth: Issue One does not outlaw tax abatement. The mayor can give a truly needed business any amount of abatement he wishes. However, he must, if it passes, reimburse the schools for lost revenue.” (In addition, single and double-family homes were exempted from the proposed law.)
It was that simple. Just repay the schools for what revenue you give away.
Politicians allied with business, foundations and the news media can easily distort the truth and confuse voters.
And it’s so easy to give away someone else’s money. That’s what the city was doing and continues by giving tax abatements with most of the revenue coming from the school budget in Cleveland.
REAL PROBLEM: IT DIDN’T WORK
Since the city gave Dick Jacobs 100 percent tax abatement at Key Center in 1989 – 20 years ago – only one other office building has been constructed in downtown Cleveland and that building took the Hollenden Hotel when it was built.
Further, the new abated office structure has helped suck tenants from other Class A buildings, leaving them economically damaged and seeking reductions in their values. Thus more lost tax revenue.
This devaluation showed as building owners cried that economics demanded that their buildings get tax reduction as they lost tenants and business.
During this period Tower City’s complex had the value of its properties reduced by some $300 million. The BP Building, kitty corner from Key Center on Public Square, had a reduction in taxable value of $88.5 million. Even Dick Jacobs’s Galleria took a devaluation that cost Cleveland schools nearly $5 million. And irony of ironies, the Plain Dealer sought a 25 percent reduction in the value of its new $200-million plant in Brooklyn.
What do we have as a result of this moving the chairs on our downtown deck? We have a decayed downtown. A major but long empty bank building that the Cuyahoga County bought from the same Dick Jacobs – who also, by the way, cashed in by selling the abated Key Center – and the County doesn’t know what to do with across the street, a declining Huntington Bank building, along with others in what was Cleveland’s banking corner at E. 9th & Euclid.
And we have more and more downtown office buildings – which housed people who worked and paid taxes – being converted into condos. How? With new tax abatements, that’s how.
If tax abatement policy worked, please somebody show us how.
In the meantime, the unemployed and those losing their homes trying to maintain families today MUST pay their full property taxes. No excuses, please.
And so it still goes. With the emphasis on goes.
It is time to stop all abatements nationwide and have a level playing field with the Sanctified Market determining economic development and particularly office building construction.
How Much Money is Lost to Abatement?
Posted by Roldo Bartimole in Economic Development, Media on July 24, 2009
July 22, 2009… Civic corruption comes in many forms.
We have been hearing a lot about corruption these days. However, the focus is very narrow. Unnecessarily so.
The Plain Dealer simply ignores the corruption that makes today’s hyper Cuyahoga County sleaze activity look minor league. Even little league. We’re going to talk about multi-million dollar corruption. Nothing petty. And all legal.
The fact is that the PD actually promotes this BIG kind of corruption. It’s they’re kind of corruption. They push for it editorially. Always have; always will.
I’ll show you how it works.
We’re talking about tax abatements. You will read about a number of cases in which huge amounts of money have been given to very special people. Very special rich people.
Most of the abatements are for 20 years or are tax exempted properties, meaning they will never ever pay any taxes. These cases represent large abated properties. They are only a small number of abatements given since 1977 when the program began in Ohio.
Yet over the years they will cost HUNDREDS OF MILLIONS of lost tax dollars.
The lost revenue ordinarily would go to four levels of government. Presently, property tax revenue is shared by the following entities with the percentage of the total in parenthesis: Cleveland schools (55.13 percent rounded), Cuyahoga County (21.24 percent), City of Cleveland (15.68 percent) and Cleveland libraries (7.96 percent).
Rather than guard the public’s resources, slated for the common good, city and county officials – typically backed by The Plain Dealer’s editorials and lack of critical coverage – cater to the self-interests of Cleveland’s Establishment. Their actions have and are shameful.
‘I requested information from Joann Jackson of the County Auditor’s office about how much abatements cost us. I limited the search to a few big properties.
Here’s what I found in examining certain property tax revenue for the last two years:
BROWNS STADIUM
The amount paid to Cuyahoga County this year and last year for property taxes on the Browns Stadium: ZERO.
Browns Stadium should have paid property taxes of $8,081,230 this year and $7,973,804 last year on the physical structure alone. That’s $16,055,034 over the two most recent years. Total value of the Browns stadium, including land, is slightly more than $300 million (Market value with taxes on 35 percent of that figure.)
That is a gift of $16 million in ONLY the last two years to the billionaire Lerner family, owners and users of the Browns. (This property will NEVER pay a penny in taxes on the structure as it has been tax exempted by state law, passed under pressure of local politicians – mainly Commissioner Tim Hagan and former Mayor Michael White – and the Plain Dealer.)
I reported recently that the city also has paid $102.8 million on stadium bonds, owes $160.3 million more in payments due and has to come up with $44.55 million in capital improvements now and in future years. The State of Ohio chipped in $37 million more; RTA $3 million; City Water Dept. $2 million; Northeast Sewer District $2.24 million; and the city’s water pollution control division another $500,000. Lerner’s annual rent: $250,000 with no increase over 30 years. How hard is it to become a multi-millionaire?
Having given so much, why burden the Lerner family with having to pay property taxes. Shameful to ask that. The city, by the way, also pays the property taxes due on the land beneath the stadium. This year that bill was $452,724.
QUICKEN ARENA
The amount paid to Cuyahoga County in property taxes this year and last year for Quicken Arena: ZERO.
Quicken (formerly Gund) Arena should have paid property taxes of $3,816,609 this year and $3,765,873 last year. That’s $7,582,482 over the two most recent years. Total value of the Quicken Arena, including land, is slightly more than $50 million.
This is a gift of some $7.5 million to the billionaire Dan Gilbert, Cavs owner. (This property also will NEVER pay taxes on the structure because of the actions of Hagan and White in passing legislation to EXEMPT forever all new stadia and arenas in Ohio.)
Citizens of Cuyahoga County built the arena for some $157 million but Gilbert controls it. Having given him the arena, why should we even suggest that he pay property taxes. Let’s not get greedy, citizens.
PROGRESSIVE FIELD & GATEWAY GARAGE
The amount paid to Cuyahoga County in property taxes this year and last year for Progressive Field: ZERO.
Progressive Field (formerly Jacobs Field) should have paid property taxes of $4,882,764 this year and $4,817,856 last year. That’s $9,700,620 over the two most recent years. Total value of the baseball stadium, including land, is slightly more than $69 million. (This property will NEVER pay taxes on the structure because state legislation pushed by Hagan, White and the Plain Dealer was passed to EXEMPT all new sports facilities in Ohio FOREVER.)
The amount paid to Cuyahoga County in property taxes this year and last year for the Gateway Garage: ZERO.
The Gateway Garage, built by the City of Cleveland for the new sports facilities should have paid taxes of $652,963 this year and $644,283 last year. That’s near $1.3 million. The value of the garage is $10.5 million.
This is a gift of some $11 million to the billionaire Dolan family, owners of the Cleveland Indians.
Cuyahoga County citizens paid most of the some $180 million for the stadium but the Dolan family controls it. Why bother to ask them to pay property taxes? It might be seen as pushy.
We also note that the citizens of Cleveland alone built two parking facilities, one tax abated, at a cost of more than $40 million.
Are you seeing a pattern here?
KEY CENTER, MARRIOTT HOTEL & GARAGE
The amount of property taxes paid to Cuyahoga County on Key Center, Cleveland’s tallest office building: ZERO
Key Center, built by multi-millionaire Dick Jacobs, should have paid $5,399,922.84 this year and $5,328,139 last year. That’s more than $10.7 million. Total value of the 57-story Key Center building, including land, is $72.4 million. (This property, in addition to $10 million, zero interest loan, was given a 20-year tax abatement, 100 percent tax abatement by Mayor George Voinovich and Council President George Forbes.)
This was a gift given by Voinovich and Forbes in 1988. Jacobs was yet to get a stadium built for him. The new stadium gave him an advantage to sell it to the Dolans for a pricy $320 million.
Oh, there’s more that Dick got.
The Marriott Hotel, attached to Key Center, should have paid $1,123,027 last year and $1,208,098 the previous year. That’s slightly more than $2.3 million. Total value of the 25-story Marriott Hotel, including land, is $15,594,500. (This property, in addition to another $7.9-million, zero interest loan, was provided a 20-year, 100 percent tax abatement by Voinovich and Forbes.)
As if that were not enough, Voinovich and Forbes gave Jacobs the ability to build a parking garage beneath the city’s Mall A, which is located in front of the Marriott Hotel. It’s called Memorial Park Garage.
Memorial Park Garage should have paid property taxes of $230,835 this year and $227,767 in property taxes last year. That’s some $457,000. Total value of the parking garage under Mall A is $5.2 million. (Voinovich and Forbes cancelled a contract with a top bidder to deliver the parking garage contract to Jacobs for 65 years. Jacobs hired Forbes’ favorite parking lot operator for the facility; Voinovich’s old law firm, Calfee & Halter, made $443,000 (paid by Jacobs) representing the city in the law suit resulting from the city’s action to give the deal to Jacobs. Jacobs offered to increase parking places from 600 to 1,200 but it was cut to 900 in the final plan. Revenue payments also were reduced down under the Jacobs plan.)
Forbes and Voinovich didn’t stop there. They were even more eager to fill Jacobs’s pockets.
The two – Voinovich and Forbes – offered the same sweet deal as Key Center to Jacobs for the west side of Public Square. It was to be another office building and hotel. You may notice that the west side of Public Square – which in 1989 had working office buildings that Jacobs then knocked down – remains a parking lot. Has been a parking lot since the early 1990s.
Further, other downtown buildings, damaged as tenants moved to Key Center, sought and got tax reductions. Squire, Sanders & Dempsey, for example, moved into Key Center from the Huntington Building. The law firm wrote the state legislation for tax abatement in the 1970s. (As an example, Jacobs’s E. 9th corner, left vacant for years. He was rescued, however, by the County Commissioners, who bought the complex of buildings for new County offices. It remains vacant, of course.)
The absurdity of these abatements hasn’t penetrated the minds of politicians or editors, however.
WYNDHAM HOTEL
The amount paid in property taxes on the luxury Wyndham Hotel for this year and last year: ZERO.
The Wyndham Hotel, built public subsidy upon public subsidy, should have paid property taxes of $339,500 this year and $334,987 last year. That’s some $674,000 over the two most recent years. Total value for tax purposes of the 200-plus luxury hotel at Playhouse Square is $4.7 million, including land. That’s very low.-
The luxury Wyndham was soaked with government subsidies in addition to the tax abatement, including a $5.5 million zero interest loan; a low interest state loan of $4 million; a tax incremental financing deal worth several million dollars over 20 years; the city helped purchase part of the land for $2 million then invest $1.5 million to improve the site and sold it to Playhouse Square Foundation for less than $1 million. The subsidies came to some $136,000 per room. “Credit” this rotten deal to Mayor White and then Council President Jay Westbrook.
RITZ-CARLTON HOTEL
The amount paid in property taxes this year and last year for the luxury Ritz-Carlton: ZERO.
The Ritz-Carlton, a luxury hotel at Tower City, should have paid a total of $1,718,020 for this year and the last year on four parcels tax abated for Sam Miller interests. The market value of the properties is $31.1 million.
This amounts to a generous gift of $1.7 million to the multi-millionaire Miller. The hotel piggybacked on the Marriott for an abatement. The city also gave a $7.9 million, zero interest loan for the 207-room hotel built into Tower City. Why not help a multi-millionaire if you can?
That covers only nine tax abatement projects in Cleveland. There are many, many more. Admittedly, these are among the largest.
In any case, the total cost of these abatements for ONLY TWO YEARS totals some $48 million in lost tax revenue. Two years remember. Tax revenue sliced away from Cuyahoga County’s tax collections. Taxes that you – if you are a property tax payer in Cuyahoga County (or even a renter for that matter) – have to make up.
You won’t see this on the front page of The Plain Dealer. They avoid such information as if it were the plague. Indeed, the paper and its editors will fight to keep the public from being informed about this issue. In future, I’ll try to show how they have done this and flesh out the issue of abatements.
There someday will be more buildings built in downtown Cleveland. The issue of tax abatement will arise again. So I hope you will print out this information and keep it handy.
Of course, developers today are getting tax abatements on new housing development, especially in downtown Cleveland. It helps to offer a tax abatement to buyers. You can get a better price if you tell a prospect that they will be saving thousands of dollars by not paying taxes.
The wealthy love NOT PAYING TAXES. It’s a major ingredient of wealth. Believe it.