Posts Tagged Mike White

Park Building – From Tax Reduction to Tax Abatement

August 5, 2009… I was passing by the Park Building on Public Square and Ontario Street recently and stopped to ask about the new condominiums promoted for the old office building.

The Park Building is historic in many ways.

Its handout says, “The Park Building, one of the most elegant buildings in Cleveland, offers the only residential units on Public Square in over 100 years. The Cleveland landmark features 25 exclusive condominiums, including four stunning two-floor penthouses with large ‘window walls,’ and balconies with inspiring views that take in Public Square, Lake Erie and the entirety of Cleveland’s downtown.”

The condos range in $269,900-$359,000 price to an offer of a custom penthouse “starting in the $700,000’s,” a flyer says. Pricey, no?

As long ago as 1919, the Park Building had a special place In Cleveland.

“The southeast corner of Ontario Street and Public Square, the land on which the Park Building and adjacent structures stood was the most valuable acre in Cleveland, being assessed at $2,178,000…” wrote William Ganson Rose in his Cleveland history, “Cleveland – The Making of a City.”

The building, and its one-time owner David Swetland, had an even more significant impact on property values and taxes for the entire State of Ohio. Swetland sued the County, claiming in essence that his office building should not pay more taxes proportionally than his home.

Indeed, that ALL property should be taxed at the same value.

In that historic Ohio Supreme Court case – known as the Park Investment case – in the late 1950s, the whole system of taxing property was changed significantly. Homeowners paid the price. The change helped commercial and industrial properties to shift more of the burden of taxes from real estate interests to homeowners.

The Ohio Supreme Court ruled for Swetland that property should not be taxed at different rates. Commercial and industrial properties – because they involved profit – had been paying taxes at a higher level than property used to house families. Taxes are paid on 35 percent of the market value as set by County Auditors.

The Park Investment case tipped taxes from real estate interests to the owners of homes.

Commercial and industrial properties had been taxed at 49 percent of their market value. Homes were taxed at 35 percent of market value. The Court leveled the payments for both classifications at 35 percent. So, commercial and industrial property owners enjoyed a 14 percent reduction in their taxes.

What does that mean? Well, the value for 2009 property taxes of commercial and industrial properties in Cuyahoga County is $8.4 billion, according to the County Budget department.

A 14 percent savings is $1.176 billion. That’s for one year! Multiply that by the years since 1959 and you see that it’s a whole lot of money.

Without tax abatement. However, since the late 1970s, tax abatements have been generously given to property owners.

The Ohio Supreme Court, as might be expected, gave those with wealth a big financial break. It’s a gift that keeps on giving, year after year.

One might say that this ruling sets a precedent that communities should not be able to offer tax abatement since they allow properties to be taxed at different levels. It gives an unfair preference to newly develop property. Sometimes that unfair preference is very significant, as properties are abated at 100 percent for 20 years.

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Note: I recently reported on the cost of tax abatements for just for two years on eight Cleveland properties. The cost came to $48 million. That was just for the most recent two years. The detail of each property is published here at ReadRoldo.com. Simply click here to reference.

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The abatement subsidy started in the late 1970s when Squire, Sanders & Dempsey, acting for major property owners, wrote the state law that passed in the Ohio legislature.

It promptly became an issue in the 1977 Cleveland mayoral election when Mayor Ralph Perk bestowed a tax abatement for a new National City Bank building at the southwest corner of East 9th & Euclid Avenue and one for Sohio (at the time) for a new building behind Tower City. (When Sohio moved to Public Square it didn’t ask for tax abatement since it was drowning in North Slope cash. Sometimes unseemly does win.)

Dennis Kucinich beat his general election opponent Edward Feighan on the head over tax abatement since Feighan had voted for the legislation as a state legislator. Kucinich opposed abatements and gave none.

Abatement thus became a hot political issue and it took a few years before local politicians to believe it cooled enough to restart the give-aways.

Mayor George Voinovich and Council President George Forbes revived the practice with hefty abatements for major projects. It grew during the White administration and expanded even more when Mayor Michael White and County Commissioner Tim Hagan took it a bit further with tax EXEMPTIONS for stadiums and arenas. Multi-millions of dollars in tax revenue went down the drain.

Giving away tax revenue became so pervasive that the Cleveland Teachers Union, under Rich DeColibus, decided to do something about it in the late 1990s.

The rub was the city gave the tax abatement; the schools lost the most revenue.

The mayor and city council enacted tax abatements but the Cleveland school system lost the bulk of the revenue, usually near 60 per cent. Presently, the schools lose slightly more than 55 percent while the city loses slightly more than 15 percent.

Abatements thus don’t much disturb city finances. In fact, they may enhance city revenues since the city alone gets payroll taxes, which may increase from jobs and new residents. They do great damage to the schools, however, which don’t share in any income related taxes.

That’s the way it stood until the summer of 1997 when the Teachers Union got 33,000 signatures to put an issue changing tax abatements on the ballot.

The Park Building, as we’ve seen, played an important part in lowering property taxes for commercial interests. Not much has changed. The Park Building Condominiums are offering 12-year tax abatements, 75 percent the first five years; 50 percent the second five; and 25 percent the final two.

Some things never change – for the better.

I’ll talk about that vote in subsequent comments.

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Cleveland Needs a Game-Changer

July 31, 2009… You could hear the envy in his voice as he grumbles that when Jeff Johnson walks into a room all eyes moved to him. He takes the air out of the room, said a friendly rival.

Johnson had that effect on people. Youthful, movie-star looks and a smile to go along. Maybe he still has the magic. We’ll soon see.

Johnson, 51, hasn’t lost his looks but the boyishness is gone. He also has to recover from a very bad decision that derailed a political career that seemed destined for big things.

Starting over by running for a seat he held a couple of decades ago does not seem that engaging. Yet, Johnson seems intent on proving himself all over again. He’s hiking daily door-to-door in Glenville as a candidate for Cleveland City Council’s Ward 8.

Johnson has had his share of tough times. Getting caught on camera, seemingly demanding a promised campaign donation that appeared as a payoff, revealed a cocky politician on film. He was lured into performing before a hidden camera for the FBI. I think he was set-up but he played into the drama.

I had seen the same brash Johnson before. So the act revealed by the film didn’t surprise me. It was haughty. Indeed, Jeff was playacting a tough, savvy Cleveland politician, which he really wasn’t. He was a bit naïve but earnest.

He did his time. He did his penance.

JEFF AS HE USED TO BE

So I want to remember the Jeff Johnson I knew. And I want him back at City Hall, hopefully more mature. But hopefully still cocky enough to speak out as I heard him do before.

That’s because Cleveland needs some sparkle. Needs some tension. Needs some hope. Needs some vision.

He walks door-to-door as someone who really wants to be a Councilman. To start over. Council members are servants. At least that’s the way they portray themselves. Less legislators; more clerks. Clerks to get the garbage picked up, dogs to bark less, and drunks to be quieter. Though they complain about these demands they are the ones who trained the public to expect this brand of attention.

Johnson says he’s getting good reception at Glenville doors. People still know him. They also know of his past.

He says he’s “more humble, wiser.” More humble would be wise.

Former Mayor Jane Campbell gave him an opportunity when she became mayor. She brought him back to City Hall. He worked his job – quietly. When Frank Jackson ran against a weakened Campbell, Johnson didn’t bolt to another African-American as many might. He, in essence, repaid his debt for his opportunity to renew.

Jackson, however, dumped him when he took office.

UNWELCOMING CITY HALL?

That’s politics. However, now I believe there’s some skittishness at City Hall. What if Johnson returns on his own power? Voter power.

Is he a rival to Jackson? Is he a rival to Council President Marty Sweeney? Whether he wants to be or not, the answer is “It would seem so.”

Part of the reason is his experience. The other part is that Council is never heavy with talent. Johnson will stand out whether he wants to or not.

Heads still will turn when he enters a room. It can’t be helped.

The thing about Johnson that I most admired was his insistence upon being heard and being respected. Not so easy when you are in a minor and often a minority of one. That was when Council President George Forbes ruled with an iron fist. And an iron chair.

Forbes tossed the chair at Johnson in a closed meeting that was supposed to be a peace-maker for the two. The chair hit a glancing blow. No blood.

The problem, back in 1988, involved a project promised to Johnson for his ward. Forbes held it up as a tactic to break the young Councilman.

Around that time I wrote that “Johnson had to endure racial ostracism, physical and verbal abuse and all kinds of threats. False rumors were even circulated bout him in an attempt to break his spirit. It didn’t work.” Forbes called him a “mulatto punk.” Tough stuff.

Forbes orchestrated an open attack by other Council members. Obedience was owed.

BEAT UP – BUT STANDING UP

I listened as one black – and only black – Council member after another beat up on Johnson. Forbes was orchestrating.

“I’m embarrassed. My kids are embarrassed. My neighborhood is embarrassed,” said one member. He had been charged with sexual harassment – to speak of embarrassing.

Most brutal of all was veteran member Ken Johnson. He complained that Jeff had the same last name as he. “You have been a disgrace to me, to my people and to this council,” said K. Johnson. Another attack racially tinged.

“You’re too young to get killed… so please sit down and talk,” pleaded Fannie Lewis.

It was the most brutal verbal beating I ever watched.

Nearly overcome with emotions, Johnson responded to his colleagues, “You talk about respect for the chair. I have never across this table called him a name, disrespected him, unless you consider a disagreement disrespect, which I don’t.

“How about respect for me? How about respect for fellow councilmen? Because we gave him authority to be president, we didn’t give him authority to disrespect. And that’s the bottom line – a human being to human being. He has disrespected me… I have not been brought up to accept that from anyone,” said Johnson.

I believe that Johnson earned Forbes respect, if not his tolerance, that day. How could he not? It was his finest moment.

The present Council President, Marty Sweeney, would not like to see Johnson coming back to City Hall. Heavy lies the crown.

Sweeney said that he and the Council would be backing Shari Cloud, a young woman who took Sabra Pierce Scott’s spot as Councilwoman. She’s a three-month rookie. Sweeney’s backing was expected. How vigorously he does works will indicate just how hard-nosed he might want to be with Johnson.

Sweeney has the choice of giving Cloud substantial financial help or waiting through the primary in September to see the lay of the land in the race. Thus, not risking alienating Johnson too much.

At this point, I think Johnson has other thoughts rather than breaking into office fighting. Nor do I believe Johnson has eyes on being Council President, though he may be unlikely to join with the Sweeney leadership crew.

Johnson’s return (along with Brian Cummins in Ward 14) could spice the Council with some progressive thinking. Some backbone, too. A serious void in this Council.

A HISTORY THAT WENT SOUR

Cleveland has suffered a lack of political leadership with a strong progressive quality for a long, long time. I’d say going back to Carl Stokes with a short visit with Dennis Kucinich.

The rise of a black political power hardly resulted in a prolonged period of activist government. The phenomenon did give rise to a more liberal period. It didn’t last long and pretty soon we had a Mayor George Voinovich and then Mayor Michael White. Both represented corporate interests. Voinovich, indeed, had competition on that score with Forbes, who had his own coterie of corporate friends.

William Nelson a political scientist at Ohio State University, in a book entitled “Cleveland: The Elevation of Black Political Power,” helped outline its demise some years ago.

“The decade of the 1970s witnessed a sharp transformation in the character and structure of Black politics in Cleveland. During the Stokes era the fundamental goal of Black politics was the redistribution of power in ways that would allow blacks to control their own destinies and share equally in the rewards of government. The return of black leadership into the Democratic party fold after Stokes’ departure changed the fundamental goal of black politics from community uplift to self-aggrandizement.”

He went on to write: “It has been replaced with a focus on individual benefits and the concentration of power in the hands of a small political elite.”

Well, that’s the situation Cleveland still finds itself. It will take a lot more than a Jeff Johnson to change it.

However, it’s time to scramble again. The town needs a shaking. Jeff, I hope you have not become too careful and too conservative for the job. You’ll need help, of course.

Anyone can see how badly Cleveland wants that jolt.

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