Posts Tagged tax abatement
Subsidies Cause More Problems Than Cure
Posted by Roldo Bartimole in Economic Development, Media on March 7, 2010
March 7, 2010… The Plain Dealer reported Sunday about the troubled downtown commercial properties. Empty and emptying buildings. It’s a shame.
“Turmoil in commercial real estate,” says the article by Michelle Jarboe here:
http://www.cleveland.com/business/index.ssf/2010/03/commercial_real_estates_challe.html
Yet The Plain Dealer – with business and political leaders – has been pushing for more and more subsidies to build new. That’s just one of the major reasons there are so many empty buildings. We are helping to create excess.
You can’t build new when you can’t even keep the old relevant.
At the same time retail and commercial properties go into foreclosure Cleveland political leaders are using hefty subsidies to produce more retail and commercial. Why?
You can’t have everything you want. Isn’t that what we teach children?
Why then isn’t that good advice for developers.
As business declines downtown the answer we seem to get is to open new property for development. As buildings are emptying, we are providing very heavy – in the multi-tens of millions of dollars – to the Wolstein project on the East Bank of the Flats.
The Port Authority wants to open land on the lakefront to the same kind of development. Now there’s a push to get rid of Burke Lakefront Airport and open it for development.
Cleveland, in a dirty deal, opened more than 500 valuable acres in Chagrin Highlands two decades ago. Now, Eaton Corporation will move out of downtown to Chagrin Highlands. So will University Hospitals with a new hospital facility. And other business have been attracted to the open spaces at the Highlands, city owned land that never should have been opened to greedy speculators. But then Mayor George Voinovich, tied to the project via his old Calfee-Halter law firm, and then Council President George Forbes, tied to Dick Jacobs, worked a deal that has hurt the city and will continue to damage downtown.
You can’t have it all. We seem to be urged by major institutions to grab more, however.
The Port, of course, has gotten itself into trouble with its attempt to serve more as an economic development body than a port. Its desire to open up land on Lake Erie is self-defeating. Developers, led by John Carney of the Port board, push this direction.
The Plain Dealer has been doing a good job of being critical of the Port Board and how it does business. However, the PD has been a chief cheerleader in the past. It helped push the Port into being a financial conduit, starting with its financing of the Rock and Roll Hall of Fame.
Again, you can’t have your cake and eat it too.
Corporate and civic leaders (aren’t they same?) and The Plain Dealer have pushed and applauded the politicians into thinking they are developers. More and more various levels of governments are acting as economic development entities. As if they know what they’re doing. They don’t. They do what developers tell them.
For years and years the politicians have been using public funds to subsidize almost any project that came to them for handouts. I don’t believe they know what they are doing. They obviously don’t care since it helps them, sometimes with campaign dough, sometimes with kudos and pressure from the totally undiscriminating news media, and sometimes, I’m convinced, via the greased hands of corruption.
How do we stop it?
Citizens have to more and more tell public officials upfront that they dislike all this welfare to business.
Tax abatement and tax exemption have produced some development. However, it’s rather clear it also has damaged other business.
At the same time the public services that cities, counties and state should provide its citizens declines. Cleveland can’t even pave its roads. Not enough money. That has to change.
Here are some links with evidence of what I’m talking about:
Plain Dealer Doesn’t Want to be Pain Dealer
Posted by Roldo Bartimole in Economic Development, Media on December 1, 2009
December 1, 2009… The Plain Dealer is playing games with us about “Progress.” The paper wants to make us feel good. So Good News makes for good Page One copy. It also makes for misleading information.
It’s important to keep Progress reality-based. If you raise expectations too high and don’t produce, you have a problem. Ask Barack Obama.
It can discourage people in the end. More than they are already.
Once again we have it in a piece this past Sunday emblazoned across Page One: “Revival continues despite recession.” Oh, hope!
It links the new HealthLine – RTA’s new bus line from Public Square to University Circle – as the impetus for active development at both ends and in between the two destinations.
Two Page One articles proclaim Progress to support the newspaper’s revival theme. Two facing-pages inside the paper are dominated by a route map of the $200 million HealthLine.
The map’s graphics define projects along and about the HealthLine.
The strong intimation, if not declaration, credits the HealthLine as the impetus for this economic development.
If you take a look at what the PD is crediting to the development of RTA’s HealthLine you find it very misleading.
It’s a laundry list of projects from Public Square to University Circle. The price tag is $3.3 billion.
However, much of it isn’t private investment. It is either governmental or nonprofit construction and much of it planned, not a done deal.
The largest investment derives from various projects of the Cleveland Clinic at some $793 million. Similarly, University Hospital has a projected development of $410 million. The Stokes VA Medical Center has a $539 million projected cost. The Cleveland Museum of Art expansion involves $350 million.
Those projects do not owe their being to a new transit line. And they total more $2 billion of the projected $3.3 billion.
Cleveland State University’s projects total some $200 million.
You may have noticed also that these projects involve institutions that don’t pay the city any property taxes.
A major, accomplished development is East 4th Street at $115 million. But this also has heavy government financing. And involves property tax abatements.
The mention of E. 4th brings up another major defect in this kind of rah rah reporting: Opposite E. 4th is The Arcade, a heavily-subsidized renovation on Euclid Avenue, which is severely depressed.
If you are going to assess what’s happening economically along the HealthLine route you have to look at what is failing along with what may be succeeding. The Arcade represents a historic and critical retail link between Euclid and Superior Avenues.
One of the articles made a dubious claim of a great hike in ridership on the HealthLine compared to the former ridership.
“The innovations are working for the most part. Ridership on the HealthLine is up 47 percent over the old No. 6 line along Euclid Avenue, formerly the most heavily used line in the RTA system,” wrote Steve Litt, the PD’s architecture critic.
He goes on to say that the HealthLine had 3.8 million riders compared to 2.6 million for the old system’s No. 6 line down Euclid Avenue. (A RTA spokesperson told me that the 3.8 million is a projected ridership figure for 2009.)
However, Litt counted only the No. 6 bus route. Last year, according to RTA, it ran the No. 7 and No. 9 buses along this route. The figures for them tell another story. They were 267,631 riders on No. 7 and 951,369 riders on No 9 for a total of 1,218,940 riders last year.
The No. 6 had 2.6 million riders. However, the No. 7 & 9 buses – both in operation last year – had another 1.2 million riders. If you add them to the No. 6 route you get some 3.8 million, or just about the same ridership this year as last year. No dramatic jump of 47 percent.
There goes another rubber tree plant, as Frank Sinatra used to sing.
Actually, there were two other bus routes, a variation of No. 7 and No. 9 that didn’t run along Euclid last year. In 2000, they accounted for more than 150,000 other rides.
So maybe ridership along Euclid Avenue is really down.
Maybe also The Plain Dealer is getting too Pollyannaish. Too ready to see a silver lining.
This is now policy at the PD. Give us BIG. The newspaper under Editor Susan Goldberg has become a paper of headlines. Give us BIG headlines. Give us LARGE photos. Give us BOLD headlines. Make people believe that we are reporting HARD stuff. It’s magical stuff. Now you see it, now you don’t.
We’ve had similar ballyhooing of projects that don’t seem to blossom. In July of 2008, it was “A resurgence at East Ninth Street” on the PD’s Page One. That one highlighted the Ameritrust Tower to support the headline. Didn’t happen. In fact, it’s a terrible blight on Euclid Avenue. At a crossroad that was the city’s financial center.
We’ve seen lots of renderings of the Flats East Bank. But the Flats remains substantially, well, flat. Nothing.
And University Circle, development stories seem to make it to the PD time and time again. The same ones. Yet, the private developments don’t seem to materialize.
We allow that the economy has something to do with this. However, we suggest that people who want their projects to get attention don’t have to haggle much to get the “news” on the front page of the PD.
The paper is accommodating. Even when it doesn’t know whether the projects are real or not.
Too much wishful thinking is going on. It doesn’t need encouragement from the daily newspaper.
Yet it sells papers. Must be so. Because they keep on using it. But does it do what newspapers are supposed to do? Inform us. Not titillate us. Not uplift our spirits. Not get us feeling good. Tell us the truth.
Let’s have a bit of reality. In the end it may save us. If nothing else, the embarrassment of failure.