Can we give you anything else?
By Roldo Bartimole

Ladies and gentlemen, if you have money and resources, step right up.

We're giving away money by the truckload. Wait, you taxpayer/suckers, please leave, you're not eligible. However, we'll send you the bill.

That's the message I got from a deal presented by Mayor Frank Jackson with the full and hardy cooperation of a feeble, led-by-the-nose City Council. Is there a single council member worth a dime of the $70,000 or so they are paid? I don't think so.

Let's start this way. RTA is spending some $200 million in tax funds to redo Euclid Avenue. RTA says, "The goal of the Euclid Corridor Transportation Project is to improve transit, as well as support increased development along Euclid Avenue [emphasis mine]." Since buses have been operating already along Euclid Avenue for years, I'd say that most of that $200 million is for the "as well as support.

Here's the breakdown of the money: $83 million from the feds; $75 million from the State of Ohio; $21 million locally from RTA; $10 million from the Northeast Ohio Areawide Coordinating Committee; and $8 million from the City of Cleveland. I know that only adds up to $197 million but let's stipulate it will be a lot more before the project is completed.

Should that public subsidy suffice to "support" development, as RTA says?

Apparently not.

City Council passed legislation last week that further subsidizes development for the rehabilitation of buildings in the 600 block of Euclid Avenue. Council approved in a single day a $5.1 million loan for K & D Group, Inc., the firm that supposedly bought the E. 9th & Euclid corner from the County. I say "supposedly" because I'm waiting for the money to go to the County and suspect that won't happen as it should.

The $5.1 million "loan" for the K & D development from the city will be paid back not by the developer, as you would expect, but by the city.

Yes, the city loans the money for the development and then the city pays back the debt itself. You cannot ask for better loan terms.

The $5.1 million comes from two city funds - Core City 1, $2,574,500, and Core City 2, $2 million and a third source, the city's UDAG repayment fund, $525,000. Ironically, both funds are financed by bonds backed by revenue from Chagrin Highlands, another developer-favored (Dick Jacobs) project, which was supposed to help the city's finances.

This rehabilitation project will involve creating 765 apartment units of housing. But guess what? They all will be tax abated for 12 years at 100 percent. Neat gift. The project will also have a 900-space garage and a 268-room hotel.

The hefty loans will actually be paid back via future property taxes. This relieves the developer/investors of payment of its loan. Since the abatements last 12 year and another two years of free money will be included in the deal, the payback won't begin until 14 years out.

That's when the development supposedly will start paying property taxes.

Typically, property taxes are divided among the schools, city, county and city libraries. However, in this case only the schools will get the property tax revenue on these properties. The city, county and city libraries property tax share will be diverted to pay off the $5.1 million loan. It will take a long time.

The loans are for 28 years!

How sweet can it get?

Oh, it can and does get much, much sweeter. The sugar in this deal comes by the ton.

In addition to the $5.1 "loan," the project also receives a $14.4 million Federal Historic Tax Credit. In other words, the developers, or someone else who buys the credits from the developers, will get the opportunity to write off $14.4 million on their federal taxes over five years. Only available to the very rich.

Oh, that's not sweet enough.

The generous, though fiscally busted State of Ohio will award a $7.4 million state historic tax credit. Once again, the developer or someone who buys the tax credit will write off that amount from his or her state taxes.

But it's not quite over.

Because the developers are doing us such a favor in taking our money, the three stooges at the Cuyahoga County Commission will throw them another $800,000 in commercial development money and another $300,000 in another development incentive.

Oh, to be fair, I have to mention that developers Doug Price, III and Karin Harrison, 50 percent owners each, are not going to let the public carry the full burden. They'll be chipping in $500,000 as equity. At the same time they will TAKE a $1.85 million developers fee! Isn't that the kind of deal we'd all appreciate having?

Does anyone care how their tax money is spirited away?

I noticed that our daily monitor, otherwise known as the Pee Dee, spent all of one paragraph telling the public this deal had been done.

To be fair, the Pee Dee did have a story about this deal before Council ratified the gifts. However, the details were rather meager, as usual.

The sad thing about this dirty deal is that there isn't a single political voice in the city that even attempts to inform people of what is really happening. I guess a dead city deserves dead leadership.

The neighborhoods are dying or dead but they are flushing cash into downtown, over and over again.

In the book Free Lunch – How the Wealthiest American Enrich Themselves at Government Expense (and Stick You with the Bill), David Cay Johnston writes: "For the bottom 90 percent of Americans, a group we will refer to as the vast majority, annual income has been on a long, mostly downhill slide for more than three decades. The vast majority's average income peaked at $33,000 way back in 1973. By 2005 it had fallen to a bit more than $29,000. Even with three decades of economic expansion, the vast majority has to get by on about $75 less each week than it did a generation earlier, tax return data show."

What does it mean when we subsidize some and allow others to deteriorate financially and emotionally?

Cay writes, "Today, all over America, state and local governments lavish funds on commercial ballparks while holding public parks to a starvation diet and allowing buildings to deteriorate, grounds to go to weeds, and activities to grind to a halt. The number of full-time recreation professional fell during the eighties and nineties. Adjusted for population growth, park staffing by full-time professionals is below the levels of the sixties.

"Starving parks … means idle young hands do not have opportunities to play games, learn skills, and interact with others in a healthy ways, but instead turn to what opportunities are available, often in the 'devil's workshop."

It means supporting private interests while thumbing our civic noses at public needs. We know, if we watch the news, what that does for our youth and our community.

From 1995 through 2006, Cay reports, local, state and federal governments spent "more than $10 billion subsidizing more than 50 new Major League stadiums and countless minor league facilities."

Just as the Romans offered circuses to deflect the public from its societal ills, we offer Super Bowls and other extravaganzas. By depriving families and our children of some necessities of well-being we are damaging our civic life.

We are and will pay the price for our circuses.

From Cool Cleveland contributor Roldo Bartimole roldoATroadrunner.com
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