Cleveland City Hall as a House of Blues
by Roldo Bartimole

Mayor Jane Campbell has pressured unsuccessfully the County Board of Revision to drop significantly the value of a downtown property that would give a financial break to a developer and help attract the House of Blues to Cleveland.

The plan to upgrade the Euclid-E. 4th Street area was based on a $9.2 million bond issue by the city via a TIF (tax incremental financing). The plan called for property taxes from that area (and possibly other city revenue) to pay off the bonds. For complicated reasons, the lower the value of TIF properties now at the start of the project, the higher the proceeds to meet bond payments thereafter. The developer would be liable for shortfalls from property taxes to repay the bonds.

Under a TIF, owners pay the regular property tax but instead of the revenue going to the schools and other governmental bodies, the money is diverted to help finance development.

The developer, MRN Ltd., petitioned the Board of Revision to revise down the property value retroactive to 2000. MRN asked for a $5.5 million value on property now assessed at market for $22.3 million, according to the County.

By lowering the property value, the developer also pays less tax and the schools, in particular, lose that revenue.

Such a substantial decline for one building's market valuation would have a domino effect on values along Euclid Avenue with a high cost in lost revenue.

The developers did not present the Board of Revision with an appraisal to back up the claim for lowering the valuation for the building. They also refused data mortgage information and construction in renewing the property from office space to a hotel, according to sources.

The Board of Revision - made up of one representative each of the County Commission, Auditor Frank Russo and Treasurer Jim Rokakis - has balked at a phony reduction in the value of the property.

The board has no basis for lowering the value so significantly and any County taxpayer could object to this attempt to fake a lower property value.

City Council in a rush job at its final summer session passed legislation for the $9.2 million bond (with interest, a $12.8 million cost) to help developer MRN Ltd. in building renovations in the Euclid-East 4th Street area. The city's share would pay 22 percent of the projects' $37 million total cost. Council heard the legislation some 14 hours into a marathon session. Councilman Mike O'Malley summed up the Council's frustration and attention to its details. "After 14 hours here, I can't comprehend this information," he said of the plan.

Apparently, neither did the Campbell administration - aided in lobbying the County by Cleveland Tomorrow, in for $1 million via an affiliate. They now want County officials to bail it out of a poorly designed financial deal by faking tax values of property at a location RTA and the city already pouring substantial government funds.

The city last summer boasted that the agreement on the TIF allowed the developers, headed by Richard Maron, to lure the House of Blues to Cleveland. The House of Blues clubs would represent a major coup for an administration desperate to show some sign of economic progress. House of Blues is the second largest promoter of live entertainment events in the nation and operates in only a few cities.

The bond issue calls for the developer, MRN, to make up shortages on TIF payments. Likely, MRN would have a tough time meeting that cost with higher property taxes. The fear is that the tight finances would hurt plans and lose the House of Blues as a tenant, a major setback for a troubled administration.

MRN petitioned for a value of $5.5 for property housing its Holiday Inn Express, recently converted from office space, on Euclid Ave. in the old National City Bank Building. The TIF was based on that unrealistically low value. The building now has a market value of $22.3 million, set by the County Auditor in 2000. The Auditor lists the property as $1.2 million tax delinquent since 2000 on its web account for the site.

The Cleveland schools typically send legal counsel to oppose such requests. Ironically, the Cleveland Board of Education, which will lose some 60 per cent of reduced property taxes, has stipulated via legal counsel to the highly reduced valuation. (Earlier this year the board opposed an attempt by the same owner, based on an incorrect listing of the owners. Apparently, the city helped the school system to change its opposition.)

The Cleveland school leaders say they need a major tax increase next year. (This situation may be a perfect example of abuse related to mayoral control of the schools. Apparently, Mayor Campbell got the schools to change positions, taking money from schoolchildren to give to downtown developers.) School officials didn't reply to requests of their thinking on accepting the revenue loss.

Further, the city privately has implored the County to keep downtown property values up. Because of vacancies and soft sales prices downtown, especially the low price paid for the Galleria and Erieview Tower, central city property owners are expected to apply for hefty decreases. Financially this will hurt Cleveland schools primarily but also the city, county and city libraries.

Behind the scenes, there's talk of pressure from the Campbell Administration that if County doesn't agree to this deal, the city will lose the House of Blues and the blame will lie with County officials.

The constant ravaging of government for subsidies by private interests has to stop. The public may be tired of corporate handouts. There were hints of heightened public skepticism of corporate welfare in the votes to defeat the eminent domain issue in Lakewood and Issue 1 statewide.

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Honor, Honor, Honor You could have expected it. The latest honoree for the "In Tribute to the Public Service Award from the Cleveland State University's Levin College of Urban Affairs will be Gateway board chairman Bill Reidy. He sits on the Gateway board with the college's dean, Mark Rosentraub. The wall on the second floor of the college's building has photos of former winners. You can tell right off the bat what distinguishes, not all, but certainly most of these honorees of the urban schools. It ain't working for the People, that's for sure. Reidy joins with the following: Tim Hagan, Sam Miller, George Forbes, Pat Sweeney, Lou Stokes, George Voinovich, Otis Moss, A. J. Celebrezze, Jr. and Sr., Jim Petro, Dick Pogue, Steve Minter, Alex Machaskee, and Mercedes Cotner. Have you ever seen such a list of mostly rogues in one spot? You can admire their framed photos on the second floor of Dean Rosentraub's school. One head-scratching media person asked me recently wasn't Mark Rosentraub that guy that wrote a critical book about stadiums. Yeah, the same guy. He apparently lost all his critical faculties writing that book. Now he's a flak for Cleveland's corporate community and a darling opinion-maker for the Cleveland news media, i. e., the Plain Dealer and WCPN-Radio.

Though Reidy and Rosentraub sit on the Gateway board, they officially don't sit very often. By the time you read this it will be 250 days since the board last met on March 3. Such responsive public officials!

While on the subject of Honors, Plain Dealer publisher Alex Machaskee was honored under Sam Miller's auspices. Another excuse for his photo in his newspaper. Project Love honored the publisher at something called the Celebration of Goodness. Oh, my goodness! Miller made some remarks, according to the publisher's paper as Machaskee was lauded for his "advocacy for and dedication to Cleveland, Cleveland's organizations and Cleveland's children."

These elites pass around awards the way one would give out candies on Halloween. The trick's on us and the treats for them. The ability to honor themselves allows elites to say to the public: See how much we do for you while they continue, really, to do us.

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My Eror

I err by not joining the news media.

LEBRON JAMES. There, I've written the words.

Can anyone distinguish whether the coverage of the young player by television news or the Plain Dealer is news or advertising?

 (:divend:)