K&D Out As County Developer

The Plain Dealer got the headline and photo it wanted with County Commissioner Jimmy Dimora's "temporary" abdication of his chairmanship of the County Democrats. It will be a long "temporary." Dimora makes a hard-to-resist "bad guy" for the PD. (Also, a chance to waste more space that might accommodate news. But who needs that.)

The more important story, I think, is the quieter front-page headline that K&D -- involved in the County corruption scandal -- has decided to drop out of the deal with the County at East 9th and Euclid Ave. That's where the County first was going to relocate its administrative offices. Then it was going to have K&D develop that crucial downtown corner.

The County Commissioners should have quashed that deal long ago. The PD should have been asking for K&D's dismissal as heartedly as it was seeking Dimora and County Auditor Frank Russo's dumping.

However, the PD is eager to claim a scalp in the ongoing scandal at the County. Dimora’s was easiest at the moment. It seems it is part of the paper’s desire to be relevant. However, the PD never seems to go after developers or corporate interests. So K&D had to do it by itself.

K&D never should have had development rights to the building and land. Never. The deal stunk from the beginning as a bogus move to hide the embarrassment of a sour deal involving the late Dick Jacobs and County Commissioners. The Commissioners got caught in their own web.

Now we’ll have to watch if the $500,000 K&D put down on the deal will be returned by our County Commissioners. It was supposed to be non-refundable.

Tim Hagan tossed off the costly debacle with ease. As usual. He told the PD, “We bought a building; we thought it was going to work; the economy collapsed; and there you have it. Anybody can second guess anybody in this economy.” After all, as he once told a reluctant fellow commissioner, it’s not your money you’re spending.

What a guy.

The Cuyahoga County Commission gave K&D the development rights to its white elephant corner twice. The long-empty buildings were bought by Hagan and Dimora from the late Dick Jacobs in a sweetheart deal. The building complex includes the historic old Cleveland Trust Rotunda and the Breuer building. It cost the County $22 million to purchase. Now costs have risen to some $37 million not counting the need for asbestos removal, another $4 million or more.

The PD says it also costs $10,000 a month for upkeep. That’s $120,000 a year. $600,000 for five years. Anyone want to bet on 10 years before anything happens?

The County gave K&D development rights, which I had called “counterfeit” at the time. Turns out to have been a correct assessment.

I wrote that the “bid by K&D Group from the beginning struck me as a backroom deal made with at least two County Commissioners - Hagan and Dimora – to help them save face on a smelly deal that could have significant financial damage to Cuyahoga County and its taxpayers.”

The grandiose development was never going to happen. But the handiness of having a K&D around to hand off a project that would lie in limbo suggests a familiarity between the County and developer too convenient to be trusted.

Now it is revealed that K&D provided a free condo to County officials in its Flats development. How convenient.

I wrote about K&D’s condo project back in 1999. The City of Cleveland gave developers Bob Corna and partner Doug Price not only tax abatement (100 percent for 15 years) and other goodies on their condo development but development rights to the Old Superior Viaduct. The Viaduct which juts out but is an unfinished bridge was listed on the National Register of Historic buildings. It’s a bridge that goes nowhere. But quite interesting.

However, Corna and Price were given rights to the bridge for 40 years at $1.00. Yes, that’s a dollar. In exchange they were supposed to revamp the bridge and make it an entertainment site.

They were supposed to make the bridge an entertainment venue. The city turned a public space into private space for a buck. However, little has been done in the 10 years to make the Viaduct anything more than a parking lot.

The Plain Dealer recently reported that “Authorities said money for the bribes came from an unnamed company that was a landlord to the engineer’s office. County records show that K&D Group runs Stonebridge, a residential and commercial building on the West Bank of the Flats. The company paid $143,000 in consulting fees to a Dimora ally that were used to pay for limo rides, gambling trips and other perks for Dimora, prosecutors said.”

There should have been an editorial right then demanding K&D be jettisoned as the County’s developer of the old Ameritrust building and its buildings.

The question remains what are the County Commissioners going to do with the properties bought so cavalierly from Jacobs now? Just how much in taxpayer funds are going to be expended on this obviously smelly deal?

May I make a little suggestion to those who want to reform County Government? Have the commissioners legally responsible to have multiple hearings on any legislation that involves more than $100,000.

That is, force the commissioners to discuss what they are doing before the public, rather than act typically at one County Commissioner hearing, having already decided in private in almost all cases what their decision will be.

A little more public exposure – and a little more work – is in order for these three elected officials.

This one day of meetings every week – now the routine - seems to me a rather relaxed way of doing business. Say, it’s the Earl Turner Method of Management. It needs a goose.

Ohio, Cuyahoga Job Losses Alarming

Bad economic news keeps hitting Ohio and Cuyahoga County. The newest data from researcher George Zeller concludes “the rate of layoffs in Ohio continues to increase very sharply and at an alarming rate.”

That is alarming.

In Cuyahoga County at this time of year the number of new claims for unemployment, writes Zeller, should be less than 1,000. The figure this week is double that at 2,094.

He also reports that Ohio’s “20,663 new unemployment claims for the third week of June are at a level now 171 percent higher and nearly triple ‘a job growth’ level of 7,617 that is normal at this time of year during economic growth periods.”

To read Zeller’s entire report click here.

How Hypocritical Can Sam Miller Get Before We Laugh Him Out of Town?

Hypocrisy - thy name is Sam Miller. Forest City Enterprises co-chairman and Treasurer Sam Miller says he’s willing to donate to the Cleveland libraries if budget cuts are made by the State of Ohio. Sam says that he will donate to keep libraries in poor areas open if the cuts are made.

Generous Sam.

He made that statement to The Plain Dealer as reported in its piece on protests against state budget cuts at the downtown public library.

The Plain Dealer the same day also reported on its front page about citizens attempting to lower their property taxes by lowering the value of the property as homes lose value.

Lowering the value of property hurts schools and libraries. It also takes from Cuyahoga County and the City of Cleveland by lowering revenue from property taxes.

Guess who is a champion of seeking (and getting) property tax reductions?

Well, of course, Sam Miller.

In other words, Sam takes dollars away from libraries and schools but in a pinch he’s willing to donate. Pennies, that is.

City libraries get 7.96 percent of collected property taxes. Cleveland schools get 55.13 of property taxes.

So every time Sam gets a reduction in taxes, revenues fall by those above percentages for the libraries and schools.

Does he really care?

No, he doesn’t. Sam has been a major downtown property owner who consistently applied to lower the taxable value of his properties. That’s good ole Sam. Not so generous.

Back in 1994 – and other times through the years – I’ve written that Forest City Enterprises - of which Sam is a top executive and shareholder - has sought large decreases in property taxes.

I reported tax reductions given for Tower City in 1990, 1991, 1992 and 1993. Tower City is owned by Forest City.

They were hefty reductions, too.

In 1990, tax reductions awarded to Sam and his boys were as follows: Reductions in 1990 of 21 percent; in 1991 of 20 percent, 1993 of 17.3 percent; 1993 of 12.4 percent. It’s a wonder they paid any taxes.

The reductions in value for those years totaled $160 million. Assessed value would be 35 percent of market value. The money value of the taxes was $56 million, 35 percent of $160 million. I guess Sam could have been a bit generous but he wasn’t.

Indeed, the Cleveland Teachers Union at the time asked Tower City, Gateway, National City Bank and Dick Jacobs at Key Center to forgo their tax abatements for one year because of the funding crisis of that time. One year!

Neither Sam nor any of the others found a charitable bone for the Cleveland schools. The answer was “NO.” Generosity can go just so far. And that ain’t very far for these guys.

At the time, of course, our civic cheerleaders were pounding home the message that downtown Cleveland was booming. Comeback City, they claimed.

The only boom – aside from publicly funded and non-taxed private ventures as Gateway – was the noise out of Sam’s office asking for tax reductions.

Generous Sam. He knows how to do PR and the PD knows how to report it without context. Context isn’t taught at the PD.

At the time Sam was asking for these reductions, the PD reported some balderdash under this headline: “Tower City Could Add Two Anchors to Complex.” The paper quoted Al Ratner, Forest City chairman, saying that “… he hopes to add two department stores to the Tower City Complex soon.” Yeah, empty ones. Such amusing claims of progress. And at the same time asking for tax reductions because business was bad.

I’ll say one thing about Sam and the Ratners. They sure know how to juggle.

The Pee Dee added that Ratner said, “Gateway has been a very big impetus for this project.”

Should we all laugh loudly now?

Miller at the time said the real estate industry in Cleveland was “well on its way back to once again becoming the darling of the investment community.”

My response at the time was: “Ho, ho, ho.” It hasn’t changed.

Miller and the Ratners also arm-twisted City Council (not hard) to give a tax abatement of 100 percent for 20 years for the Ritz-Carlton hotel at Tower City. The hotel had already been planned but they saw that Council gave Dick Jacobs $120-million tax abatement for the Society Center (now Key) and Marriott hotel.

So they wanted to escape paying property taxes, too. Generosity? No. Rapacity? Yes.

It’s a game these guys play. Let’s shift our taxes to others. It adds to our profits.

I wonder how much tax abatement for housing downtown has played in foreclosure issue as the city’s neighborhoods empty out. Those with more money, however, can get new housing without having to pay taxes. The revenue resources of the city decline.

Years ago Robert Reich, then Secretary of Labor, said, “Bidding wars that are initiated and conducted by companies, or joined in by states or localities, can have a pernicious effect with regard to undermining the abilities of states and locales to use their resources to educate and develop the human capital of their workforces.”

He went on to say, “These tax abatement, these subsides, can be the most insidious form or corporate welfare… (that) put competitors at a competitive disadvantage if they do not get the same largess, because they rob local jurisdictions and states of the resources that they otherwise might have to invest in people, in infrastructure, and because they are often, in the classic sense of the term, zero-sum games in which jobs are simply moved from one place to another, and there is not a net improvement in job growth or the quality of jobs.”

He could make the speech in Cleveland and talk about Sam any day for the last 40 years or more.

The truth is Sam Miller isn’t a philanthropist. He’s a greedy businessman.

Sam, we don’t need your stink’n donations. Just pay your rightful taxes.

Wait Just a Minute -- Plain Dealer -- What's Going On Here?

The Plain Dealer, hot and heavy on corruption, recently buried the fact that a man the paper says could replace county commissioner Jimmy Dimora story has been indicted on bribery charges and theft-in-office, has relatives in political jobs, and has business relations he won’t talk about.

Isn’t that a recipe for a continuation of what we’ve been seeing the FBI spend countless our tax dollars trying to unravel here? Isn’t that the fodder of headline after headline on the Plain Dealer’s front page?

The potential replacement for Dimora as Democratic Party head may be, according to the Plain Dealer, Thomas Day, Jr., clerk of courts in Bedford.

Yes, the charges of bribery and theft-in-office against Day were dismissed by Judge John Angellota. But that doesn’t hold much water with me. A grand jury found cause but a judge didn’t agree.

In addition, late in Mark Gillispie’s otherwise very comprehensive piece, we’re told that Day has ownership interests in a printing company and a consulting firm with with County Prosecutor Bill Mason, Victory Communications Inc., which does work on political campaigns.

County Prosecutor Mason also conveniently refused to talk about these matters.

And the PD allowed him to remain silent.

You may have notice that in the blazing corruption exposes in Cuyahoga County, the County Prosecutor – Bill “I’m Power Hungry” Mason – hasn’t indicted anyone. Under his nose but no smell of corruption.

Apparently, the County Prosecutor’s office finds everybody holding office in Cuyahoga County is Snow White clean.

The PD has been on a rampage – rightly so – about cozy deals among County officeholders. Yet, in this piece, all the signs of the same pattern of political dealing are buried in a long article. Why?

“Friends of William D. Mason, the county prosecutor’s campaign organization, paid Cleveland-based Qwestcom Graphics $141,000 last year. The county party spent $105,000 with Qwestcom in 2008,” the PD reports.

But what I’d call serious news is buried on the run-over page 33 paragraphs and 36 inches of type into the story. How many people read that far? Few, I’d say.

The burial in the context of such heavy coverage of County corruption is inexplicable to me.

“Day,” the PD reports, “declined to discuss his ownership stake in Qwestcom or in Victory Communication Inc., the company he incorporated in 2002 and owns with Mason.”

Well, that’s convenient. Why won’t they talk about it?

Here the PD seems to give a boost to Day’s ascendency but lets him plead the Fifth Amendment? Again why?

I would have thought the lead of this kind of story would go something like this:

"Democrats may choose a new party chairman who has been indicted on bribery and theft charges and has business connections with County Prosecutor Bill Mason. He also has a load of relatives in County jobs, just the problem that has been discovered in Plain Dealer exposes in recent days."

The big question is my mind is why Gillispie wrote the piece as he did and whether he was instructed to bury his lead way down in an unusually long story.

Maybe the paper’s Reader Representative Ted Diadiun will let us know the inside scoop on this.

From Cool Cleveland contributor Roldo Bartimole roldoATroadrunner.com
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