Walking is Depressing in Downtown Cleveland
Plus: Deep-Six Wahoo, Life is Good For Lerners, The Sales Tax Hike and more...

I ventured downtown Monday and was shocked by what I saw. Or what I didn't see. Cleveland -- a virtual ghost city. At 11AM. At a crossroads of downtown at East 9th Street and Euclid Avenue. Scary empty.

I took the new so-called Health Line down Euclid from University Hospitals. First venture on it. The machines used for purchasing tickets are very confusing. I finally solved it with the help of a woman who was awaiting the bus. Then I learned you could make the ticket purchase on the bus. Confusing to a first-timer.

It took about 17 to 18 minutes to ride from Euclid at University Hospitals to East 9th Street. I think it was a minute to three less time than it used to take. Not exactly a great time-saver for some $200 million. Time saving was one reason RTA cited for doing the project.

I was most disturbed getting off to a nearly empty Euclid & E. 9th Street. "Where are the people?" I said to myself. For years I had been a walker in the downtown area. My foot travels moved a friend to joke about my “aimless walking around.” Actually, I met people who gave me information they never would without a face-to-face encounter.

I continued my walk to CSU. I passed empty and boarded retail spots up the street on the south side from E. 9th almost to the Halle’s building from East 9th where the County-bought property stands vacant as it has for years.

I stopped in the Halle’s building. Shocking. All the retail within the building is gone except for a place to get the newspaper, cigarettes and some sundries. The city invested millions of dollars in this building. For what? Empty seats placed in retail outlets that once held businesses.

I had lunch with Norm Krumholz, picking him up at CSU’s Urban Studies office. I mentioned the dismal state of downtown. “It’s your fault,” he said not really meaning it. I knew he meant I had opposed every project in the downtown area. “What are you talking about, everything I opposed was done. How could it be my fault,” I countered.

I later continued my personal survey walk. A most depressing experience.

The Arcade - a building bestowed with tens of millions of public dollars to entice a Hyatt Regency hotel – is depressing. The Arcade remains a beauty but deadly absent of commerce. More than $10 million in tax incentives poured into the structure. Soon after, owners sought to lower the value of their property, thus the taxes.

The Arcade, which runs between Euclid and Superior avenues, should be Cleveland’s most enticing visit. Actually, it still is despite its economic failure.

The first floor from the Euclid entrance was nearly clean of retail business. It had been a more active, though not upscale, retail spot before the subsidies. Scores of people ate their lunches, some bought there, at tables overlooking the first floor below. Now mock store windows line the path from Euclid to Superior Avenue. They are disguised as real businesses.

These former retail outlets had umbrellas opened in the windows to hide the fact that they are empty. Hiding despair with colorful umbrellas. Below, on the first floor from Superior Ave. the elegant setting looks more like a food court than anything else. Empty retail spots there, too.

“The Arcade is an internationally renowned structure bringing together the economic, technological, and aesthetic developments of the 1880s. It has no peer in the U. S. and has been compared with the Galleria Vittorio Emmanuele in Milan, Italy,” says the Encyclopedia of Cleveland History. Those are bragging rights.

The Arcade’s status now scoffs at that tradition and beauty. Shame!

Empty locations at the Chesterfield apartment’s street retail on E. 12th Street, north of the Union Club. Same with the Galleria at E. 9th Street and St. Clair. The Colonial Arcade, built in 1898, across from The Arcade, on the south side of Euclid also depresses. It has activity at noon with fast food outlets but the attached arcade to the west appears totally underused.

All signs of a depressed city and downtown. They have been gutted by suburban shopping centers now also suffering too much retail.

No wonder the streets are not bustling. Job losses have made their impact too. Thousands of jobs have been lost downtown.

I was especially interested in this personal monitoring after Sunday’s story in the PD about the great developments at E. 4th Street. I don’t doubt the positive aspects of new restaurants and housing there by MRN. I admire Ira Maron’s inventive efforts. However, they are limited and predatory, pulling retail from elsewhere.

Decline and desperation are just a stone’s throw away.

In Sunday’s story, Mayor Frank Jackson’s economic aide Chris Warren noted that the city invested about $10 million in infrastructure, loans and tax credits at E. 4th. Actually, a lot more public welfare has gone into the E. 4th development The city legislated a $9.2 million bond issue with added costs of several millions of dollars in interest, all supported by a TIF. The TIF diverted property taxes from Cleveland schools, the city, and the county and city libraries. Cleveland also gave a $1.5 million subsidy.

It’s even more depressing when one considers the immense infusion of public money downtown since the late 1980s. Hundreds of millions of dollars flowed at Gateway to Playhouse Square; $200-million plus RTA transit investment along Euclid; grants to the Halle’s building; to the Wolstein-built office building on Huron Road; and the very expensive public investment and tax abatement at the Wyndham Hotel; purchase of Dick Jacobs’ long abandoned E.9th & Euclid to Prospect properties by Cuyahoga County; public dollars to John Carney at the Colonial Arcades; huge investments and tax abatements at Tower City and at Jacobs’ Key Center and Marriott Hotel; the $92-million Rock and Roll Hall of Fame; and the $300-million plus Browns Stadium; and many, many more public expenditures.

Now, there will be another stab via the so-called Medical Mart and Convention Center. There goes another billion dollars of welfare subsidies to a private business to try to infuse new economic activity downtown. Futile.

All for what? A depressed and depressing downtown. The price hasn’t matched the expectations.

Yet we continue on the same road.

What is the answer? Private development done naturally to meet needs. You can’t force people to be where they don’t want to be, to do what they don’t want to do.

Activity will come when people – the market – demand it. You can’t force it even with almost free money.

A walk around downtown teaches that lesson.

How Good it Gets for the Lerner Family

Isn’t America great! If you’re rich, that is. Ask the Randy Lerner family. Happy billionaires. Our welfare burden.

Here’s a case where Cleveland people subsidize one of its wealthiest families. The reverse philanthropy has gone over the $100 million so far. And yet, so long a way to go.

I asked the City of Cleveland for an accounting of how much the city has paid to bondholders for the Browns Stadium since 1997. The total came to $102,823,948.58, according to the Finance Dept. documents.

The city faces financing costs of another $160,367,109.48 in bond payments to be made until November 15, 2027, according to a refinancing done in 2007.

The Browns Stadium – a property tax free facility - is used almost exclusively used by the team owner. That means Randy Lerner and his family. Randy – worth a billion and a half dollars - is the son of Al Lerner. Al ironically was the principal person who helped Art Modell move the team to Baltimore. Not only will the stadium never pay property taxes but the lakefront land was donated free by the city.

Randy Lerner also owns an English football team from Birmingham. He paid some $100 million pounds for the team. He’s got the team name, Aston Villa, tattooed on his right angle, it has been reported.

Really endearing.

This exclusive stadium use by the billionaire Lerner family means there are maybe 10 games a year. Ten days a year when Cleveland likely makes a little money from visitors who make purchases.

Now who would make that kind of investment except our sports-minded public officials with the help of our civic leaders? You would have to be a sucker. Oh….

This represents a puny return on a huge city investment. The city says that the cost to construct the stadium was $287 million. However, many believe that the cost was well more than $300 million. There was a strong belief that Mayor Michael White used city resources to cover extra costs. White had said at the time something to the effect “Let me drive this sucker.” He drove it.

He didn’t pay for it however. Now we pay.

The taxes to pay this money come from, of course, the “sin” tax, which was extended for 10 extra years, and Cleveland taxes - an 8 percent parking tax, a 2 percent increase in admission tax for all events in the city; and a $2 fee on motor vehicle rentals. Passed by City Council in 1996.

The Lerner family pays $250,000 in rent for its near exclusive use of the Stadium. The minimum rent doesn’t ever increase over the 30 year lease. Thanks Fred Nance. The city has the right to use the stadium less than 10 times a year but hasn’t much taken advantage of this economic opportunity.

By the way, the latest financing was counseled by Squire, Sanders & Dempsey. Would you expect anyone else? Yes, the game is rigged.

Browns Stadium, of course, has no naming rights. Just as well. However, that means NO income for the city.

However, Al Lerner did a dance around that issue. He put up two huge electronic signs that freely used the MBNA signal. MBNA, his credit card company, was the base of the Lerner family fortune. The large electronic signs face east and west as Shoreway drivers see every day. Free publicity.

This is the way the bond document describes the original funding for construction of the stadium: “Funding for the construction of the Stadium was provided by the City, the NFL and the Browns, the State of Ohio and by in-kind contributions of the City Department of Utilities as well as the Northeast Ohio Regional Sewer District and the RTA. The City’s contribution totaled approximately $190 million (not counting interest) generated by City cash contributions together with public issuance of various obligations paid by the City and County contribution. Approximately $10 million of the above total was originally lent by the Cleveland Development Partnership and subsequently refinanced in 2004 by the City. The NFL and Browns contributed nearly $64 million to the initial construction and the State of Ohio contributed nearly $37 million.

The city alone pays the debt incurred for the Stadium.

It doesn’t stop there.

The city is also required to feed the capital repair fund for major repairs to the Stadium. The payment schedule is as follows: From 2008 to 2020, the city deposits $850,000 annually; in 2021, $5.9 million; 2022, $6.3 million; in 2023, $6.7 million; in 2024, $7.1 million and finally in 2025, $7.5 million.

Do we think the city will be able to keep this burden?

That’s another $44.55 million cost that the city has to pay.

The city ran into a little trouble when the interest rate recently jumped to 12 per cent. A number of cities, including Cleveland, had been in the auction rate bond market. Bloomberg.com reported that the “auction rate market is now backfiring on hundreds of borrowers as fallout from the collapse of the subprime mortgage market threatens credit ratings of the world’s largest bond insurers, deterring investors from even the safest bets.” It named Cleveland among those cities using these tax exempt bonds for stadiums.

A city representative said that the interest rate rose to 12 percent for Cleveland. However, that lasted, she said, only about two weeks as the city refinanced its debt.

Of course, the city doesn’t share in the revenue from tickets sold, usually 72,000 attendance, the 8,000 club seats or the loge revenue, food concessions, parking or advertising in the stadium. All that revenue goes to the needy Lerners.

You might notice that the Browns get a lot of media attention.

However, you never see Jim Donovan jumping up and down reporting about the financial aspect of the Browns, or the Cavs, or the Indians. No spastic reporting that might do us some civic good.

The Plain Dealer seems to be able to devote lots of space to our sports teams. Front page? We’ll give you it all. But neither the news section nor the business section ever seems to touch upon the financial aspects of the teams. When it comes to the financial burden on citizens, especially for an impoverished city as Cleveland, there’s a news blackout. Silence.

It’s out of bounds. Foul ball. Yes, foul. But in another way.

It's Past Time For Chief Wahoo To Go...

It’s time somebody had some sense. Major League Baseball may have struck the first blow to end the life of Chief Wahoo.

It’s overdue that the Cleveland Indians buried Chief Wahoo, a racist emblem that brings shame to the baseball team and the city of Cleveland.

Maybe Mayor Frank Jackson should speak out. Maybe City Council should act against this racist insignia.

C’mon, Dolans, do away with this blemish on Cleveland.

I guess Major League Baseball is saying just that. MLB nixed the Indians’ cap with a stars-and-strip emblem depicting Chief Wahoo with the American flag and its stars and stripes. The new hat design is meant to honor U. S. service people, making it even more repugnant.

Please end this obnoxious racist and ugly team emblem.

See what MLB thinks here.

Sales Tax Hikes Hit Cuyahoga For $154 Million

There may be a depression but the Tax Collecting County Commissioners are still deep into Cuyahoga taxpayer pockets. Deep, I mean.

We have the monthly update on the tax cost via the Med Mart sales tax increase, the Browns Stadium sin tax and the Arts & Culture cigarette tax.

The Med Mart May sales tax – a quarter percent to 7.75 in Cuyahoga County – produced $3,018,629.56, up from $2,974,836.56 in April.

The total take for the proposed Med Mart from Cuyahoga taxpayers: $58,682,893.71 since January 2008. (The PD recently reported incorrectly that the tax has generated $82.76 million.)

The PD did report that MMPI (Merchandise Mart Properties Inc. of Chicago), picked by the County Commissioners to build and operate the Med Mart and Convention center, had already been paid $333,333.

Nice money, if you can get it.

The sin tax take for the Lerner family, owners of the Browns, has hit $52,946,168.75 with a May contribution from taxpayers of $1,087,777.37. The $52 million has been collected since August, 2005. It goes to pay for stadium bonds.

The Arts & Culture tax, solely on cigarettes, produced $1,581,410.70 in May to increase the total take from smokers to $44,373,310.81, up from $42,791,900 from last month’s total. It goes to art and cultural institutions.

Once again, these are regressive taxes that weigh more heavily on ordinary people and they often fund facilities and events not easily accessible to ordinary people. They perpetuate inequality of income.

Once again I note that these regional facilities and events are paid for largely by Cuyahoga and Cleveland residents though they are used regionally.

So much again for Regionalism. It stops apparently at the Cuyahoga County border.

From Cool Cleveland contributor Roldo Bartimole roldoATroadrunner.com
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