A $30 Million Mistake By Best & Brightest

In the 1990s, Cleveland had a rather highly educated City Council. I can't remember the number but the percentage of lawyers among the 21 members was high.

Cleveland also had an intelligent, crafty and feisty Mayor in Michael White.

Today, City Council appears -- with a few exceptions -- to be inept and even farcical. Mayor Frank Jackson may be steady but one wouldn't call him artful or exciting.

Does it make any difference?

Here is an example where it definitely didn't. The city and its citizens have been paying dearly for it ever since despite the best and the brightest at city hall at the time.

I asked the city recently to provide me with payments by the city for two garages the city built during the White Administration for Gateway.

The documents they sent me detailed the costs of the garages to the city since September 1996 through September 2008. Each September and each March, the debt service figures are totaled of payments made.

The cost since 1996: $30 million. All city money.

The city has had to raid its “parking meter collections” and its “parking garages/lots collections” – money that could go into the general fund to pay for police, fire or any other city service – to pay debt on the Gateway garages.

This was a disgraceful method of insuring that the bondholders would be secure.

There was a reason to be highly skeptical that the garage parking revenue would ever be enough to pay the bondholders.

Why? Simple. County Commissioner Tim Hagan and Mayor White, leaders in the subsidy train to Gateway, gave away so many parking spaces in the garage to Dick Jacobs and the Gund brothers. Garage revenue could never pay off the debt.

In order to meet the debt the city – not the teams, not the owners, not a private developer - HAD to build the two garages.

I go back to the days of the Cleveland Edition for my memory of how many parking spots our leaders gave the team owners to utilize free of charge. The two owners got 250 parking spaces each free every single day for their private use - game or no game on those days. Jacobs also got 1,250 parking spaces for each home game or 82 times a year. The Gunds – Gordon & George – got 1,450 spaces for each of 42 games. The free spaces go to premium and loge ticket holders. (These special fans never have to set foot on a Cleveland street.)

No private developer would build if a significant portion had to be free. So White - who admitted that a private developer “would lose money” -came to the rescue, as I wrote, “with City Council as his posse.”

Finance director at the time, Steve Strnisha - also a Gateway board member at the time - sold the deal for White, He promised Council – always eager to have a leaf to hide behind – that the garages would be “a good investment on the part of the city.” Some investment.

Strnisha, who later went to work for Cleveland Tomorrow - now the Greater Cleveland Partnership, - told Council, “The fact is that if these garages are not built... Gateway will not occur.” (Not unless Jacobs and the Gunds were forced to pay their own way.)

REMEMBER this when it comes time for either the city or the county to add money for the garage or garages for the medical mart and convention center. Plans for the new convention center include only 925 parking spaces, far too low for its needs.

So good, the Gateway garages poor financial performance has eaten into the city’s coffers for $30 million. This financial drain will continue for years to come.

Now, the Gateway scheme for paying for the garages had to be legislated.

In fact - presumably to make it more palatable - Mayor White had to add a third garage. The city hall’s Willard Parking garage – it was said – needed to be replaced as it was dangerously decaying. Why not bundle the three garages in one bond issue? So convenient.

So a third city garage was used as an excuse really to build two more at a total cost of some $73 million. This doesn’t include interest. One study at the time said that the Willard - built as a city contribution to urban renewal was attached to the 1916-built Cleveland City Hall - could actually be rehabilitated for $12-million. The Willard was built during the Ralph Perk administration, which puts it in the mid-1970s. The garage was less than 20 years old.

This was the deal that the late Fannie Lewis claimed, “This ties up the city like you tie up a hog.” She couldn’t have been more correct.

Lewis was likely the least formally educated member of that above-average Council but wisest as to the best interests of her constituents.

Finally, excuse me for laughing: Gateway was given $3.1 million by the city to coordinate construction of the garages for the city.

Can you cry for Cleveland? Or have I asked that too often.

From Cool Cleveland contributor Roldo Bartimole roldoATroadrunner.com
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