It may have been a dozen years too late but still welcome. Nice to see the Plain Dealer take a look, at long last, at the economic costs of Gateway.
Joel Rutchick and Mark Gillispie, as usual, did a skilled job of assessing how the City of Cleveland gives its wealth away to the area’s richest people. They didn’t exactly put it in those terms. It’s not proper for the mainstream media to pepper the wealthy.
The Gateway garage deal, they reported, could cost the city $77 million by the end of its payment term. Already it has cost the city $31 million, they reported. Those are scarce Cleveland tax dollars. Gone. Kaput.
It’s no surprise. Our politicians and civic leaders preordained it. They did it, not by mistake, but purposefully. All too predictable.
The poor city has always had money to give away to our corporate richest.
Councilwoman Fannie Lewis at the original two-day hearings on the garage deal some 10 years ago knew exactly the game being played. Steve Strnisha, the able finance director, represented Mayor Michael White. Strnisha told Council the city could make money on this deal. At the same time, the Council was told the city would not charge the teams a penny for use of thousands of parking spaces.
“This ties up the city like you tie up a hog,” said Lewis presciently. She could have added, “To the slaughter.”
How true, as the Plain Dealer story attests.
The deal was from the beginning a sucker’s deal. The Gateway leases, according to what I wrote years ago, gave to each team 250 parking spaces each day free, then 1,250 spaces to the Indians and 1,450 to the Cavs at every home day for luxury box owners. Thus, these spaces could never provide any income for paying the garage debt, principle and interest, used to construct the two Gateway garages.
That’s why the city had to play the sucker. No private developer would touch such a predictable money loser.
Compare what Rutchick and Gillespie found to Mayor White’s past statement in selling the project. White, with straight face, said, “We have to this point struggled not on behalf of big business, not on behalf of the teams,” but for the city of Cleveland and its people.
I described Lewis at the time as one “whose often wildly gyrating paranoia can be frustrating, still oft times shows a wise native sense that sears the sophistry of her better educated colleagues.”
I looked back at what I wrote.
“Council’s Finance Committee, in two days of hearings, passed eight pieces of legislation for Gateway, including a $71-million bond issue for three garages, two for Gateway. The Gateway garages, at $43-million, were needed because Gateway, in lease negotiations, gave the Cavs and Indians so many free spaces for luxury seat customers that no private developer could build the garages.”
What’s more instructive are the people who sold this bogus give-away to Dick Jacobs and the Gund brothers at the start.
Selling the program was Strnisha, of course. The Greater Cleveland Partnership, which is the old Cleveland Tomorrow, employs Strnisha. The last IRS filing in 2003 showed Strnisha was paid annually $196,900 with $15,752 in benefits.
Backing up Strnisha at the meeting was our old friend Bill Reidy. Reidy heads up Gateway and our latest boondoggle, the Convention Facilities Authority. CFA works hard to sell Cleveland on a new convention center at a cost of hundreds of millions of tax dollars.
Reidy, ironically, was also a former city finance director under Mayor George Voinovich. Reidy was a consultant with Coopers & Lybrand for the garage deal. He was being paid $40,000 for the garage task.
Two expert finance directors telling Council to pass some $43 million in bonds that they had to know would be costly failures. I wish the two PD reporters had pressed them on why they did this.
With Reidy now trying to sell the community on the biggest public cost project since Gateway, Strnisha, the day after the PD expose, was selling Council again. This time Strnisha was peddling the Flats East Development.
The Flats project is dressed up like a Christmas tree of public subsidies.
Where to start. The public subsidies will be enormous. Core Cities, a city fund, will toss in $6 million. Get this. The loans, one for 30 years, another for 22 years, with interest rates as low as 1 percent at times. (Excess parking income – sound familiar - will be used to help pay off the bonds. Laugh or cry now.)
Cuyahoga County will toss in a 20-year $1.1 million loan. There will be a TIF, an abatement form of tax relief, to cover payment of the $1.1 million in borrowing.
In all there will be, according to a data sheet passed out to Council, $52,590,000, or 23 percent of the project, paid by bonds. In addition, $23,889,024, or another 10 percent, will come from other public funding, not counting the $6 million from Core Cities and $1.1 million from the County. This includes $18 million in grants from local, state and federal sources.
Label this Government Capitalism – the funding of private development by your tax dollars – or as our corporate friends would like to label it, a public-private partnership (that means the taxpayer partner pays, the developer partner collects.)
As a retired Council junkie, I did not attend the committee hearing but long experience tells me here’s another Gateway Garage con.
Jay Westbrook was Council President and Jim Rokakis was Finance Chairman when they guided and sold the 1990s garage swindle to legislative passage.
I wrote: “Westbrook’s disdain for the public he supposedly serves is subtle. He tried to embarrass one member of the G-Pack grassroots organization with a line of questions meaningless to the debate at hand, including asking the citizen in what cities had stadiums been built without public subsidy, as if that were the essence of Council business on building garages for Gateway.
“Later Westbrook gave Lewis a look of condescension, asking her if she had finished (her questioning) in such a manner that the question took on the tone of a put-down.
“‘Quit being facetious with me,’ she told Westbrook. Then she caught him where it hurts, his past. ‘You and I came into this Council screaming about things (corporate rip offs of public funds’). Then Lewis scowled at him, ‘Don’t play me cheap’”
After four hours of hearing the sales pitches of lawyers, investment bankers, brokers and a slew of Gateway executives, including, of course, Tom Chema, Rokakis finally turned to the public audience.
“Time now was of major essence,” I wrote. “Rokakis’ first words were a warning, a time limit. ‘Three to five minutes each,’ said the generous Jimmy.
“One could see the mood and temper of the chairman change to decidedly chilly. Now, the rabble. What a shame Council had to hear their ignorance. The five or six citizens, totally unarmed in comparison to the hired professional guns, for some reason were barely tolerated.”
Lewis was right. Rokakis and Westbrook played them cheap.
The public too often goes unrepresented in public dealings, as we see nationally with the scandal of high-paid lobbyists and such corporate fronts here as the Cleveland Development Partnership, which is loaning $3.5 million in the Flats deal. Loans secured, you might expect, by tax revenue.
Strnisha and Reidy, both at the scene of the garage crime, still tell the City of Cleveland what to do and when to do it. All part of their civic duty.
From Cool Cleveland contributor Roldo Bartimole hidden-email:ebyqb@nqrycuvn.arg? (:divend:)