Pony Again Up For Dick Jacobs
By Roldo Bartimole
Every so often, it takes a little time to screw the public. In the end, however, the dirty deed usually gets done.
Developer Dick Jacobs – who has taken Cleveland for more free goodies than nearly anyone in its history – has won the battle to put “big box” development into Chagrin Highlands apparently.
In other words, Jacobs has screwed the public again.
Isn’t that wonderful. After some $150-million dollars in road construction, including an I-271 interchange, made the City of Cleveland’s land in the suburbs even more financially attractive, Jacobs gets what he wants - big box development - quick, easy and very profitable, no doubt.
Some, of course, want to call it other than “big box.” Let’s say they want to label it “little big box,” or “littler big box.” It’s all the same. It’s big retail boxes, a business organism destructive and well overstocked here and elsewhere. We have too much retail, not enough production.
With “big boxes” the city gets businesses that don’t add much to the economy and likely less to the city since it shares in the land sales at Chagrin Highlands and also the income taxes generated by the development. All those $6 an hour retail jobs really don’t help the region’s economy.
Jacobs first went to Council President George Forbes in 1986 and asked about obtaining this undeveloped land owned by the city in suburban communities like Beachwood, Orange and Warrensville Heights.
So it’s 20 years later but Jacobs is still at the trough trying to suck more out of Forbes’ gift.
In 1989, Forbes secretly injected Jacobs into the profitable deal that then Mayor George Voinovich had devised for the old Figgie International. One of Voinovich’s old law partners, Russ McKnight, sat on the Figgie board and represented the company in the deal. (See 1997 column below for details).
In the early 1990s, a new mayor – Michael White – put the screws to the deal and a court case uncovered the dirty pact among Forbes, Voinovich, Jacobs and Harry Figgie of the Figgie corporation.
The legal battle between White and Jacobs deterred big box development – at least for a time because of the lawsuit’s out-of-court settlement.
In 2001, Forbes returned to City Hall for his benefactor Jacobs pushing legislation to allow big box. With Michael Polensek as Council President and fighting with Mayor White, the Forbes-Jacobs contingent saw a new opening. It didn’t work.
Mayor White was so upset that he had 35 boxes of his legal tussle, mostly depositions of the crucial people involved, with Jacobs delivered to the Free Times. He was angry that Polensek was trying to overturn the deal made between White and Jacobs by allowing Jacobs to develop at Chagrin Highlands any way he wanted.
Here’s what the Free Times said at that time about the development site:
“This glossy economic generator would bring tens of thousands of high-paying jobs to a stagnant region, to say nothing of the increased income tax revenues the city would accrue. Some real estate experts had considered it the most valuable piece of unspoiled land between New York and Chicago.”
Now in 2006 here come the “big boxes” - Value City Furniture, Bed, Bath & Beyond, OfficeMax and a Filenes’s Basement discount clothing store - as the Plain Dealer reports in a story headlined: “Retail wins long battle over site.” Sub-head “Chagrin Highlands gets stores, if not ‘big boxes.’”
I don’t care what size they call them they’re big box retail stores. It’s not what was envisioned for this valuable land. The developments were supposed to be for offices and corporate locations bringing jobs and income tax revenue for the City of Cleveland. Cleveland shares half of tax revenue collected in the various suburbs.
In the late 1960s, Mayor Carl Stokes wanted to develop a new city there with housing available for families of different income levels. When the Chagrin Highland concept of office/corporate headquarters was being proposed in the late 1980s, Stokes said, “We will see more of the same kind of humdrum development that competes with Cleveland’s downtown everywhere in our region.”
Now the economic situation here in Northeast Ohio AND downtown Cleveland is even worse.
Polensek said the legislation back in 2000-2001 did not pass in part because Warrensville Heights Mayor Marcia Fudge, now a proponent, gave “me so much crap.”
Mayor Fudge does not want to talk about it, says a representative at her office.
People do change their minds. One has to question why, however, Mayor Fudge changed hers but she is mum about it.
The mayor’s web site claims, “You shall defend those who cannot help themselves. You speak for the poor and needy and see that they get justice.” Apparently not.
Council President Marty Sweeney said he hasn’t officially heard about the project, only reading about it in the PD. He feels City Council would have to vote on the matter. He also denied talk that former Council President George Forbes spoke to him about Jacobs’ development. Sweeney said the former Council boss paid a friendly visit two weeks ago. Forbes advised him to always maintain 11 votes, the majority to keep his job as president of Council, said Sweeney.
Mayor Frank Jackson’s press office couldn’t provide an answer to the city’s response on the big boxes. The press person offered the novel excuse that since a press release hadn’t been issued she could offer no response. Ken Silliman, the mayor’s top aide, and economic development head Brian Reilly didn’t return calls.
Reporters I have talked with find Jackson’s press office less than inadequate.
The city and the region likely would have been better off NOT having this low economic level development.� Better to leave the land vacant until economic times improve and become more valuable.
To give some historic perspective to the Chagrin Highlands issue, the following is a column i wrote in the Free Times, July 31, 1996, entitled ''Keep Your Eye On The Figgie Deal"". It follows:
If City Council members were upset about a 15-hour summer marathon in June and a 12-hour endurance test in July, just wait for the surprise as Council President Jay Westbrook and Mayor Mike White have in store for them in August.
NO, I am not talking about more multi-million-dollar bailout legislation for that old tax sponge Gateway, though that may be on the agenda, too.
However, a bigger deal is awaiting Council’s blessing. For a second time. Westbrook will ask Council in mid-August to wrestle with a new big, billion dollar issue, which was riddled with secrecy and deception the first time Council dealt with it in 1989. At that time, Council voted to develop 630 acres of city-owned land. Now because of a lawsuit recently settled, and some changes, Council must vote again.
We’re talking about the Figgie project at Chagrin Highlands, passed by Council under former Council President George Forbes in 1989. The deal is a cesspool of political and economic intrigue and should require weeks of intense hearings for members to even begin to understand its ramifications.
What wasn’t known when Council passed the original legislation was that secret dealings were taking place between Figgie International and Dick Jacobs, at the urging of Forbes, who went to work for Jacobs … right after leaving office. Forbes said, “I have had a continuous representation of Jacobs since 1990” in a deposition.
(Forbes also said, I have never taken a thin dime from Dick Jacobs or anyone associated with him.” Laugh now. Jacobs said, “His daughter (Helen, George’s partner) handles collections and remediation services” for Jacobs. Also, Jacobs and his son Jeff gave Forbes more than $90,000 and Figgie gave $20,000 to Forbes’ 1989 mayoral run.)
Jacobs, now a fifty-fifty owner and managing partner in the lucrative deal, was a secret partner of Figgie, as evidence by a letter of intent signed back in 1989 when Council voted.
Forbes got Jacobs into the project by telling Harry Figgie, Jr., that Jacobs had a desire to be part of the largest city land deal ever (who wouldn’t), and the two should talk. A message like this coming from Forbes – a man Figgie called the second most powerful city official – was taken as an order. Figgie, then boss of the company, actually described in his testimony what Forbes did as “steered.”
But no one, including Forbes, Figgie, Jacobs, then Mayor George Voinovich or any member of his administration, ever informed Council of the deal as they voted to allow the development of some 630 acres of prime land owned by the city in the Chagrin Corridor, a desirable office and retail center outside Cleveland.
It was a historic deception. Council now will be asked to overlook this, and anoint the deal a second time – in what leadership will undoubtedly prefer to be a one-day Committee of the Whole so that Council again will be voting essentially blindfolded.
Figgie was to move its headquarters from Richmond, Va., back to Cleveland as a result. Figgie, now a shell of the corporation it was in 1989, had been headquartered in Willoughby previously.
Will there be any Council member who will demand that this time everyone come clean about details of the deal and exactly how the city will benefit? Not likely.
The development of lucrative land – made more valuable by time and huge highway expenditures of more than $100 million - could be mainly for offices. Jacobs had wanted an upscale mall development, which may explain why Mayor White went sour on the deal. Jacobs wanted to bring in retailers (Neiman Marcus, Nordstrom, etc.) that could likely hurt the business of White’s close friend Sam Miller who owns Tower City.
Indeed, an intriguing question is asked of Dick Jacobs: whether he “had a suspicion about a Figgie executive’s ‘supposed relationship with the Ratner family (Miller and the Ratners run Forest City Enterprises, thus Tower City.) “No, I didn’t,” Jacobs answered and it was dropped. But from testimony, it appeared Jacobs thought a double-cross by Figgie might be in the making as he stalled on a final agreement.
Jacobs, of course, has been the recipient of so many tax subsidies from Cleveland that he could afford to pay Albert Belle one of those $100-million contract and not feel much of a pinch.
Jacobs, in a deposition, was asked, “Back in 1988, did you have expected goals for financial return in profits from Chagrin Highlands?
Jacobs responded: “I believed in the quantum theory of profits to the Nth power.”
Mayor, now Gov. George Voinovich, with connections through his former law firm, Calfee& Halter, brought Figgie into the deal for the city’s land, and Forbes who had forged a relationship with Jacobs, brought Jacobs into the deal.
Forbes invited Figgie to his office and told Figgie that he should deal with Jacobs. (Two years earlier, Jacobs had already made overtures to Forbes about acquiring the city’s land. It could be that Voinovich was heading Forbes off with the Figgie deal and friends of his own.)
Forbes described the result of the meeting with Figgie as follows: “I left that meeting with the impression that the previous desires of Dick Jacobs about being involved in the project, wanting to develop it, would somehow be considered by him (Figgie). I took him for his word that it would be no problem that it could be worked out.”
Question: “Did you go into the meeting with Mr. Figgie and his group with an understanding that Mr. Jacobs would be part of the development process?”
Forbes: “Oh, sure, sure.”
Forbes testified that he really wanted that land used to house low-income people. He twitted the lawyer questioning him by gratuitously noting, “You can say black people (rather than low income), no problem.”
The lawyer later questioned if Forbes had asked developers to provide some low-income housing.
Forbes: “No, because I had concluded that we had reached a stage where that would never happen.” Forbes may have been correct that interests in the area would have blocked such housing, but that’s what leadership is about – getting people to build what’s needed and certainly it wasn’t another upscale mall as Jacobs envisioned.
Forbes testified that Harry Figgie, Jr., was the person who wanted to keep Jacobs’ involvement secret (three Council members were told. Ken Johnson, Earle Turner and John Barnes) He was explicit on this point.
Of a meeting at Calfee & Halter law offices, Forbs said, “I remember explicitly Harry making the statement, this was the statement made by him, not one of his underlings, that Jacobs had the Galleria, he had the Indians, he was going to build the Marriott, he had Erieview Tower and that he (Figgie) wanted his project, that he wanted a project that was his, as the Figgie project.” (Thus, reason to keep Jacobs’ name secret.)
Figgie when asked in deposition whether he had insisted that Jacobs’ name be kept secret, as Forbes testified, said: “Absolutely not.”
The deception by Forbes had less to do with Figgie than with keeping Dick Jacobs’ name out of the deal. Jacobs had already hit the subsidy jackpot: $3.5 million (not yet paid back) for the Galleria; some $120 million in tax abatements and nearly $20 million in Urban Development Action Grants (UDAG) for Society Center (now Key Bank building) and other goodies were on the way, Gateway.
The publicity that Jacobs was now going to be let in on another deal of a lifetime involving city property for untold riches would have possible been too much even for the Pee Dee.
Now we face the issue again, With Mike White’s backing, to be sure. The giant mall is out of the picture both because White (rightly) didn’t want it, and Beachwood Place has moved ahead. But there are other questions to be answered and it would be proper for Council members of any integrity to demand a full hearing, if they are to vote honestly about giving Dick Jacobs another huge subsidy.
The deal probably is in the$1 billion range and the studies suggest that the profits will be 14.9 percent – that’s nearly $150 million. And this doesn’t even take into consideration that various Jacobs’s enterprises will be doing various tasks of the development from legal to architectural.
Postscript to the Free Times column: Now I believe Mayor White wanted the lawsuit to hold up Jacobs’ mall development plans at Chagrin Highlands, not because it would compete with downtown and The Avenue at Tower City but because Sam Miller, White’s benefactor and boss, was protecting his interests at Beachwood Place. It’s always helpful when you own a mayor.
Ken Silliman returned a call too late for publication; Brian Reilly, economic development director, did not return a call.
From Cool Cleveland contributor Roldo Bartimole roldoATadelphia.net (:divend:)