Business is Hard (whether you are Medpace or Liz Rogers)

The Cincinnati Enquirer Editorial Board recently wrote an opinion about economic development incentives and the need for more oversight.  They only cited one specific example.

“The nearly $1 million that city taxpayers gave or loaned Mahogany’s owner Liz Rogers might remain the single most egregious example of how not to do economic incentives.”

As a financial consultant for over 20 years, thank goodness I didn’t have to witness a lot of my clients’ businesses fail.  But one was a well-established, upscale restaurant with a reputation for great gourmet fare. From the sidelines, I could see the obvious long-before the owner admitted defeat.  But when you are the one who has invested everything you are, your time, reputation, your entire identity and all your family’s money (and then more money that you don’t even have) in this one dream and everybody is counting on you  – you’re not allowed to give up.  You have to try everything, even beyond reason. It’s horrible.

Last fall I dropped in on a Budget & Finance Committee meeting at City Hall and was surprised to find a crowd in Council Chambers.  Normally the only people in attendance are a handful of eccentrics like me, city administrators, and anybody giving a presentation.  So I asked the woman in dark sunglasses sitting next to me what was happening.

“We’re here to support Liz Rogers,” she said.

Charlie Winburn, the Chair, had called a special hearing so the public could talk about the Mahogany’s disaster and African-American activists showed-up to highlight our city’s dismal record with minority-owned businesses.  The last person to testify that day was Liz Rogers herself, the woman in the dark glasses sitting to my right.  She told the Committee about the death threats she’d received, what it was like to be the target of such venom on talk radio every day, how she was a single mom trying to support her son.  She wanted to pay the money back, but she didn’t know how she was going to do it if she couldn’t open another smaller, simpler location and that’s why she wanted the furniture we’d paid for with our development incentives.  Behind her glasses, her eyes were red and swollen from crying.

I’ve thought about Liz a lot as her name continues to pop up frequently in the news.  She’s clearly gone off the deep end.  But last night as I was reading documents on line related to the Medpace development in Madisonville, my mind went to her situation for a different reason.  Last week City Council voted to amend their original Job Creation Tax Credit Agreement from October 3, 2008. The company said they were going to create 1,339 jobs at an average salary of $70,192.  They ran into problems and now the city has to drop those numbers to 844 jobs at an average salary of $55,000.

Our smartest development experts in city administration, the professionals who make these decisions about how we should invest subsidies of all sorts, in cooperation with the talented executives at Medpace, were only off on their projections by a total of $47,567,088 annually, over 50%.

But did we hear an explosion of outrage about our inability to accurately predict the future on this deal?

Not a word.  Instead we’re going to give Medpace a $5,000,000 road and Tax Increment Financing with all the trimmings for a $98,000,000 hotel-restaurant complex.  All while middle-class taxpayers pay the bills for the corporation’s share of basic services.

In the scope of city incentives, the money we invested in poor Liz Rogers is a drop in the development bucket. The Editorial Board is correct in their assessment that this was not a positive outcome, but my gosh, how long are we going to hammer on her example as the poster child for bad development decisions, provoking a magic porridge pot of public outrage in the media.  Give Liz a break.  Business is hard for big companies like Medpace and one-woman operations alike.  Our frustration should be directed where it rightly belongs.  As a city we need to do a much better job of assessing risk and return on all these deals.

Cincyopolis reminds readers that information-delivery is currently in a revolution the likes of which haven’t been experienced since the invention of the printing press, that the internet is a wild-west experiment in how we share knowledge and that it is absolutely, completely, totally impossible to participate in this medium as a passive observer depending on experts and authoritative sources.  Followers are encouraged to leave comments (disguise your identity if necessary), correct me when I’m wrong (be nice – I’m trying my best and will correct mistakes ASAP) and add your wisdom to the collective pot that builds this great city or ours.   Submissions for guest posts of around 600 words are encouraged.  Send them to executive.dreamer@gmail.com for consideration.    If you’ve got experience to share, please do it where everyone can see, instead of emailing, messaging or calling me privately, as all this info hurts my head.  Welcome to the wikipedia-model of citizen journalism.

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5 thoughts on “Business is Hard (whether you are Medpace or Liz Rogers)

  1. Bill Collins

    Thank you, Kathy.

    The reason that the media focused on the City’s subsidy of Liz Rogers is, ultimately, because she is black, female and not part of “the club.” And, the reason that the media has not focused on Medpace’s subsidies is because the company is led by white men who are part of the club. [Medpace’s legal firm is the Keating law firm (KMK) for which Mayor Cranley worked immediately prior to becoming mayor.]

    Another example: on the current issue involving Ray Schneider’s proposed housing development across Red Bank Expressway from Medpace which was in the news last week, it’s interesting to see what detail has *not* come out in the media. And, that detail also has a racial component.

    When people in the Madisonville community (us) point out that Mr. Schneider has not honored the commitments he made in his 2006 development agreement, we are talking about Ray’s not honoring his commitment to cul-de-sac Charlemar Drive to prevent trucks from cutting through this residential area.

    So, you may ask, what does race and being well-connected have to do with this?

    Well, it’s simple. In this immediate area in the western part of Madisonville next to Oakley (bound by I-71 on the north, Duck Creek (the creek, not the road) on the south and west, and Red Bank on the East, the only way that this Eastwood area works as a mix of thousands of jobs and perhaps 200-300 residents is because of the dead-end streets that keep trucks out of the residential areas. Simple enough. Right?

    So far ALL of the residential streets around here that have large numbers of white people live on them HAVE been dead-ended. Those include Oaklawn, Eastwood Circle (where I live), Overbrook and Collinwood.

    The ONLY residential street that has NOT been properly cul-de-saced to keep trucks out is Charlemar, and that is the street that Ray Schneider failed to cul-de-sac as per his agreement with the City. AND, among all the streets around here that I mentioned, Charlemar is the street that has the largest concentration of black residents.

    Does ANYBODY think that is a coincidence? Does anybody think the focus on Liz Rogers is a coincidence?

    Reply
  2. Quimbob

    I don’t know how much of the animosity towards Rogers was because she was black but that she got the deal precisely because she was black.
    Easy credit isn’t a good thing & the city really did a number on her in the name of racial favoritism.

    Reply
  3. Bill Collins

    Quimbob: I hear what you’re saying, but it cuts both ways. Some folks like the previous mayor and city manager clearly did lobby for Liz Rogers in the beginning (as a restaurant operator who operated a much smaller restaurant 25 miles aay in an area with much cheaper rent) because she was black in order to broaden the base of business operators at the Banks.

    That being said, when you see the venom and media circus that was directed at her and at Tracy Hunter *after* their falls — both of these people being female, black and single — I think the pattern starts to add up. My point here is not to gin up yet another debate about Liz Rogers or Tracy Hunter.

    My point is that, in the context of the kinds of info that Kathy Holwadel brought to this blog posting today, it starts to become clear that lots of questions are asked of certain people and not of others, and often the difference in approaches is because of gender, race, marital/relationship status and their connections (or lack of) to the local powers-that-be.

    Reply

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