Mabley Place: what a win for a rookie in real estate

I’m not much of a football fan, but from what I can see real estate development is its own kind of rough-and-tumble, drawing the same kind of guys with a focus on winning no matter what the cost.

Former Bengal, Chinedum Ndukwe, grew-up in Dublin, Ohio, just outside of Columbus.  Drafted in the 7th round in 2007, he was mostly a reserve defensive back and made OK money for a guy fresh out of college, averaging $425,088 for the four years he played, . But a knee injury sidelined him in 2010 and the Bengals did not renew his contract.  After 2 games with the Oakland Raiders in the fall of 2011, they didn’t want him either.

Nedu was smart, articulate, and ambitious.  But apparently not star foorball material

Fortunately #41 is breaking all kinds of records in his new profession.  In December of 2013, right after Mayor Cranley took office, the  City announced 28 year-old Ndukwe had formed Kingsley & Co LLC and would be putting together a group of private investors to transform the former Tower Place Mall into a 775 space parking garage.  His partner was Jake Warm of JDL Construction, the same family associated with the Hilton and Carew Tower.  Having owned the property since 1988, City Council voted to sell one of our most embarrassing development albatrosses to Warm for $1, and immediately put the asset in the name of the Hamilton County Landbank.

Why the detour to the Landbank?  Somebody owed almost a million bucks in back property taxes on Tower Place Mall, but the Port Authority that runs the County Landbank used one of the “unique tools” in their “development toolbox” (please read “tax loopholes for for-profit corporations”) for those taxes to be waived, stating that the new developer had nothing to do with the tax liability and could not afford to make the project work if they had to pay what was owed to Cincinnati Public Schools, mental health services, indigent hospital care, etc., etc., etc.

Fast forward to December of 2014.  12 months.  1 year.  365 days. (Got it, Citizens?  Catching on here?)

Tom Demeropilis of the Cincinnati Business Courier reported that 70% of the garage that opened in October was being sold to a San Diego Real Estate Investment Trust for $15,000,000.  Let’s do the math.  If 70% equals $15,000,000, that means the whole garage is worth $21,428,571.

Now there’s a wide range of numbers as to how much the renovation of the space cost the developers.  Tom Demeropolis, a professional journalist not known for outlandish statements who always checks and double checks his facts, puts the number at $9,000,000.  Mayor Cranley’s office puts it around $5,000,000.  Let’s be conservative.  Let’s use Tom’s number and call it a $9,000,000 investment.  That puts the profit at around $12,428,570 in one year

That’s a 12,428,570% return on investment, Mr. Ndukwe. Wow. That is, if you don’t include the contributions #41 made to Mayor Cranley’s 2013 campaign (his family came in #7 on the list of contributors with a total of $12,700)  – or Christopher Smitherman’s campaign.  In any case, I’d say his foray into development qualifies as a touchdown.  Ndukwe was wasting his time in football.  With that kind of talent just imagine the wealth and power he could have accumulated if he’d started out in real estate in Cincinnati.

And the rest of us Citizens, what should we take away from the story of the Mabley Place parking garage?  Look what $12,700 can buy a 28 year-old rookie with no experience and no training. A well-placed political contribution might very well be by far the most profitable investment of all.

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25 thoughts on “Mabley Place: what a win for a rookie in real estate

  1. Craig Hochscheid

    Investing in John Cranley pays off at a rate unheard of on Wall Street. John Cranley might have surpassed George “Boss” Cox as the most blatantly corrupt politician in Cincinnati’s history. Cranley’s quid pro quo cronyism knows no bounds.

    Reply
  2. Bill Collins

    Thank you, Kathy. This piece is a slam dunk expose of how development policy in this town so often is designed to favor the rich (in most cases) or well-connected (in this one).

    When neighborhoods look at development projects, two of the critical and logical questions are always:
    1) What is this developer’s track record? [In other words, “what has this guy (or gal) ever DONE?)
    2) Can this developer be trusted with the future of our community?

    In Madisonville those are precisely the questions we are struggling with as we consider the housing proposal by Ray Schneider of the “Hyde Park Circle” group on ten acres near the southwest corner of Madison and Red Bank. Based on the response by the Cranley administration to our concerns, it’s obvious that these two questions are not the kind of questions that this administration likes for communities to ask.

    In this case of the downtown garage deal mentioned in this column, the Cranley administration is clearly giving the green light to a rookie — in effect lining this rookie’s pockets at the expense of City taxpayers, the Cincinnati Public Schools, etc. Maybe this rookie should go to the Canadian Football League (CFL), learn his craft, and then come back to the big leagues (the NFL). Rookie-ism is no way to run development policy in any city.

    Reply
    1. executivedreamer Post author

      Hey, thanks for responding. I’ve got to admit this one has me confused. I’ve tried searching for every related name I can think of on City Council Online and come up with nothing except transfers of unappropriated surpluses from parking going into a Tower Place development account. I asked Christine Zimmer to start a public records request for me to get more information outside what’s available in the media. (Gosh that woman works hard – she answered me on a Sunday). — I think the information as I presented it is accurate – the property tax liability was written off. The Ndukwe family was the 7th largest contributor to John’s campaign according to public records. Tom says 70% of the building sold for $15,000,000 – though I can’t I can’t verify that number yet and have contacted Dusty Rhodes to ask him if he can clarify the discrepancy since the Auditor’s page has it listed significantly lower. It’s a mystery. And I hope I can find more information that tells me my assumptions that a 28 year old football player with no experience in real estate development could not do this without big strings being pulled are wrong. The nice thing about a blog is that it doesn’t have to be a one-time story and we can use crowd-sourcing to get more details. I’ll share what I find and if you could do anything to track down any public records on the transaction< I'd appreciate whatever you can do. It's important that citizens understand what goes on behind these decisions, don't you think?

      Reply
  3. 5chw4r7z

    Maybe they should write these deals so any owed taxes become due only after the property is sold? It is mind boggling to think this project wasn’t feasible unless purchased at $1.

    Reply
  4. Steve Deiters

    Hmmmm. I guess on Mr. Kincaid’s comments and the links he provided with the timeline incumbent to them Mr. Cranley seems to be out of the loop on this transaction and former Mayor Mallory is now in?

    Reply
  5. executivedreamer Post author

    Hey, Steve, I’ve missed you. — On my Facebook page Jay gave me even more detailed information with links to the vote and the original article by Chris Wetterich in the Business Courier. http://bit.ly/1MfMEIv (vote) http://bit.ly/1MfMEIv and (article) http://bit.ly/1KZuWqY. Interesting thing about this deal is that it starts out under the name of Brook Lane Holdings. Which is why I couldn’t find anything in City Council Online. That company was dissolved in January. Mr. Ndukwe’s company, Kingsley Wells, was dissolved in May. Which surprised me since his simple web page indicates (as Tom Demeropolis’ articles do) that he is looking for more development projects. I would thought he’s want to parlay his success into longer-term name recognition. (Notice all those Neyers don’t want to give up their name recognition even if everybody gets confused and they are known to fight like cats and dogs). — It’s a mystery. But as city government has clearly entered the business of real estate speculation, can we all agree that we need more transparency on these deals no matter who is in office? I’d suggest using a model like 3CDC on their web site with clear information on all their projects.

    Reply
    1. executivedreamer Post author

      Oh, yes, it still stands. There are too many questions on every single one of these deals – But Jay Kincaid is right on one thing – it’s happened on everybody’s watch, not just John Cranley’s. (However the weirdness with the football player needs somebody to explain something.) Step 1,2, and 3: more transparency, fewer Emergency Ordinances, a broader representation of viewpoints in the decision making process.

      Reply
    2. Nancy Gack

      From the January 2014 Enquirer article Kathy shared: “City of Cincinnati officials agreed to erase the debt as part of a deal for JDL Warm Construction LLC to redevelop vacant Tower Place into a parking garage and retail space that will go by the name Mabley Place.” So, which city officials?

      Reply
  6. Steve Deiters

    This investigation was linked over on “Greater Cincinnati Politics” in case you weren’t aware of it with a headline that read “Yet another stroke of fortune for a member of the donor’s club.” Implying Mr. Cranley was entangled in some way with this transaction yet it all took place before he came to office by almost a year.

    Hey, I’m all for shining lights where they need to be shown, but one has to keep in mind in the world of social media today with a light that can be laser focused to find things can rapidly disintegrate into loud noise with the only illumination coming from people with torches and carrying pitchforks when the recalling of events does not necessarily follow the actual facts as they transpired.

    Reply
  7. executivedreamer Post author

    Personally I’m ready for pitchforks, Steve. I wouldn’t be doing this for free if I weren’t. There’s a handful of pros in on the decision-making process with the taxpayer intentionally excluded. That’s not OK with me. It never has been. Not under Mallory. Not under Cranley. The question about the football player is a very, very logical one. Period.

    Reply
  8. Steve Deiters

    Pitchforks and torches are fine but I think it goes without saying accuracy is of paramount importance…….

    Reply
  9. Mary Lambert

    For the moment, I can only say, “Thank you Cincyopolis!” However, when I learned a few years ago that TJ Maxx was moving out and that Tower Place was not doing well, selling the same mediocre, but handy food in their food court that seems to be very popular in the nearly identical Kenwood Mall food court, I thought it odd that I was hearing simultaneously, the constant desperate drumbeat to “finish the Banks….oh God, it’s now or never – we have to have it”. I would believe that Tower Place and Carew Tower in general (office spaces) were being deliberately sacrificed to the latest “pie in the sky” development. I want ALL of it to succeed but can never understand the haste, the waste (Tower Place is just a retail space like any other – it could be made to work if the product it sells is in demand). It suggests deliberate planning to sacrifice one for the other which means it’s not good CIVIC planning, but somebody thinks it’s the way to go. Tax $$ that have been thrown at so many businesses (Lazarus, stadiums, and yes, an already failed restaurant in….The Banks!) that you have to wonder why banks don’t give loans for this stuff – it hey were even asked. And I will believe that downtown Cincinnati is livable – you can build all the cool condos you like – when, 1) there’s a decent grocery store, dry cleaner, shoe repair, 2) mass transit which WORKS and works quickly to take us around the city (Metro, please), and until then, I’ll be happy to risk my safety to go to dinner, theater (yes, you still have a crime problem…perception?), but I’ll never put my real estate $$ there. I’d rather lose my life than live a miserable old age having lost my money in a neighborhood that isn’t designed yet to function as one. Glad we have another parking garage though.

    Reply
    1. 5chw4r7z

      Its interesting to me as a downtown condo owner that people keep going on and on about a grocery. No one outside the city lives within walking distance of a grocer. And if you did, the developments are usually surrounded by fences so you couldn’t walk there anyhow. So I do the same thing you do, I get in a car and drive. I don’t like it but I never understood why a grocery was a deal breaker for some people living downtown.

      Reply
      1. Marc Raab

        It s a deal breaker because with the higher cost of living downtown, people expect convenience, (ie: streetcar, grocer, arts, sports) to go along with their higher costs.
        Trust me, as a family man looking for a place to support 4 people, it’s hard to justify 3k a month yet still have to drive everywhere.

        3k a month makes sense when you can ditch your car, have your gym dues included, and can entertain a number of guests without calling in Trumps helicopter.

        Unfortunately the CBD and OTR are not there…. yet.

  10. Marc Raab

    With this great piece of writing, combined with the revelation that recent Historic Conservation Board appointee (and surface parking lot fan) Shree Kulkarni donated $8300 to Cranley, it’s rather evident that the average citizen doesn’t have much influence in our city.

    So while we have bitched and complained about Cranley for 2+ years now, for all intents and purposes he seems to be playing by the rules. I was curious as to how Ndukwe can donate $12,700, and Kulkarni $8300. How Cranley can puill in a cool 26k from the Neyers. It seems our Charter doesn’t distinguish between individuals and businesses. http://city-egov.cincinnati-oh.gov/2013%20PDFs/Charter%20Article%20XIII%202013.pdf

    So Kulkarni can donate money from each of his three companies, on top of him and his wife each donating once for the primary at $1100, and again for the general election.

    And this is repeated OVER and Over, almost always with developers.

    And it is interesting that while the charter review task force seems to recommend some great ideas to fix the laws governing our city, I have yet to hear them mention anything on campaign finance. Shocking.

    But this is our charter, and we can change the rules and take back some power. I would love to piggyback a ballot referendum that fixes the abuses of the TIF system Cranley developed with a campaign finance restructuring referendum.

    The question is whether those disgruntled with these abuses are willing to take action beyond Facebook posts and blog commenting. I have had enough.

    Reply
  11. Julie Zavon

    TRANSPARENCY AND GOVERNANCE: that’s the overarching issue. If there were an easily accessible complete record of procedures followed with these property deals– who did what, when, etc.– then Cincinnatians wouldn’t have to spend hours trying to piece it together, and they wouldn’t be debating each other about the completeness and accuracy of the emerging picture of events.

    Does anyone know an example of this kind of transparency, maybe in another city, that could be a model or at least an inspiration for what we want and need in Cincinnati?

    Reply
  12. executivedreamer Post author

    Hey, Julie, thank-you. You always take the issue down to its simplest component. — As far as your inquiry – the best we’ve got in Cincinnati is the 3CDC website. (which is voluntary – they are not a public agency and therefore not subject to Ohio Sunshine laws). Every project is posted and has a pie chart reflecting financing, a description of the project, including total costs and average sales price of the units. In a perfect world there would also be links to city council votes related to the project or a clear description of the specific subsidies involved. AND that information would be coordinated with the Auditor’s site.

    Reply
  13. Pingback: Another Score for Former Bengal, Chinedum Ndukwe | cincyopolis

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