Tag Archives: Queen City Square

The Lytle Park Mystery Hole

Last week I was running to an appointment when I bumped into Mario San Marco coming out of the University Club.  He’s the President of Eagle Realty, a subsidiary of Western & Southern, the developer of Queen City Square/Great American Tower, the hotel-conversion of the Anna Louise Inn, and the new hotel proposed for the Banks, to name but a handful of their current mega-deals. (He’s big.  Really big.)

“I was just talking to one of the guys on the crew on the Lytle Park construction site,” I told him, “and he said the only reason for that hole IS to replace the utilities.”

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This picture was taken on August 16, but all the dirt is out of the hole now. This is what a 2-year project to replace ventilation fans and upgrade the lighting system looks like. Come see for yourself. It’s a damn, big hole.

The “hole” I was referring to is the giant mystery hole that looks suspiciously like the same type of construction used for the underground garage in Washington Park and I knew Mario would be interested since he’d sent me an email on July 27th regarding my post, “Calling all Engineers and Construction Professionals.”

washingtonparkgarage

This is what the underground garage looked like during construction in Washington Park. You can see why a neighbor might get confused.

“Your posting of rumors that you have not taken the time to validate does nothing to further the efforts  of attempting to restore 311 Pike Street and the former Anna Louise Inn Building for adaptive reuse, with positive impact for our neighborhood and City. Had you called me or emailed me and waited for a response to your inquiry of the State of Ohio, you could have used your forum to make a positive statement that would have reassured stakeholders that the work being done by the State was federally/state mandated and will serve to maintain the park for many years to come. You can be assured that none of the work on the tunnel is to accommodate any plans we have for the Lytle Park neighborhood.”

While Mario’s offer to answer my questions regarding the Ohio Department of Transportation project in a public park is generous, I’m stymied. Why would I contact an executive of a private corporation about a public project on publicly owned land?   I thought the logical source for information would be officials who have a fiduciary responsibility for taxpayer interests.  And yet this is the second time that Mario has called me to task for not coming to him on such a matter. After 6 months of calls to the Cincinnati Public Schools, the Port Authority, the Hamilton County Auditor, city administrators and elected representatives, finally Western & Southern summoned me to their office and told me where to look for the semi-annual property tax payments they’ve been making to our public schools for Queen City Square.  (Indeed, it was a lot faster when the pros gave me the clues – but, come on, somebody in the public sector should have known where to look for the tax payments on one of our biggest public-private partnerships ever-completed.)

“Were you telling them how to do the job?” Mario chided when he heard I was talking to the construction guys.

Which is pretty much the same attitude I always get from the professionals who have made all the decisions about our “public-private” partnerships behind closed-doors for decades.

This is none of my business.  I don’t know enough.  About public financing.  About real estate development.  About journalism.  I should go back to school before I write about these complicated matters.  I should trust the professionals.

Except I don’t.

Because all the professional-experts earn their livings from building these big projects, even the ones who work for public agencies – and the professional journalists clearly can’t afford to alienate the business community if they don’t want advertising pulled. Our experts are not capable of being objective.  Objective sources I can identify – long-term trends in property tax income, infant mortality rates, the poverty rate, and population figures – all of these sources are flashing the exact same great big giant red neon warning signs:  Whatever we’ve been doing based on the advice of our experts hasn’t been working.  If the point is not just to build buildings but to improve the standard of living for all the residents of Cincinnati, the results have been a disaster.

This country was founded on democratic principles of citizen participation in the decision-making process.  We not only have the  right to ask questions about public projects.  It is our responsibility to ask them. The reason for Ohio Sunshine Laws, for open records and meetings is so that we can verify the integrity of the democratic process as well as fair and even application of our laws.  Access to information is not enough in and of itself.  We have to use that information to demand accountability so that we can make better decisions about our collective future.

Whether or not the Lytle Park Mystery Hole turns out to be a garage or just a hole is irrelevant to my responsibility to raise awareness about decisions from which the public has always been intentionally excluded.  The public needs to ask more questions. Lots of them  And hard ones.  If developers and public administrators find the questions annoying, these projects should be undertaken with private money, not the public’s.

BTW, I did call Mario in response to his email and even offered to let him write his own post for cincyopolis.  He never returned my call or acknowledged my emails.

A Primer in Garage Building in Cincinnati

There’s no such thing as too much parking in Cincinnati, Ohio.  According to current public policy in this city, every problem we have can be solved with a one-size-fits-all answer: taxpayers pay for more garages.  Taxpayers paying for more garages will result in more jobs.  More jobs will generate more income-tax revenue to pay for basic services to fill our pot holes and hire more police which will make middle class homeowners happy “customers” (that’s what the City Manager calls us these days). More jobs will apparently alleviate poverty, reverse our absurdly high incarceration rates, stop violence and get people off drugs.

Since we are making these infrastructure investments as fast as we can – and they are very expensive – it behooves us to become garage literate, Citizens.

image (8)Here are the costs for three of our most recent garage projects.  But the figures are not entirely apples-to-apples fair.

Western & Southern’s Queen City Square figures are inflated due to the fact that I did not try to back out non-garage costs from the total $65,000,000 Tax Increment Financing package.  We didn’t just get garage space.  We purchased a multi-storied pedestrian promenade, two giant escalators, a plaza and quite a bit of ground level retail for our money.  It’s a pretty sophisticated set-up and Eagle Realty probably did a very decent job of holding garage costs to within 10-15% of the national average.

Of course, Oakley Station’s $6,200,000 structure hasn’t broken ground yet.  We can see that our development professionals must have used the same national average costs for garage construction I did for their projections.  New construction always costs more than we think it will and this project will probably be no different.  Let’s just hope it comes in close.

That leaves the mysterious dunnhumby, now known as 84.51, a 3CDC public-private partnership with Kroger’s latest acquisition.  I contacted Anastasia Mileham, VP of Communications, five times over the past three months asking for a clarification on why construction costs were so high.  At dunnhumby taxpayers bought 1,003 spaces for somewhere between $60,000,000 and $70,000,000.  (The figure tended to float a bit as we talked.) She explained that only the top four floors of the 9 story structure are currently needed for offices, but they anticipate significant growth and it was decided to build the lower floors so that they could someday be converted. Ramp design was complicated, ceiling height had to be 12 feet as opposed to the normal 10, and two floors of the garage were built below ground.

Call me annoying – but that didn’t seem an adequate explanation for costs more than three times the national average.  So I did what I always do – kept asking questions.  I asked super-smart staff members of City Council.  I mentioned my concerns to other developer friends.  I even called Robert Bertsch, Sr. (otherwise known as Bob), the guy who is in charge of development projects for this area of town in city administration.  He called me back within 5 minutes, was funny and charming and forthcoming. But he couldn’t tell me why the project cost so much more than anticipated when Council approved the deal in June of 2012. (They voted on $88 million.  It came in around $140 million.)  “You’ll have to ask 3CDC,” he said.

So I sent my little-Kathy charts to Anastasia and explained why I was confused.  More than 2,200 spaces at Queen City Square cost us about the same as 1,003 at dunnhumby.  I told her I would have to start to ask publicly why this building cost so much for us to build.  And I heard nothing.

I hate to write this post.  Because I’m a 3CDC fan.  I think they’ve done about as good a job as is humanly possible in Over-the-Rhine and on Fountain Square.  But since City Hall clearly intends to use 3CDC as their preferred developer on parking garages in the city center and we are building them as fast as we can, it’s important that we honestly evaluate our garage-outcomes.

The History of Tax-Increment-Financing in the Queen City (Oh my!)

Tom Stapleton (Senior VP from Eagle Realty) and I exchanged a few emails recently and I happened to mention that I thought Great American Tower was the first use of TIF project bonds in Cincinnati and “there is no other way for citizens to critically examine this financing structure without citing specifics about Great American Tower.”

Tom responded, “What do you mean by the statement “this was the first use of TIF project bonds”?  Project-specific TIF financing has been around for a long time, so I don’t understand your comment.”

He was kind enough to follow up with a link to the Ohio Development Services website that lists all the active Tax Increment Financing Districts and Projects in the state.  Tax Increment Financing is a type of financing structure that uses tax payments (that would have been used for basic services like police and trash collection) to pay down debt associated with a specific building project instead.

Of course, Tom’s right.  He’s the pro.  TIFs have been used for quite some time, 32 currently active within city limits.  19 of those are Districts that benefit a wide variety of businesses.  The other 13 were established for specific projects, usually pretty big ones.

Our oldest TIF was for Fountain Square South parking garage in 1980.

In 1984, we used the TIF tool to build Hyatt/Saks.  Partners that owned the Hyatt filed for bankruptcy protection in 1994 and a foreclosure action was sought on the property in 2008. The hotel was sold in 2009 at sheriff’s auction after years of financial woes.  The TIF, however, remains outstanding and benefits the current owner of the property.

10 years later in 1994 we used another project TIF to finance the  square and parking garage at Fountain Square West.

A TIF was used again in 2001 for the Center of Cincinnati Milicron project in Oakley, a Neyer development.

In 2004 we established a project-based TIF for the first phase of Tom’s project: Queen City Square, now owned by the Port Authority with Western & Southern named in the Master Lease Agreement.  The second phase was established in 2008.  Total financing amounts to over $323 million.  Redirection of property tax payments to pay down the debt of both buildings and their garages will continue until all the bonds have been paid off, probably around 2038. (Cincinnati Public Schools still receive 25% of the payment and another part of the payment goes to finance other development.)

The Baldwin Building just purchased by Neyer was originally granted a TIF project in 2007.  They will most likely continue to benefit from the arrangement as they reconfigure the property into apartments.

Neyer was awarded a project TIF to develop the Keystone Park Project, a $100,000,000 office campus in Evanston in 2008.

The dunnhumby garage received the benefits of TIF financing in 2013.  3CDC holds the master lease on the $70,000,000 garage.  (The headquarters portion of the building will receive a 15-year Community Renewal Act abatement.)

5 new TIF projects have also been recorded as of 03/02/2015:  3D Color Project Development, Centennial TIF, Emery Pineapple Project Development Public Improvement,  P&G June Street access, and Rumpke Project, Public Improvement.  No details have been provided for any of these new Tax Increment Financing deals.

So – Tom –  thank-you for correcting me.  Tax Increment Financing has been used for projects in Cincinnati since 1980.  But it’s been a fairly rare occurrence, Queen City Square/Great American Tower was the largest private financing to date three times over, and we have used this 30-year arrangement for only a handful of companies.  I stand by my statement that your financing structure is one-of-a-kind – no other building is owned by the Port Authority with the developer holding a master lease – and it is important for citizens to study this particular example and understand it.

It’s especially important right now, as the use of this highly advantageous, 30-year tax subsidy is apparently gathering steam in the city of Cincinnati – all this while we project at least another five years of budget deficits.  Let’s hope our elected officials don’t get so greedy for growth that they forget what can go wrong and cripple the next generation of hard-working middle-class taxpayers who will have to cover the costs of their great expectations.

One Small Step for Cincyopolis – one giant leap for transparency

Yesterday’s letter from Tom Stapleton, Senior Vice President of Eagle Realty Group, marks the beginning of a new era in Cincinnati.  The tone was co-operative, the information, a helpful and specific record of the logic behind public subsidy on one of the biggest for-profit projects Cincinnati has ever under-taken.  My only frustration is that it took 9 months of relentless arm-twisting to get to these numbers in a format that is easy to understand and can be shared.

Yet Tom and his boss, Mario San Marco, would tell you that those 9 months were completely unnecessary.  “Why didn’t you just ask us?” Mario said during our conversation last week. And maybe he’s right.  Maybe I should have just picked-up the phone and asked.

Except for two things:

(1) There’s a steep learning curve involved in commercial real estate development, especially the financing part of it – and in the beginning I didn’t even know what I didn’t know, much less what questions I needed to ask.

(2) You don’t really want to ask the people who are making the money off the project for independent and complete analysis of their building.  I thought the government entities that facilitated this mega-Tax-Increment-Financing Project should – in a perfect world – be the keepers of record and my best source of verifiable data.

But the world is not perfect, Citizens. The only page on the internet dedicated to public involvement on Great American Tower is on the Port Authority web site, a couple of paragraphs that are more public relations material than accurate and complete financial data with measurable benefit-expectations clearly spelled-out.  When I pushed for more information about the “whys” of city involvement early on, one of the most knowledgeable public employees associated with Queen City  Square admitted, “We did it because City Hall told us to do it and you’ll have a hard time finding anybody there to talk to since those people are all gone.”  This is a building that opened 4 years ago – not 30 – and we should have a written, on-line record accessible to the public in a format that is easy to understand – not 50,000 pages of documents in boxes in storage.

Let us rejoice, Cincinnati.  In the scope of world problems, this one is relatively easy to solve.  It’s not poverty.  It’s not the Middle East or global warming.  This is numbers on a page and all it takes to fix it is commitment and some focus.  We’ve even got a model to use – not a perfect model – but a darn good start:  3CDC dedicates a page to every single one of their projects complete with financing details and links to informational videos for people who want to learn more.  (Wouldn’t it be nice if they could add information about how these deals impact property taxes?)

Screenshot 2015-04-09 at 8.55.38 AM

Tom and Mario, I have a lot to learn about how a city gets built – but here’s one thing I know for absolute sure:  If we discipline ourselves to do our homework and ask the important questions before we make investments that will be with us for generations, and if we put our assumptions out in public where everybody can see what we are doing and why we are doing it – we will make better decisions.  I learned that as a financial consultant and the principles of good investment are the same for families as they are for cities.  Public scrutiny is not a cumbersome evil to be avoided.  It’s a crucial step in the decision making process that will help politicians, public administrators and – yes!  – even private, for-profit developers build a really, really great city where everybody wants to live.

“Guess who this is? . . . It’s Mario.”

SAN_MARCO_MARIO_Eagle_WS_0662

My friend, Mario San Marco

Mario San Marco, President of Eagle Realty Group, and I have a history.  It started in 2011 when I concocted an extravaganza called “Cincinnati Dreams Italy” in conjunction with the Taft Museum. Even though I’d never met him before I wrote Mario a letter asking if we could use a few of his buildings and – the crazy Italian – he said ‘yes.’  It was a ridiculous undertaking that included over a hundred local artists, 3 locations, and the installation of a bocce court in the middle of Lytle Park – all in less than 6 weeks.

A few days before the opening, my phone rang and it was the president of the United States Bocce Federation.  “It’s been brought to our attention that you intend to hold a tournament without official sanction from our governing body,” he said.  I tried to be polite.  I explained that the tournament was about building community, that I didn’t really know anything about bocce or the Federation or sports in general.  The conversation went on for several minutes before Mario finally identified himself.  I’d been punk’d by the best.  He was en route to a family vacation with one of his sons riding shotgun, the whole exchange broadcast on speaker.

So when I answered my cell phone the other day my first reaction was to assume someone was playing a joke on me.  But it was really Mario.  He wanted to get me together with Tom Stapleton, Eagle’s senior vice president, so they could clarify the facts regarding Great American Tower.  We agreed to meet the following afternoon at his office in the Guildford Building.

Am I brave?  Or ridiculously foolish?  Our meeting was on Good Friday and the front door was locked when I arrived.  I had to call upstairs for somebody to come down and let me in, the whole place dark and empty, me, alone, with these two powerful, important men on their home turf.

Mario was very serious.  He communicated that Western & Southern cared deeply about its reputation and readers of my blog were getting the impression of wrong-doing, particularly related to my focus on their Queen City Square development. The real purpose of our emergency pow-wow was to hand-deliver a formal letter of clarification Tom had prepared.  Until Mario handed me my copy of the document, I hadn’t even noticed the blue folder sitting in the middle of the conference table.

Mario and Tom said they seldom grant interviews because the media so often gets the facts wrong. In order to avoid any possibility of mis-interpretation, this is the original text of that letter in its entirety:

W&S page 1

W&S page 2

As we shook hands before I left, Tom smiled and handed me his business card.  “Call me with any questions,” he said – and he sounded sincere.  So let’s call this the start of a new version of public-private partnership in developing Cincinnati, one where citizens and for-profit developers work together in a spirit of trust and cooperation to create a great place to live.  Tomorrow I’ll share a few comments about Tom’s letter and my first steps towards team-building.

"Guess who this is? . . . It's Mario."

SAN_MARCO_MARIO_Eagle_WS_0662

My friend, Mario San Marco

Mario San Marco, President of Eagle Realty Group, and I have a history.  It started in 2011 when I concocted an extravaganza called “Cincinnati Dreams Italy” in conjunction with the Taft Museum. Even though I’d never met him before I wrote Mario a letter asking if we could use a few of his buildings and – the crazy Italian – he said ‘yes.’  It was a ridiculous undertaking that included over a hundred local artists, 3 locations, and the installation of a bocce court in the middle of Lytle Park – all in less than 6 weeks.

A few days before the opening, my phone rang and it was the president of the United States Bocce Federation.  “It’s been brought to our attention that you intend to hold a tournament without official sanction from our governing body,” he said.  I tried to be polite.  I explained that the tournament was about building community, that I didn’t really know anything about bocce or the Federation or sports in general.  The conversation went on for several minutes before Mario finally identified himself.  I’d been punk’d by the best.  He was en route to a family vacation with one of his sons riding shotgun, the whole exchange broadcast on speaker.

So when I answered my cell phone the other day my first reaction was to assume someone was playing a joke on me.  But it was really Mario.  He wanted to get me together with Tom Stapleton, Eagle’s senior vice president, so they could clarify the facts regarding Great American Tower.  We agreed to meet the following afternoon at his office in the Guildford Building.

Am I brave?  Or ridiculously foolish?  Our meeting was on Good Friday and the front door was locked when I arrived.  I had to call upstairs for somebody to come down and let me in, the whole place dark and empty, me, alone, with these two powerful, important men on their home turf.

Mario was very serious.  He communicated that Western & Southern cared deeply about its reputation and readers of my blog were getting the impression of wrong-doing, particularly related to my focus on their Queen City Square development. The real purpose of our emergency pow-wow was to hand-deliver a formal letter of clarification Tom had prepared.  Until Mario handed me my copy of the document, I hadn’t even noticed the blue folder sitting in the middle of the conference table.

Mario and Tom said they seldom grant interviews because the media so often gets the facts wrong. In order to avoid any possibility of mis-interpretation, this is the original text of that letter in its entirety:

W&S page 1

W&S page 2

As we shook hands before I left, Tom smiled and handed me his business card.  “Call me with any questions,” he said – and he sounded sincere.  So let’s call this the start of a new version of public-private partnership in developing Cincinnati, one where citizens and for-profit developers work together in a spirit of trust and cooperation to create a great place to live.  Tomorrow I’ll share a few comments about Tom’s letter and my first steps towards team-building.

Cincinnati Design Disaster Awards: The Results are In!

Why didn’t somebody tell me that Eric Avner is funny?

Just in case you haven’t been paying attention, Eric is the Vice President of the Haile Foundation and Senior Program Manager – Community Development.   But in an earlier phase of his evolution, Mr. Avner was an urban planner for the city of Newport with a background in historic preservation – so he pays more attention to building design than normal human beings.

Last week, a few days before the truly prestigious Cincinnati Design Awards, Eric set-up a Facebook page, sent out a press release and gave everybody 36 hours to nominate their choices for “less than stellar achievements in local architecture, interior design, graphic design, and landscapes.”  All tongue-very-much-in-cheek, of course.

In case you missed the official announcement, here are this year’s winners:

Winner: Best Economy of Design 

uc banks

Kudos to the City, County and University of Cincinnati for saving a boatload of cash by using the same design twice. The jury repeatedly confused the designs of The Banks and U Square, proving the issue of homogenization of design is slowly overwhelming our built environment. After all, it’s clearly a waste of time and money to come up with original designs for every location. Perhaps we’re just returning to the historical trend of architectural pattern books. If it was good enough for Palladio, Thomas Jefferson and Andrew Jackson Downing, it’s probably good enough for us, too.

Winner: Best New Student Housing

incline village

Oh wait, nevermind. That’s Incline Village.    

(If I’m not mistaken this is Mayor Cranley’s condo development in Price Hill.)

Winner: Best Fear of Ornament

mercer

The latest phase of Mercer Commons demonstrates what happens when “streamlined” is taken to the extreme. Someone appears to be listening to Adolf ‘Ornament is Crime’ Loos, Walter ‘Avoidance of Applied Decoration’ Gropius, and Mies ‘Less is More’ van der Rohe a little too literally. Let’s show some flair, people!

DOUBLE WINNER: Best Demonstration of Garagaphobia & Best Engineered Obsolescence 

oakley station
In an era where homebuyers flock to walkable neighborhoods, where sewers are overwhelmed by stormwater runoff, and where landlocked cities strive to use limited land wisely, it’s comforting to know that we still demand massive surface parking lots. Oakley Station at The Center of Cincinnati has more surface lots than anyone else in town. But hey, parking garages are scary.

We’re also grateful that the developer of Oakley Station at The Center of Cincinnati chose to build his big boxes with materials that may allow the community a chance to redevelop the site again in 20 years.

Winner (TIE): Best Place to Watch the World Drive By While You Eat Your Breakfast Cereal

delta 1 delta 2

Kudos to One Rookwood in Norwood’s Rookwood Exchange and Delta Flats in Columbia Tusculum for taking advantage of the yet-untapped market of people who want to live close to highways. Not just close, but REALLY close. Close enough to feel it. Like 20 feet from your balcony to Columbia Parkway. Or 50 feet from your bedroom to I-71’s northbound lanes. Ah, home sweet home.