Tag Archives: real estate development

When Government Works, It's a Beautiful Thing

People love to complain about City Hall, how nothing ever changes and how disappointing the political process is.  Oddly enough, that’s the exact opposite of what I’ve found to to be true.  I’ve only cared enough to get deeply involved in public decision-making twice (my other issue was bike and pedestrian issues in 2008), but both times I have been amazed by the talent, sincerity, and committed intelligence of the people who work there.  If I put in the time to learn and don’t give up, my government listens.

This week, when City Council returned from summer recess, was particularly faith-restoring.   My goal was to be the first in their doors to try to focus some political will on how we make development decisions in Cincinnati and my first appointment was with P.G. Sittenfeld.  Of course, PG is your dream politician.  He’s really smart, articulate, takes a good picture, thrives on the back-and-forth of public debate, and is very comfortable being in the public spotlight.  But if you spend much time at City Hall at all, it doesn’t take you long to figure out that the real deep-thinking in political life happens on a staff-level.  It’s the legislative aides who are responsible for researching issues and helping our representatives develop intelligent positions and strategies.  

Lucky for me, I arrived half an hour early for my appointment and then PG was a little late.  So Elida Kamine, PG’s cracker-jack legislative aide, and I decided to go ahead and start without him.  Even though Elida only came on board a little over a year ago, there’s already an almost mythic quality to the way people talk about her around town, especially among young policy wonks.  She’s the one who gave up a six-figure income in the corporate world to make a difference in the public sector.  

I’d seen Elida a couple of times before our meeting – always across a crowded room, sitting quietly and taking notes, offering information when PG asked for clarification.  But something impressed me from the beginning of my exchanges with his office.  She made me feel like she really remembered who I was, cared, and was actually reading my work and trying to figure out how to best address my concerns.  

After a few minutes of introductory chatter, she pulled a piece of City of Cincinnati letterhead from a nearby file and pushed it to the middle of the small laminated desk she must share with P.G. when he’s in the office.  “We’re entering a motion at tomorrow’s Council meeting,” she said quietly.  “Its just for a report, but everybody has signed.”

She talked about it in such a quiet humble way, that I almost missed how important it was, this little motion she’d drawn-up.

MOTION

We move that the Administration provide a report to Council setting forth the policies in place to determine appropriate financial assistance and incentives for businesses locating in and creating jobs in the City of Cincinnati;

We move further that the Administration provide the guidelines it uses to evaluate proposed incentives or other financial packages to Council; and

We move further that the report include updates from the Tax Incentive Review Commission: and

We move further that the Administration provide the report by September 8, 2014.

And at the bottom, the motion was signed by every single Council member: Sittenfeld, Mann, Flynn, Young, Simpson, Smitherman, Winburn & Murray.

It seems so little, so nothing.  It’s not partisan, not progressive or conservative, not urban or neighborhoods, not cars or bikes. No ballot initiatives.  No charter amendments.  No big money investments.  It’s just a simple request for our City Manager on day one of his new job to focus Cincinnati’s attention on how we make decisions about how to build a city together.

It might not seem like much to you, this simple little motion.  But I’m pretty sure it’s all we need to start to make better, more informed decisions in Cincinnati about a very complex issue.  Because I have complete faith in us as a community, that we all care deeply, all want a good life for everybody, that we already have everything we need if we just use it effectively and that we are smart enough to figure it out together.  When we focus our collective attention and work together, we do amazing things on a regular basis.

Thanks, Elida Kamine.  This simple little motion is all we need to get us started in the right direction.

 

When Government Works, It’s a Beautiful Thing

People love to complain about City Hall, how nothing ever changes and how disappointing the political process is.  Oddly enough, that’s the exact opposite of what I’ve found to to be true.  I’ve only cared enough to get deeply involved in public decision-making twice (my other issue was bike and pedestrian issues in 2008), but both times I have been amazed by the talent, sincerity, and committed intelligence of the people who work there.  If I put in the time to learn and don’t give up, my government listens.

This week, when City Council returned from summer recess, was particularly faith-restoring.   My goal was to be the first in their doors to try to focus some political will on how we make development decisions in Cincinnati and my first appointment was with P.G. Sittenfeld.  Of course, PG is your dream politician.  He’s really smart, articulate, takes a good picture, thrives on the back-and-forth of public debate, and is very comfortable being in the public spotlight.  But if you spend much time at City Hall at all, it doesn’t take you long to figure out that the real deep-thinking in political life happens on a staff-level.  It’s the legislative aides who are responsible for researching issues and helping our representatives develop intelligent positions and strategies.  

Lucky for me, I arrived half an hour early for my appointment and then PG was a little late.  So Elida Kamine, PG’s cracker-jack legislative aide, and I decided to go ahead and start without him.  Even though Elida only came on board a little over a year ago, there’s already an almost mythic quality to the way people talk about her around town, especially among young policy wonks.  She’s the one who gave up a six-figure income in the corporate world to make a difference in the public sector.  

I’d seen Elida a couple of times before our meeting – always across a crowded room, sitting quietly and taking notes, offering information when PG asked for clarification.  But something impressed me from the beginning of my exchanges with his office.  She made me feel like she really remembered who I was, cared, and was actually reading my work and trying to figure out how to best address my concerns.  

After a few minutes of introductory chatter, she pulled a piece of City of Cincinnati letterhead from a nearby file and pushed it to the middle of the small laminated desk she must share with P.G. when he’s in the office.  “We’re entering a motion at tomorrow’s Council meeting,” she said quietly.  “Its just for a report, but everybody has signed.”

She talked about it in such a quiet humble way, that I almost missed how important it was, this little motion she’d drawn-up.

MOTION

We move that the Administration provide a report to Council setting forth the policies in place to determine appropriate financial assistance and incentives for businesses locating in and creating jobs in the City of Cincinnati;

We move further that the Administration provide the guidelines it uses to evaluate proposed incentives or other financial packages to Council; and

We move further that the report include updates from the Tax Incentive Review Commission: and

We move further that the Administration provide the report by September 8, 2014.

And at the bottom, the motion was signed by every single Council member: Sittenfeld, Mann, Flynn, Young, Simpson, Smitherman, Winburn & Murray.

It seems so little, so nothing.  It’s not partisan, not progressive or conservative, not urban or neighborhoods, not cars or bikes. No ballot initiatives.  No charter amendments.  No big money investments.  It’s just a simple request for our City Manager on day one of his new job to focus Cincinnati’s attention on how we make decisions about how to build a city together.

It might not seem like much to you, this simple little motion.  But I’m pretty sure it’s all we need to start to make better, more informed decisions in Cincinnati about a very complex issue.  Because I have complete faith in us as a community, that we all care deeply, all want a good life for everybody, that we already have everything we need if we just use it effectively and that we are smart enough to figure it out together.  When we focus our collective attention and work together, we do amazing things on a regular basis.

Thanks, Elida Kamine.  This simple little motion is all we need to get us started in the right direction.

 

The Insane History of Desperation at 5th & Race

Let’s say you’ve found the perfect lot to build your dream “investment” at the perfect location and the current owner is willing to sell it to you with a few conditions.  Would you sign this contract?

1.  The seller receives $6,000,000 cash for the lot.  

2..  The seller will be the developer of your project and be paid to do all design & construction.

3.  You have to take the majority of the financial risk and put up almost $32,000,000.  The seller throws in the lot proceeds, $12, 500,000 in cash, and takes out a $10,000,000 loan.

4.  The seller will then lease your project, paying a minimum rent of less than 1% of your investment for 5 years, slightly more for the next 5, and $1 a year thereafter plus percentage rent if the space stays full and profitable.  

5.  Oh yeah, one last little minor detail – the deed to the property includes a “right of re-entry” so that after 50 years the seller can require demolition of the entire project and you have to sell the property back to the original owner for $1.   

A FRIGGIN’ DOLLAR!!!!!!!  Put in 32 mill, get back a dollar.  A $55,000,000 project designed for obsolescence before the  first shovel of dirt was turned, to be replaced by a bigger and better office tower.   It’s insult to injury after also giving up rights to property and sales taxes.

5th

The original plan was to renovate the building. But Western & Southern demolished it and turned it into a parking lot for the next decade.

Would any sane, financially literate human being with half-a-brain sign this contract?  Not unless they were desperate.

And yet my fellow citizens, these are the exact terms City Council signed off on in an Emergency Ordinance on January 7,1998 regarding the development of 5th & Race.  Western & Southern was the seller.  They had an agreement to sublease the retail space to Maison Blanche, a subsidiary of Mercantile Department Stores – the old parent company of McAlpin’s. But the world changed.  Maison Blanche pulled out of the deal.  In fact, they don’t even exist anymore.  This is now the site of the new Dunhumby headquarters and 3CDC is in charge.  

In all fairness to the Council members who voted unanimously for this ordinance, 1998 was a different Cincinnati with long blocks of empty storefronts and steady population decline.  There weren’t a bunch of developers standing in line to help us create a different future and Western & Southern was in a unique position to negotiate extraordinarily favorable terms.  

Why even care about this old contract?  First, it’s good to remind ourselves how quickly the world changes these days.  A mere 16 years later nobody’s talking sky walks or department stores anymore.  People actually live downtown in the spaces Shillito’s and McAlpin’s used to occupy.  And of course we know that Western & Southern finally got to build that giant office tower they always wanted, just a few blocks further east on Fourth – also on nauseatingly favorable terms – and in spite of the clear trend for shrinking corporate office staffs.  

“Those who do not study history are doomed to repeat it,”  are wise words for a city to remember. With so much interest in the Cincinnati Renaissance right now, this is the perfect time to re-evaluate what kind of returns we expect on our development dollars and to make sure our Development Director doesn’t give away any more stores.  

The Insane History of Desperation at 5th & Race

Let’s say you’ve found the perfect lot to build your dream “investment” at the perfect location and the current owner is willing to sell it to you with a few conditions.  Would you sign this contract?

1.  The seller receives $6,000,000 cash for the lot.  

2..  The seller will be the developer of your project and be paid to do all design & construction.

3.  You have to take the majority of the financial risk and put up almost $32,000,000.  The seller throws in the lot proceeds, $12, 500,000 in cash, and takes out a $10,000,000 loan.

4.  The seller will then lease your project, paying a minimum rent of less than 1% of your investment for 5 years, slightly more for the next 5, and $1 a year thereafter plus percentage rent if the space stays full and profitable.  

5.  Oh yeah, one last little minor detail – the deed to the property includes a “right of re-entry” so that after 50 years the seller can require demolition of the entire project and you have to sell the property back to the original owner for $1.   

A FRIGGIN’ DOLLAR!!!!!!!  Put in 32 mill, get back a dollar.  A $55,000,000 project designed for obsolescence before the  first shovel of dirt was turned, to be replaced by a bigger and better office tower.   It’s insult to injury after also giving up rights to property and sales taxes.

5th

The original plan was to renovate the building. But Western & Southern demolished it and turned it into a parking lot for the next decade.

Would any sane, financially literate human being with half-a-brain sign this contract?  Not unless they were desperate.

And yet my fellow citizens, these are the exact terms City Council signed off on in an Emergency Ordinance on January 7,1998 regarding the development of 5th & Race.  Western & Southern was the seller.  They had an agreement to sublease the retail space to Maison Blanche, a subsidiary of Mercantile Department Stores – the old parent company of McAlpin’s. But the world changed.  Maison Blanche pulled out of the deal.  In fact, they don’t even exist anymore.  This is now the site of the new Dunhumby headquarters and 3CDC is in charge.  

In all fairness to the Council members who voted unanimously for this ordinance, 1998 was a different Cincinnati with long blocks of empty storefronts and steady population decline.  There weren’t a bunch of developers standing in line to help us create a different future and Western & Southern was in a unique position to negotiate extraordinarily favorable terms.  

Why even care about this old contract?  First, it’s good to remind ourselves how quickly the world changes these days.  A mere 16 years later nobody’s talking sky walks or department stores anymore.  People actually live downtown in the spaces Shillito’s and McAlpin’s used to occupy.  And of course we know that Western & Southern finally got to build that giant office tower they always wanted, just a few blocks further east on Fourth – also on nauseatingly favorable terms – and in spite of the clear trend for shrinking corporate office staffs.  

“Those who do not study history are doomed to repeat it,”  are wise words for a city to remember. With so much interest in the Cincinnati Renaissance right now, this is the perfect time to re-evaluate what kind of returns we expect on our development dollars and to make sure our Development Director doesn’t give away any more stores.  

Stay Calm and Go to the Top of the Foodchain

Anger can be a very productive emotion if you learn how to use it properly.  But it requires a conscious effort.  Let’s take a look at my most recent bout when I was being given the run-around by the Port Authority regarding Western & Southern’s equity participation in Queen City Square.  (See the blog post, Now I’m Pi$$ed)

1.  Their Associate Counsel sent me a 63-page document that did not answer my question and told me to hire a lawyer to read it for me.

2.  Since I had copied the specific employee who negotiated the original deal for the city on my request, this was very frustrating and I did not feel they were making a good-faith effort to supply the information. Grrrrrrrrr. The implication that I was too stupid to understand a legal contract did not help my mood and I started using terms like “that little pip squeak.” Double grrrrrrrr.  “Stupid” is the worst thing anybody can imply since I try very hard to do more homework than anybody else in any room.  My poor husband – who really doesn’t understand why I don’t just mind my own business – had to pretend like he was listening to a lot of complicated real estate jargon that doesn’t directly impact his life.  

3.  Then I slept on it.

4.  And when I woke up this morning, I wasn’t mad anymore and knew from the bottom of my heart that I was not a powerless, little insect that the Port Authority could flick-off at will, a mere annoyance on a list of much more important considerations.  I am a Citizen and there’s nothing more important.

Still in my nightgown, I created a multi-pronged plan to march towards change.  And the change I’m looking for is increased transparency, a better educated electorate, and more meaningful community conversation.  None of it requires casts of thousands or any money.  It is a commitment of time, will, and faith in the intelligent goodness of my fellow citizens.  I believe in us.

The first item on my action-list was to go back to the Port Authority and ask for the intervention of the woman who runs the show, Executive Director, Laura Brunner.  

Hello, Laura.  Christopher Recht has been very responsive in my recent requests for public documents regarding the Queen City Square project.  But we seem to have reached an impasse on the question of any retained equity ownership of the building by Western & Southern Life Insurance or any of their affiliates.  Since the building is currently on the market two years after completion and the Lessee can terminate the lease on or after October 1, 2015 this is important for the citizens of Cincinnati to understand.

 
Christopher’s first response to my query was a one-page summation of the project financing and it clearly included no discussion of division of proceeds should the building be sold. When I told him that this was not the information I needed he sent the 63 page Lease Agreement and suggested I consult an attorney for interpretation of the document.  
 
I have seen a 15% percent retained ownership mentioned in other sources, so I am puzzled as to why I don’t see any reference to such an arrangement in documents provided by the Port Authority.  Susan Thomas negotiated the terms of the project for the City and I was hoping this would be a fairly simple question for her to answer.
 
As Christopher implied in his most recent email, perhaps I don’t have sufficient expertise to read and understand legal contracts without going to the expense of paying an attorney. But if that is the case, then I would suggest we need a uniform executive summary of the most important financial facts regarding each of the Port Authority’s projects that is accessible on your website.  I’m sure this improvement in communication would save a lot of valuable time for your staff in responding to inquiries such as mine.  Currently there is no standardization and the information on Queen City Square appears to have been written by a public relations professional, seriously lacking in financial detail. Your biggest project to date by ten-fold, it deserves far greater transparency and I would be happy to volunteer my time to help the Port Authority develop a standardized format for use by elected public officials, citizens, the press, and commission members.
 
In the meantime, I would very much appreciate it if Christopher could supply me with a reference to the particular section and page numbers in the Lease Agreement that pertain to division of proceeds on sale of Queen City Square.  If my other source is wrong in regard to equity participation, that would also end our conversation and I could feel comfortable in my understanding of the relationship of the city to this project, but I would like somebody to say it out loud. 
 
Thank-you for your help,
Kathy Holwadel

Fellow Citizens, we’re not crazy and we’re not stupid.  There’s always something we can do to disrupt the patterns of secrecy that create an unhealthy balance of power, especially now that we can network through social media.  When you get that yucky feeling in the pit of your stomach about what’s going on, dig in your heals and refuse to go away.   Because that’s what they count on.   Not because our public officials and administrators are bad people.  They’re just like the rest of us, always slightly over-whelmed and trying their best to do some very complicated jobs – so, of course, it would be easier for them if we Citizens would trust their judgement and not worry our pretty little heads about these complicated political issues.  

Ask questions.  Get angry.  Pick up a pen.  Talk to each other.  We are powerful, Citizens, and nobody is more important.

Now I'm Pi$$ed

Five months ago I decided to learn about how real estate development decisions are made in the City of Cincinnati.   And the first thing I noticed was that nobody wanted to talk about it.

People I’ve known and adored for years in the private sector, people who used to invite me for beers, now cross to the other side of the street when they see me coming.  If they answer my emails at all it’s short and to point.  And those are the folks that acknowledge my requests.  I’ve worked on several big civic projects since I retired from the financial services industry almost fifteen years-ago and I’ve never gotten the no-answer/answer like I have on this one. 

But city employees have to answer all inquiries.  Not always the first time you call.  Maybe not even after the third email.  But if requests are made for documents on specific topics referencing the Ohio Public Records Act, it initiates a formal preceding through the legal department that has to be documented and eventually folks comply.  

This month I tackled the Queen City Square project on 4th St., the tallest building in town, AKA Great American Tower.  I wanted to know why the Port Authority, a “quasi”- (still haven’t figured out what that “quasi” means) public agency owns it.  Since when has city government started speculating in real estate?   Western & Southern Life insurance owned the parking garage on the lot and had talked about building for years.  What did they get out of the development deal and why didn’t they want to own this building themselves if it’s such a great investment?   Apparently nobody is super-excited about long-term ownership of the thing because even though the Tiara Building was just finished in 2012, it’s already on the market to be sold.  

I’m proud of the progress I’ve made on my real-estate development education.  This Spring I had no idea what Tax Increment Financing was all about, or triple-net leases or air rights.  It was a foreign language.  But little by little, contract by contract, in spite of a total, absolute and complete lack of transparency designed to make sure the electorate will never understand what’s going on with their tax dollars, I can now hold my own in a conversation on the topic with almost anybody in town.

There are just a couple of pieces of the puzzle still missing on this particular building and I was feeling pretty cocky about it.  — Until I got the most recent email from the associate counsel for the Port Authority on Friday.  

I’d asked (3 times) if Western & Southern retained any equity ownership in the $326,000,000 property, the biggest deal by ten times over that the Port Authority has ever done.  If the building is sold, where will the profits go? – which is especially important because the city gave away 30 years of property tax revenue and used Tax Increment Financing dollars to build about 20% of the project.  (That’s the portion we paid for , Fellow Citizens.  We Citizens apparently like to pay for parking garages with all the trimmings.)

Simple, simple question.  Do they own any portion of the building or not?

Their staff lawyer attached a 63 page document that doesn’t address equity ownership, the second such misunderstanding on this question and concluded our conversation as follows:

“We are more than happy to continue to provide you with our publicly held records to assist you in your endeavors, so if you would like any further documentation, please let me know.  With respect to the information contained therein and your interpretation of the documents themselves, I would recommend that you consult an expert or an attorney who can assist you with your analysis.”

When I asked about Western & Southern’s development fee, they gave it to me.  They didn’t make me guess which document of the dozens related to this one building might contain it.  They just told me the truth.

But on the BIG money – ownership – which a developer friend of mine from California told me is the norm on these deals – the Port Authority refuses to confirm or deny, and tells me to hire an attorney.

No.  I am not going to pay an attorney to get information that should be easily accessible in a form that the average well-informed citizen (or city council member) can understand without taking five months to track it down and piece together.  What is everybody afraid of?  And by everybody I mean the employees of the Development Department who put these deals together, as well as the Port Authority, all the biggest real estate developers in town, and members of the boards and commissions who vote on these projects. Why are the financial terms of the biggest building in Cincinnati with significant public investment a secret?

If people are doing things they don’t want citizens to know about, then they shouldn’t be doing them at all.  

Now I’m Pi$$ed

Five months ago I decided to learn about how real estate development decisions are made in the City of Cincinnati.   And the first thing I noticed was that nobody wanted to talk about it.

People I’ve known and adored for years in the private sector, people who used to invite me for beers, now cross to the other side of the street when they see me coming.  If they answer my emails at all it’s short and to point.  And those are the folks that acknowledge my requests.  I’ve worked on several big civic projects since I retired from the financial services industry almost fifteen years-ago and I’ve never gotten the no-answer/answer like I have on this one. 

But city employees have to answer all inquiries.  Not always the first time you call.  Maybe not even after the third email.  But if requests are made for documents on specific topics referencing the Ohio Public Records Act, it initiates a formal preceding through the legal department that has to be documented and eventually folks comply.  

This month I tackled the Queen City Square project on 4th St., the tallest building in town, AKA Great American Tower.  I wanted to know why the Port Authority, a “quasi”- (still haven’t figured out what that “quasi” means) public agency owns it.  Since when has city government started speculating in real estate?   Western & Southern Life insurance owned the parking garage on the lot and had talked about building for years.  What did they get out of the development deal and why didn’t they want to own this building themselves if it’s such a great investment?   Apparently nobody is super-excited about long-term ownership of the thing because even though the Tiara Building was just finished in 2012, it’s already on the market to be sold.  

I’m proud of the progress I’ve made on my real-estate development education.  This Spring I had no idea what Tax Increment Financing was all about, or triple-net leases or air rights.  It was a foreign language.  But little by little, contract by contract, in spite of a total, absolute and complete lack of transparency designed to make sure the electorate will never understand what’s going on with their tax dollars, I can now hold my own in a conversation on the topic with almost anybody in town.

There are just a couple of pieces of the puzzle still missing on this particular building and I was feeling pretty cocky about it.  — Until I got the most recent email from the associate counsel for the Port Authority on Friday.  

I’d asked (3 times) if Western & Southern retained any equity ownership in the $326,000,000 property, the biggest deal by ten times over that the Port Authority has ever done.  If the building is sold, where will the profits go? – which is especially important because the city gave away 30 years of property tax revenue and used Tax Increment Financing dollars to build about 20% of the project.  (That’s the portion we paid for , Fellow Citizens.  We Citizens apparently like to pay for parking garages with all the trimmings.)

Simple, simple question.  Do they own any portion of the building or not?

Their staff lawyer attached a 63 page document that doesn’t address equity ownership, the second such misunderstanding on this question and concluded our conversation as follows:

“We are more than happy to continue to provide you with our publicly held records to assist you in your endeavors, so if you would like any further documentation, please let me know.  With respect to the information contained therein and your interpretation of the documents themselves, I would recommend that you consult an expert or an attorney who can assist you with your analysis.”

When I asked about Western & Southern’s development fee, they gave it to me.  They didn’t make me guess which document of the dozens related to this one building might contain it.  They just told me the truth.

But on the BIG money – ownership – which a developer friend of mine from California told me is the norm on these deals – the Port Authority refuses to confirm or deny, and tells me to hire an attorney.

No.  I am not going to pay an attorney to get information that should be easily accessible in a form that the average well-informed citizen (or city council member) can understand without taking five months to track it down and piece together.  What is everybody afraid of?  And by everybody I mean the employees of the Development Department who put these deals together, as well as the Port Authority, all the biggest real estate developers in town, and members of the boards and commissions who vote on these projects. Why are the financial terms of the biggest building in Cincinnati with significant public investment a secret?

If people are doing things they don’t want citizens to know about, then they shouldn’t be doing them at all.  

Yikes! It’s an Emergency

Stand back, Everybody.  We’ve got an emergency coming through.

It’s an 800,000 square foot Class A office tower with 1,700 parking spaces, the second phase of a development project that has been discussed for ten years, officially proposed to Council in 2003, Queen City Square Phase I completed a couple of years ago.  But now it’s June of 2008, there’s legislation backed up the wazoo as City Council moves into the June crunch, right before they break for summer recess.  You know how these things happen.  Somebody gets busy and forgets to file the 142 pages of contracts on a timely basis.  Now everybody’s in a panic and the developer has to get this going or we’ll miss out on a once-in-a-lifetime opportunity.  They’ve got contractors waiting and want to be first in line on Monday morning for their demolition permits. East Fourth St. is going downhill fast.  Besides, it’s win-win.  Big corporations are just waiting for new Class A office space to bring their employees to Cincinnati. If we build it they will come, but we’ve got to build it today, I tell you, today before Covington or West Chester get the jump on us.

Besides – it’s just the same old yadda, yadda.  You know, 100% 30-year tax abatement on the biggest office tower we’ve ever built in this town. I mean – you can’t do a deal in Cincinnati if you make the developer pay property taxes, not if you’re going to be a world class city.  Oh – just as a little aside, the developer doesn’t want to actually own the building.  The developer wants the Port Authority – a “quasi-public” agency whatever that means – they want the Port Authority to actually own it.  They’ll lease it.  Which kind of potentially weakens the bond rating of the city.  But it probably won’t.  And we’re just going to have to throw in $1,175,000 for the construction of the outdoor plaza.  Oh, and a few little minor public improvements to the site for another $2,575,000. While we’re at it, why make them pay any sales tax on their construction materials of this $323,000,000 jewel?   Chump change really.  Don’t worry about it.  Or the Tax Increment Financing we’re going to use to pay for the garage which is 20% of the costs. Nobody really understands that stuff – but believe me, it’s win-win all the way.

Because we know these guys.   Worked with them for years.  Fine, upstanding corporate citizens. They sure put on a great tennis tournament, don’t they?  And if John and Mario say it’s good, it’s gotta be good.  Because why would they lie?

Come on, City Council.  Don’t be a wuss.  Vote.

* * *

Under Ohio law and City Charter an ordinance must have three readings before Council votes on it, which means a standard ordinance would take an average of three weeks to work through the process.  But Council often votes to waive those three readings, which it can do if a super-majority declares the ordinance to be an emergency “necessary for the preservation of the public peace, health, safety and general welfare.”  An emergency ordinance is not subject to referendum under Ohio law and takes effect as soon as the mayor signs it, while an ordinance passed without an emergency takes effect thirty days later.

While the Queen City Square example cited above is perhaps the most egregious case of manipulating the political process to eliminate any possible public discussion of a controversial issue, unfortunately this case is not unique.  Every single development deal I have been able to identify as using Tax Increment Financing since 2002 when then-council member, John Cranley, introduced the legislation has been passed on an emergency basis.  This means the citizens of Cincinnati have never had the opportunity to ask fundamental questions about where and how we use public dollars as incentives for development until after these deals are already signed and there’s nothing to be done.

Tax Increment Financing combined with 30-year abatement is highly complex.  California, the state that invented the financing structure, has discontinued its usage after several lawsuits and it’s being contested in many other cities across the country.  While responsible usage of TIF funding has been an important tool in jump-starting the Over-the-Rhine renaissance, it is highly prone to abuse. Having sat and listened to Council argue about a $100,000 bike infrastructure improvement like it was the last dime in our collective pocket – and especially in light of Mr. Cranley’s emphasis on back-to-basics balanced budgets – we need to take the time as a community to discuss every single one of these developments.  We’re talking about hundreds of millions of city tax dollars on a single project and giving away that kind of money to a private-profit developer has never been and will never be an emergency.

Yikes! It's an Emergency

Stand back, Everybody.  We’ve got an emergency coming through.

It’s an 800,000 square foot Class A office tower with 1,700 parking spaces, the second phase of a development project that has been discussed for ten years, officially proposed to Council in 2003, Queen City Square Phase I completed a couple of years ago.  But now it’s June of 2008, there’s legislation backed up the wazoo as City Council moves into the June crunch, right before they break for summer recess.  You know how these things happen.  Somebody gets busy and forgets to file the 142 pages of contracts on a timely basis.  Now everybody’s in a panic and the developer has to get this going or we’ll miss out on a once-in-a-lifetime opportunity.  They’ve got contractors waiting and want to be first in line on Monday morning for their demolition permits. East Fourth St. is going downhill fast.  Besides, it’s win-win.  Big corporations are just waiting for new Class A office space to bring their employees to Cincinnati. If we build it they will come, but we’ve got to build it today, I tell you, today before Covington or West Chester get the jump on us.

Besides – it’s just the same old yadda, yadda.  You know, 100% 30-year tax abatement on the biggest office tower we’ve ever built in this town. I mean – you can’t do a deal in Cincinnati if you make the developer pay property taxes, not if you’re going to be a world class city.  Oh – just as a little aside, the developer doesn’t want to actually own the building.  The developer wants the Port Authority – a “quasi-public” agency whatever that means – they want the Port Authority to actually own it.  They’ll lease it.  Which kind of potentially weakens the bond rating of the city.  But it probably won’t.  And we’re just going to have to throw in $1,175,000 for the construction of the outdoor plaza.  Oh, and a few little minor public improvements to the site for another $2,575,000. While we’re at it, why make them pay any sales tax on their construction materials of this $323,000,000 jewel?   Chump change really.  Don’t worry about it.  Or the Tax Increment Financing we’re going to use to pay for the garage which is 20% of the costs. Nobody really understands that stuff – but believe me, it’s win-win all the way.

Because we know these guys.   Worked with them for years.  Fine, upstanding corporate citizens. They sure put on a great tennis tournament, don’t they?  And if John and Mario say it’s good, it’s gotta be good.  Because why would they lie?

Come on, City Council.  Don’t be a wuss.  Vote.

* * *

Under Ohio law and City Charter an ordinance must have three readings before Council votes on it, which means a standard ordinance would take an average of three weeks to work through the process.  But Council often votes to waive those three readings, which it can do if a super-majority declares the ordinance to be an emergency “necessary for the preservation of the public peace, health, safety and general welfare.”  An emergency ordinance is not subject to referendum under Ohio law and takes effect as soon as the mayor signs it, while an ordinance passed without an emergency takes effect thirty days later.

While the Queen City Square example cited above is perhaps the most egregious case of manipulating the political process to eliminate any possible public discussion of a controversial issue, unfortunately this case is not unique.  Every single development deal I have been able to identify as using Tax Increment Financing since 2002 when then-council member, John Cranley, introduced the legislation has been passed on an emergency basis.  This means the citizens of Cincinnati have never had the opportunity to ask fundamental questions about where and how we use public dollars as incentives for development until after these deals are already signed and there’s nothing to be done.

Tax Increment Financing combined with 30-year abatement is highly complex.  California, the state that invented the financing structure, has discontinued its usage after several lawsuits and it’s being contested in many other cities across the country.  While responsible usage of TIF funding has been an important tool in jump-starting the Over-the-Rhine renaissance, it is highly prone to abuse. Having sat and listened to Council argue about a $100,000 bike infrastructure improvement like it was the last dime in our collective pocket – and especially in light of Mr. Cranley’s emphasis on back-to-basics balanced budgets – we need to take the time as a community to discuss every single one of these developments.  We’re talking about hundreds of millions of city tax dollars on a single project and giving away that kind of money to a private-profit developer has never been and will never be an emergency.

Why is the Banks Boring?

There was lots of chatter on my Facebook newsfeed the morning after Bowdeya Tweh’s Enquirer story on the disappointing architecture at the Banks, Is the Banks Too Boring?.  Words like “underwhelming” “generic,” “Cincinnati safe,” and “bland” dominated the conversation.

If you want to understand why recent designs don’t take many risks, you don’t have to look far for an explanation. Just pop on over to Tom Demeropolis’ cover story in the July 25th edition of the Cincinnati Business Courier, Why national money loves our real estate.

Most commercial buyers now are from outside the local market.

Hines, with its U.S. headquarters in Houston, controls assets around the globe valued at more than $28 billion.  They just paid more than 150 million for the Duke Realty portfolio and are looking to buy more. Affiliates of American Realty Capital, the largest U.S. owner of single-tenant properties, snatched up the Streets of West Chester and Gateway Center in Covington this year. Chicago-based Inland Real Estate Corp., which owns 15 million square feet of real estate, partnered on its joint venture with Dutch pension fund adviser PGGM to buy Newport Pavilion this summer. 

These days commercial buildings are primarily designed for their balance sheets, more consideration given to financing structures and hand-outs from City Hall than the beauty and richness we crave in our 9-5 lives. But after years of down-sizing, globalization, and out-sourcing – can we really be surprised GE doesn’t want to put the time into a design that says anything particular about who they are and what they will do inside their space on the Banks?   Industries change so fast, they don’t even want to commit to ownership.

Lately I find myself drawn into the cathedrals of Europe more and more frequently, the sweet, simple ones in small towns as well as the more famous monuments with lines of tourists.  I have to go in and sit awhile.  Which surprises my husband.   “You aren’t even Catholic,” he always says and tries to be patient.  But they amaze me, how many of them there are, the resources it took a society to build them, decade after decade after decade, how much human energy and talent was devoted to the creation of these architectural masterpieces at a time when daily life was so difficult for the vast majority of human beings. I used to tell myself that it was all about the church squeezing every dime they could get out of the peasantry to reinforce their power in a symbol of stone. But sitting on one of the hard wooden pews and looking high up into the dome, like a tiny, little ant at the bottom of those soaring arches, I can’t help but imagine every square inch of the surface covered in the bright colored stories of miracles, angels wings carved into stone. Five or six hundred years later, the strength of their belief in something bigger than themselves still permeates the space in a way that is sacred but has nothing to do with religion.

Great buildings that stand the test of time are always about something bigger than money.  And we have them in America.  We even have them in Cincinnati.   But these days, it’s not usually our big corporations responsible for commissioning their design.