HOW MUCH $$$ DOES CLEVELAND LOSE TO ABATEMENT

Submitted by Roldo on Wed, 07/22/2009 - 07:47.

Civic corruption comes in many forms. We have been hearing a lot about corruption these days. However, the focus is very narrow. Unnecessarily so.

 

The Plain Dealer simply ignores the corruption that makes today’s hyper County sleaze activity look minor league. Even little league. We’re going to talk about multi-million dollar corruption. Nothing petty. And all legal.

 

The fact is that the PD actually promotes this BIG kind of corruption. It’s they’re kind of corruption. They push for it editorially. Always have; always will.

 

I’ll show you how it works.

 

We’re talking about tax abatements.  You will read about a number of cases in which huge amounts of money have been given to very special people. Very special Rich people.

 

 Most of the abatements are for 20 years or are tax exempted properties, meaning they will never ever pay any taxes. These cases represent large abated properties. They are only a small number of abatements given since 1977 when the program began in Ohio.

 

Yet over the years they will cost HUNDREDS OF MILLIONS of lost tax dollars.

 

The lost revenue ordinarily would go to four levels of government.  Presently, property tax revenue is shared by the following entities with the percentage of the total in parenthesis: Cleveland schools (55.13 percent rounded), Cuyahoga County (21.24 percent), City of Cleveland (15.68 percent) and Cleveland libraries (7.96 percent).

 

Rather than guard the public’s resources, slated for the common good, city and county officials – typically backed by the Plain Dealer’s editorials and lack of critical coverage – cater to the self-interests of Cleveland’s Establishment. Their actions have and are shameful.

 

‘I requested information from Joann Jackson of the County Auditor’s office about how much abatements cost us. I limited the search to a few big properties.  

 

Here’s what I found in examining certain property tax revenue for the last two years:

 

BROWNS STADIUM

The amount paid to Cuyahoga County this year and last year for property taxes on the Browns Stadium: ZERO.

 

Browns Stadium should have paid property taxes of $8,081,230 this year and $7,973,804 last year on the physical structure alone. That’s $16,055,034 over the two most recent years. Total value of the Browns stadium, including land, is slightly more than $300 million (Market value with taxes on 35 percent of that figure.)

 

 

That is a gift of $16 million in ONLY the last two years to the billionaire Lerner family, owners and users of the Browns. (This property will NEVER pay a penny in taxes on the structure as it has been tax exempted by state law, passed under pressure of local politicians – mainly Commissioner Tim Hagan and former Mayor Michael White - and the Plain Dealer.)

 

I reported recently that the city also has paid $102.8 million on stadium bonds, owes $160.3 million more in payments due and has to come up with $44.55 million in capital improvements now and in future years. The State of Ohio chipped in $37 million more; RTA $3 million; City Water Dept. $2 million; Northeast Sewer District $2.24 million; and the city’s water pollution control division another $500,000.  Lerner’s annual rent: $250,000 with no increase over 30 years. How hard is it to become a multi-millionaire?

 

Having given so much, why burden the Lerner family with having to pay property taxes. Shameful to ask that. The city, by the way, also pays the property taxes due on the land beneath the stadium. This year that bill was $452,724.

 

QUICKEN ARENA

The amount paid to Cuyahoga County in property taxes this year and last year for Quicken Arena: ZERO.

 

Quicken (formerly Gund) Arena should have paid property taxes of $3,816,609 this year and $3,765,873 last year. That’s $7,582,482 over the two most recent years. Total value of the Quicken Arena, including land, is slightly more than $50 million.

 

This is a gift of some $7.5 million to the billionaire Dan Gilbert, Cavs owner. (This property also will NEVER pay taxes on the structure because of the actions of Hagan and White in passing legislation to EXEMPT forever all new stadia and arenas in Ohio.)

 

Citizens of Cuyahoga County built the arena for some $157 million but Gilbert controls it. Having given him the arena, why should we even suggest that he pay property taxes. Let’s not get greedy, citizens.

 

PROGRESSIVE FIELD & GATEWAY GARAGE

 

The amount paid to Cuyahoga County in property taxes this year and last year for Progressive Field: ZERO.

 

Progressive Field (formerly Jacobs Field) should have paid property taxes of $4,882,764 this year and $4,817,856 last year. That’s $9,700,620 over the two most recent years. Total value of the baseball stadium, including land, is slightly more than $69 million. (This property will NEVER pay taxes on the structure because state legislation pushed by Hagan, White and the Plain Dealer was passed to EXEMPT all new sports facilities in Ohio FOREVER.)

 

The amount paid to Cuyahoga County in property taxes this year and last year for the Gateway Garage: ZERO.

 

The Gateway Garage, built by the City of Cleveland for the new sports facilities should have paid taxes of $652,963 this year and $644,283 last year. That’s near $1.3 million. The value of the garage is $10.5 million.

 

This is a gift of some $11 million to the billionaire Dolan family, owners of the Cleveland Indians.

 

Cuyahoga County citizens paid most of the some $180 million for the stadium but the Dolan family controls it. Why bother to ask them to pay property taxes? It might be seen as pushy.

 

We also note that the citizens of Cleveland alone built two parking facilities, one tax abated, at a cost of more than $40 million.

 

Are you seeing a pattern here?

 

KEY CENTER, MARRIOT HOTEL & GARAGE

 

The amount of property taxes paid to Cuyahoga County on Key Center, Cleveland’s tallest office building: ZERO

 

Key Center, built by multi-millionaire Dick Jacobs, should have paid $5,399,922.84 this year and $5,328,139 last year. That’s more than $10.7 million. Total value of the 57-story Key Center building, including land, is $72.4 million. (This property, in addition to $10-million, zero interest loan, was given a 20-year tax abatement, 100 percent tax abatement by Mayor George Voinovich and Council President George Forbes.)

 

This was a gift given by Voinovich and Forbes in 1988. Jacobs was yet to get a stadium built for him. The new stadium gave him an advantage to sell it to the Dolans for a pricy $320 million.

 

Oh, there’s more that Dick got.

 

The Marriott Hotel, attached to Key Center, should have paid $1,123,027 last year and $1,208,098 the previous year. That’s slightly more than $2.3 million. Total value of the 25-story Marriott Hotel, including land, is $15,594,500. (This property, in addition to another $7.9-million, zero interest loan, was provided a 20-year, 100 percent tax abatement by Voinovich and Forbes.)

 

As if that were not enough, Voinovich and Forbes gave Jacobs the ability to build a parking garage beneath the city’s Mall A, which is located in front of the Marriott Hotel. It’s called Memorial Park Garage.

 

Memorial Park Garage should have paid property taxes of $230,835 this year and $227,767 in property taxes last year. That’s some $457,000. Total value of the parking garage under Mall A is $5.2 million. (Voinovich and Forbes cancelled a contract with a top bidder to deliver the parking garage contract to Jacobs for 65 years. Jacobs hired Forbes’ favorite parking lot operator for the facility; Voinovich’s old law firm, Calfee & Halter, made $443,000 (paid by Jacobs) representing the city in the law suit resulting from the city’s action to give the deal to Jacobs. Jacobs offered to increase parking places from 600 to 1,200 but it was cut to 900 in the final plan.  Revenue payments also were reduced down under the Jacobs plan.)

 

Forbes and Voinovich didn’t stop there. They were even more eager to fill Jacobs’s pockets.

 

The two – Voinovich and Forbes - offered the same sweet deal as Key Center to Jacobs for the west side of Public Square. It was to be another office building and hotel. You may notice that the west side of Public Square - which in 1989 had working office buildings that Jacobs then knocked down - remains a parking lot. Has been a parking lot since the early 1990s.

 

Further, other downtown buildings, damaged as tenants moved to Key Center, sought and got tax reductions. Squire, Sanders & Dempsey, for example, moved into Key Center from the Huntington Building. The law firm wrote the state legislation for tax abatement in the 1970s. (As an example, Jacobs’s E. 9th corner, left vacant for years. He was rescued, however, by the County Commissioners, who bought the complex of buildings for new County offices. It remains vacant, of course.)

 

The absurdity of these abatements hasn’t penetrated the minds of politicians or editors, however.

 

WYNDHAM HOTEL

The amount paid in property taxes on the luxury Wyndham Hotel for this year and last year: ZERO.

 

The Wyndham Hotel, built public subsidy upon public subsidy, should have paid property taxes of $339,500 this year and $334,987 last year. That’s some $674,000 over the two most recent years. Total value for tax purposes of the 200-plus luxury hotel at Playhouse Square is $4.7 million, including land. That’s very low.-

 

The luxury Wyndham was soaked with government subsidies in addition to the tax abatement, including a $5.5 million zero interest loan; a low interest state loan of $4 million; a tax incremental financing deal worth several million dollars over 20 years; the city helped purchase part of the land for $2 million then invest $1.5 million to improve the site and sold it to Playhouse Square Foundation for less than $1 million. The subsidies came to some $136,000 per room. “Credit” this rotten deal to Mayor White and then Council President Jay Westbrook.

 

RITZ-CARLTON HOTEL

 

The amount paid in property taxes this year and last year for the luxury Ritz-Carlton: ZERO.

 

The Ritz-Carlton, a luxury hotel at Tower City, should have paid a total of $1,718,020 for this year and the last year on four parcels tax abated for Sam Miller interests. The market value of the properties is $31.1 million.

 

 This amounts to a generous gift of $1.7 million to the multi-millionaire Miller. The hotel piggybacked on the Marriott for an abatement. The city also gave a $7.9 million, zero interest loan for the 207-room hotel built into Tower City. Why not help a multi-millionaire if you can?

 

That covers only 9 tax abatement projects in the city of Cleveland. There are many, many more. Admittedly, these are among the largest.

In any case, the total cost of these abatements for ONLY TWO YEARS totals some $48 million in lost tax revenue. Two years remember. Tax revenue sliced away from Cuyahoga County’s tax collections. Taxes that you - if you are a property tax payer in Cuyahoga County (or even a renter for that matter) – have to make up.

 

You won’t see this on the front page of the Plain Dealer. They avoid such information as if it were the plague. Indeed, the paper and its editors will fight to keep the public from being informed about this issue. In future, I’ll try to show how they have done this and flesh out the issue of abatements.

 

There someday will be more buildings built in downtown Cleveland. The issue of tax abatement will arise again. So I hope you will print out this information and keep it handy.

 

Of course, developers today are getting tax abatements on new housing development, especially in downtown Cleveland. It helps to offer a tax abatement to buyers. You can get a better price if you tell a prospect that they will be saving thousands of dollars by not paying taxes.

 

The wealthy love NOT PAYING TAXES. It’s a major ingredient of wealth. Believe it.

 

 

 

 

 

 

 

 

 

 

 

 

( categories: )

Tax Abatements for the Little People

Dear Roldo,

Wow... I totally respect what you are saying about the wealthiest folks using these abatements in ways that hurt the little people through trickle down economics...

My posting about Property Tax Abatements for renovated, low income housing was meant to promote development by smaller investors into the housing stock of our community and to reduce the overhead costs for the low income families that dynamically live here. I was NOT intending to support the big wigs in that posting...

Yet, I do know that when small real estate investors are trying to come into our Ward, hire our people to labor the rehabs, and to provide affordable housing, that these incentives make the trickle down economics most affordable for the tenants or future home buyers/owners.

I have worked with many small real estate investors who never knew how to get these tax abatements. By the time that they learn about it, they have already done much of the work without pulling the permits and paying the permit fees and doing the inspections that get their work certified. My goal was to promote it from the beginning of their work so as to encourage them pulling the permits, doing the work legally, and effectively doing things the right way from the beginning for everyone's best interests....

Sadly, a lot of folks in our community have the desire, but not the know-how. They are not degreed or skilled in white collar requirements, and they falter along the way because they start up their businesses without proper planning.  So, I want to promote basic info that encourages them to learn, to break through uneducated barriers, and to promote the attitude that says, "YES THEY CAN DO IT!" 

In basic ideology... if you have ten people from the community that want to buy 10 different houses, exhaust the collaboration and labor to rehab them... (the people who like swinging hammers but don't know a thing about doing their personal/business taxes) and  who don't know the basic 1,2, 3's of business 101... then you end up with a big mess in the end in the majority of cases.

My goal is to support them by providing them with the proper procedures and help them to work on a base of prevention, doing the right thing, and learning as they go... I don't want  to discredit their motivations, nor to deter them from trying and I certainly do not want to make it harder for them to get out here and do something good for our community.  

We, in Ward 14, live in an entirely different direct dynamic than those big developers that you speak of downtown. The majority of our populace don't have a clue about that stuff... They live from week to week, month to month. They don't care about those technicalities... Whether buying a home or renting...they just want to know what the bottom dollar amount is for their monthly budget. 

(Demographically speaking and in consideration of the fact that so many of our Ward 14 residents live on a Social Security stipend at approximately < $700/month... I personally believe that anyone who invests in our Ward should have the decency and respect to make projections that are considerate of these socio-economic needs.... When we have investors coming in here charging over that amount monthly to these families-then they are promoting negative mathematical equations for the residents that simply do not make common sense. Now, that is absolutely questionable. I would like to promote something that is realistic for ALL participants in this community- residents and investors.)

I value your work and info. I hope that perhaps  we can collaborate on some reasonable ideas that excite, promote, and challenge the best in our community at large while protecting the interests of everyone all the same.

 

tax abatements

at the end of the day there are two groups of individuals who fall into the category of "the entitlement class."

in Tremont the two extremes can be viewed with a drive down West 7th.  affluent suburbanites that wouldn't move to the city if they weren't getting free money.  and Tremont Pointe, the new and improved Valley View CMHA projects.

so how long can this all continue if no one is paying taxes for the affluent and not so affluent welfare recipients?

unemployment is up, therefore tax revenue is down.  and as roldo and angel so neatly point out, no one with a new building in the City of Cleveland is paying any property taxes on the structure.

maybe those who do not pay their fair share of taxes ought to not get services they haven't paid for.

we could start with ambulances and fire trucks.  i mean it's all about money, right? so your insurance carriers ought to be able to structure an insurance rate that covers properties that have not paid into the community funds that provide such services.

i mean come on, pay to play, right?

 

 

Red Lining Insurance Rates Skyrocket inside City Limits

Cleveland is still an insurance RED LINED District... call any insurer, ask them about how your rates are calculated...they start by ZIP CODE.... give them any zip in cleveland and the rates skyrocket....give them one that is considered  "OUT OF THE CITY LIMITS" such as the 44144 of Old Brooklyn/Brooklyn... And save thousands of dollars annually on those insurance rates between homes and cars...  

Truthfully, with a good budget to include paying taxes... you could live cheaper in the suburbs, enjoy somewhat better schools (although their ratings are all dropping dramatically too while the CMSD are slowly improving their scores to compete.)... and you have fast police response times, a sense of community and more recreation for your families....

Lots of info to process guys. I love that about this forum... Hopefully we can keep positive attitudes to promote healthy change for the good of all.

new housing tax abatements

>> Hopefully we can keep positive attitudes to promote healthy change for the good of all.<<

me too.  i'll do my best.

okay last shot before the day job consumes me.

new housing tax abatements:

1.  most of the properties are bought by singles, empty-nesters or new couples (who leave when the kids come OR were never sending their kids to public school anyway)

2.  are NOT transferable on sale.  BUT they are being transferred on sale.

i have had discussions with other city residents about bringing the lawsuit against those who are promoting sale of residential home tax credits and the fact that the transfers are occurring because no one has objected.  and the fact that no one really wants to open themselves up to the (at least) perceived threats to one's safety if they ever did speak out.  so that is as far as the discussions go.

so are the tax credits transferrable and the suggestion that they are not is just misinformation?  or are people buying properties that are marketed as home-owner occupied, but in the end are simply pass through investment properties, as the developers, builders and realtors know that no one will object to the sale of homeowner tax credits to subsequent homeowners.

and would anyone actually have standing to sue if they wanted to?

 

Good ???'s, IDK.... maybe somoene else herein may know?

Hope that someone has a great answer for this question b/c it's unfamiliar area for me. I await this answer.

Did the City reimburse CMSD $48,000,000 over 2 years

A Right Now Right Plan advocate stated "Under Mayor Frank Jackson, the Cleveland Schools have been reimbursed for potential loss of revenue from commericial tax abatement".

In this post by Roldo, he gives a blow by blow accounting of 2 years of commericial tax abatements to the tune of $48,000,000.

I would love to research this,  and have the question answered, but I know that this would be a waste of my time.

And, I am sure that the abatements have skyrocketed so the shool system should be rolling in this cash cow.....

OK, so where does the money come from that would be used to reimburse the school system.........

 

What about the kids?

 

A paragraph from the above post  by Roldo:  "In any case, the total cost of these abatements for ONLY TWO YEARS totals some $48 million in lost tax revenue. Two years remember. Tax revenue sliced away from Cuyahoga County’s tax collections. Taxes that you - if you are a property tax payer in Cuyahoga County (or even a renter for that matter) – have to make up."