It's Worse Than You Realize

[Bill Call]

If an arcade that received $60 million in renovations that contains stores, offices and a 293 room Hyat Hotel can't be sold for $7 million what does that tell you about the economy in Cuyahoga County? What does that tell you about all the promises made about the casino and convention center? The arcade is within walking distance of both and it's not worth $7 million? Is the economic engine the business that pays the subsidy or the business that needs the subsidy to survive?


http://www.cleveland.com/business/index ... _cl_1.html

What does that tell you about property values and property tax collections?

It tells me that both are heading for further decline. The State has already cut $3 million from Lakewood Schools. How much more can the district take? How high can the property tax rate go before the increased rate actually accelerates the decline in value? Is there a better way?

Don't ask, it upsets people.

[Matt Jones]

Bill,

In reality the successful bidder for this property would be paying far more than the $7M asking price. From the article:

"Any buyer will face the complexities of a historic building and the legacy of a public-private financing deal that supported the property's $60 million transformation a decade ago. That legacy includes the ongoing requirement to make payments on bonds used to help finance the renovation - payments that will cut into an owner's revenues. "

The key issue is the financing deal that the new owner will inherit - particularly the requirement to pay down the renovation bonds. The article doesn't specify how substantial these payments are, but I'll bet it ain't cheap.

Anyway, this is all just gamesmanship by BofA. They know they'll be able to get this property at a future sheriff's sale (most likely at an even further reduced price), and they'll turn around and sell it to a private investor that will want to operate the hotel in anticipation of increased demand from the casino and convention center.

Bill, I know you've already declared downtown Cleveland dead. Maybe I'm an eternal optimist, but I'm seeing signs to the contrary.

[Bill Call]

Bill, I know you've already declared downtown Cleveland dead. Maybe I'm an eternal optimist, but I'm seeing signs to the contrary.

I did do that didn't I?

Most downtown office buildings have high vacancy rates and many are in foreclosure. It is becoming more and more difficult to get people to work downtown. People would rather work in the new suburban office parks. In some sense we have reached the point of no return.

The only development downtown is heavily subsidized by taxpayers. Tenants for the new flats development will be moving from existing downtown buildings so the affect of all those subsidies is more vacant office buildings. Those subsidies aren't creating jobs or economic growth; they are creating a downtown Disneyland.

In around about way those development policies are or should be an issue in the school board race. We cannot tax ourselves enough to fund the future needs of the schools unless the increase in revenue comes from an increase in the tax base.

We will have a hard time creating that tax base if hundreds of millions of tax dollars are subsidizing development downtown and Crocker Park and if County funded institutions continue to encourage outward migration.

I think a wet blanket has been thrown over the political debate in this City. Ultimately that will erode the economic health of the City and the Schools. I'll do my best to light a few fires but I suspect there are more people interested in a wet blanket campaign than in a wildfire campaign.