Upfront

FORMER COUNCILMAN ZACK REED WANTS TO BE PART OF THE CLEVELAND 2021 MAYORAL DISCUSSION

FORMER CLEVELAND CITY

Councilman and 2017 mayoral candidate Zack Reed rejected the notion of defunding the police in a virtual forum with the City Club of Cleveland’s Dan Moulthrop last week. Reed was the latest in a series of City Club guests whose 2021 mayoral aspirations are something of an open secret.

Now working on minority voter engagement for Ohio Sec. of State Frank LaRose, Reed has been largely out of the local headlines for the past four years. His comments to Moulthrop — about public safety, economic development, and government accountability — were in many cases versions of the same slogans he used on the campaign trail in 2017. His “nothing stops a bullet like a job” message was perhaps the not a luxury, it’s a necessity,” he said most memorable and resonant of — and operate it as a public utility. that race, which he ultimately lost to He said the first thing he would incumbent Frank Jackson in a runoff. do as mayor would be to appoint a

Reed was omnipresent on social “Poverty Czar” and work to improve media and in the streets in 2017, Cleveland’s standings on nationwide constantly citing statistics and news poverty rankings. He said poverty reports about gun violence. His was the “number one problem” in solution at the time was to increase Cleveland, in part because its effects the number of police officers in lead to so many other social ills: low Cleveland. He wanted to bulk up the educational attainment and violence, force by at least 400 officers. That’s a in particular. belief Reed says he no longer holds. Reed was asked to describe He told Moulthrop Wednesday that how his administration would be he has changed his mind because different from Frank Jackson’s. He the status quo has not worked. stressed, above all, transparency Cleveland is now on pace for its ninth and accountability. As in 2017, Reed consecutive year of 100+ homicides, said that he would open City Hall on he said, and new strategies for public Saturdays and have regular Town safety need to be explored. Halls in Cleveland neighborhoods,

And yet, he said defunding the in general making himself much police was not the appropriate more available to members of the response. He agreed in principle public. He said that City Hall needs that more money should be given a “complete overhaul,” not only in its to neighborhood organizations use of 21st century technologies but and rejected the wisdom of federal in its treatment of residents. resources being used in Cleveland “I use a restaurant analogy,” Reed as part of the so-called Operation said. “When you go into a restaurant, LeGend, but said that instead of they hand you a menu. And the first defunding the police, Cleveland thing they say to you is, ‘What would should focus on better training you like?’ And what happens after and recruitment. He still faithfully you order? The waiter comes back adheres to a “Good Cop-Bad Cop” and asks you, ‘How was your meal? mentality in which a “few bad apples” Is there anything else you’d like?’ shouldn’t be allowed to spoil the We don’t do that. What politicians do barrel. nowadays in our community is come

Like other presumed candidates, in and tell you what you want, what Reed said he wants to make free they’re going to do.” internet a priority — “The internet is Reed did not confirm directly that 6 | clevescene.com | August 12-18, 2020

he would run for Mayor but gave a stronger indication than prior City Club guests. He said he was “leaning towards” running and admitted that he would like the job, but said it would be up to the voters to decide.

In 2017, during the controversial Q Deal negotiations, a “Downtown vs. the Neighborhoods” debate was the dominant campaign narrative. In 2021, views on public safety and racial justice may take center stage.

-Sam Allard

County to Tap Q Deal Reserves to Reimburse Indians for Club Lounge, Parking Lot, Escalators

Cuyahoga County Council voted last week to reimburse the Cleveland Indians roughly $3.5 million for repairs and renovations from a pot of money created during the Q Deal.

The taxpayer money will cover the costs of projects at Progressive Field largely completed in 2018 and 2019, including escalator repairs and preventative maintenance, the expansion of the player parking lot, renovations in the Club Lounge, renovations to the suites, and other work.

Per the conditions of the Indians lease agreement with Gateway Economic Development Corporation, the nonprofit entity that owns Progressive Field and the Rocket Mortgage FieldHouse and leases them to the pro teams, the public is on the hook for all capital repairs exceeding $500,000.

Ordinarily, the reimbursement for these projects would come from the county Sin Tax on alcohol and cigarettes. But projected Sin Tax revenues for the duration of its extended life (until 2034) is virtually all accounted for, and new revenue is trickling in at a slower pace due to the coronavirus, according to Gateway Chair Ken Silliman and county fiscal officials.

Silliman noted that the reserve fund created during the Q Deal — which was part of the $70 million bond issue in 2017 — was intended to give the county a “head start” in forthcoming lease negotiations with the Indians. There is an unquestioned assumption that the public will have to pony up in a big way to keep the baseball team when their lease expires in 2023. The Cavs’ bilking of the public for its arena upgrades, and the acquiescence of local elected leaders, guaranteed that the Indians and Browns will expect commensurate handouts, even as the public becomes less and less capable of paying.

The sports facility reserve fund currently has a balance of $5.7 million. The current Indians’ reimbursement will reduce it $2.2 million.

Silliman said the Indians

requested that the reserve funds be used to expedite their reimbursement because of their financial challenges due to Covid-19. Councilwoman Sunny Simon noted that the county was experiencing financial challenges of its own and wasn’t exactly in an ideal position to “float” the Indians money. Silliman responded that this should not be construed as an advance — the team is owed this money, per the lease — and that the sports facility reserve was separate from the county’s general fund.

Councilman Michael Gallagher nevertheless took issue with a number of the “repairs” in question. The lease stipulates that the county pays for capital expenditures over $500,000, but “improvements” are supposed to be covered by the team. Why on earth should taxpayers be responsible for an expanded player parking lot, he wondered. Was this just so the players could park larger cars?

“Hopefully in the future we sharpen the pencil on this lease,” Gallagher said, “because it is without question tilting one way [against the interests of county taxpayers].”

-Allard

FBI Raided Properties Connected to Ukrainian Oligarchs

The FBI last week raided the offices of Optima Management Group, a Cleveland and Miamibased real estate company under the direction of Ukrainian oligarchs.

FBI officials would provide no comment on their investigation and activities, but confirmed that agents carried out a search warrant at One Cleveland Center, the skyscraper on the corner of E. 9th Street and Superior Avenue which Optima owns and operates out of, last Tuesday.

Agents were also confirmed to be executing warrants in Miami. And while the FBI would not explicitly confirm that the searches were related to the so-called “Optima Schemes,” a massive alleged money laundering scheme emanating from a Ukrainian bank that made two Ukrainian oligarchs the largest owners of commercial real estate in downtown Cleveland, it almost certainly was.

Miami is the home base of the oligarchs’ men in the United States: Mordechai “Motti” Korf, his brotherin-law Chaim Schochet, and Uriel Laber. These three men managed the “Optima” companies and U.S. assets, which were ultimately controlled by Ukrainian oligarchs Igor Kolomoisky and Gennadiy Bogolyubov.

Schochet was the man in Cleveland. In 2019, he told Scene that allegations in a lawsuit which described the “Optima Schemes” in detail were “false, defamatory and utterly without merit.”

“We are immensely proud of our extensive track record building a vibrant real estate portfolio in Cleveland,” Schochet said in a statement, “and we will not let a frivolous lawsuit tarnish our hardearned reputation or distract us from our mission to continue to serve the interests of the Cleveland community.” -Allard

Tax Abatement Study Shows Inequity is Increasing, More Development Tools Necessary

The City of Cleveland should continue to use its residential tax abatement program as a development tool, a team of consultants and local nonprofit professionals told City Council recently. But if it’s the only tool in the city’s development toolbox, existing inequities could be exacerbated.

Researchers from Reinvestment Fund, Public Financial Management, Greater Ohio Policy Center, Neighborhood Connections and Leverage Point Development, in consultation with the city’s office of community development, published a detailed report in July on the city›s tax abatement program. Since 2004, Cleveland has provided 15- year 100-percent tax abatements on newly constructed home and residential developments, and similar abatements on the increased value of renovated homes.

The report recommended a number of policy interventions to ensure that neighborhoods like Tremont, Ohio City, DetroitShoreway and University Circle don’t continue to see the lion’s share of new investment. Though abatements were previously spread out across the city’s neighborhoods, in recent years they have been increasingly concentrated in “trendy” areas.

“Given the cost of construction, a tax abatement alone is not going to spur investment beyond these hot neighborhoods,” said Community Development Director Tania Menesse. “We need to help incentivize development in other neighborhoods with other tools.”

Total abatements reached their peak in 2007, the report found, with more than 7,000 actively abated properties. The number of newly abated parcels has steadily declined since the Great Recession, but a larger percentage now goes toward multi-unit developments, so the total value of abated properties has remained roughly constant.

The study was initially undertaken out of desire to create a long-term equitable housing plan in the city and was rooted in hard data. It was accelerated by city residents’ fears of displacement, particularly in neighborhoods where waves of new construction have increased home prices and the tax burden on longtime homeowners.

In spite of these fears, the report found only limited evidence that tax abatements lead to residential displacement, and only in two percent of the city’s neighborhood blocks. (Those blocks, predictably, are in the same “high price, high pressure” areas where the abatements have been most highly

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Nevertheless, the report recommended establishing a displacement threshold at which the city could adjust the time period and percentage of offered abatements based on market conditions

The report also recommended capping abatements for new singlefamily homes at $300,000. It noted that while 99 percent of the homes sold in Cleveland in 2017 and 2018 were for less than $300,000, fully 23 percent of the abated homes were. “Setting a cap at this level will primarily impact households for whom the abatement may not be the deciding factor in their purchasing decisions,” the report said.

For multi-family developments, the report suggested a “but-for” requirement for projects valued at over $5 million, which would provide an abatement only if the project could not be pursued without the city subsidy.

But the policy suggestion with the most interest from council was not directly related to the abatements themselves. It was a cap on property tax increases for longtime homeowners. Councilmen Kevin Conwell, Blaine Griffin, Basheer Jones, Kerry McCormack and others all said they’d heard from constituents about rising tax bills stemming from last year’s Cuyahoga County home valuations.

Local State Sen. Sandra Williams has an active bill seeking a statewide cap, and council members voiced their support for mechanisms of that kind which would protect existing homeowners while not discouraging new development. A tax cap was not included in the list of the report’s official recommendations in part because property tax policy is set by the state.

Councilman Kerry McCormack, who represents most of the “high price, high pressure” neighborhoods identified in the report, stressed that Wednesday’s hearing was only a piece of a larger conversation as City Hall develops what he called a “robust” housing policy. He said he hoped council wouldn’t “punt” the recommendations of the report.

“My residents and I are ready to move forward with these recommendations, not in 2-5 years, but today,” he said. -Allard