Making more money for rich folks....

Second CMHA land deal probed

Plain Dealer Reporters

The Cuyahoga Metropolitan Housing Authority's 2005 purchase of land in a gritty section of Cleveland for $150,000 an acre wasn't the first deal the agency did with a Todd Davis company.

Now federal officials are also probing an earlier land sale on the tired edge of Little Italy that brought Davis, known for his expertise in cleaning up polluted sites, and CMHA together.

Investigators subpoenaed Cleveland City Hall documents last month involving CMHA's 2005 purchase and planned development of land at East 80th Street and Kinsman Road. They also demanded similar records about CMHA's 2002 sale of land at East 119th Street and Coltman Road to another of Davis' companies.

If some of the characters in both stories are the same, so are parts of the plot lines.

At both sites, the Davis team worked with Cleveland officials to secure state dollars to revive contaminated land.

The applications touted visions for an industrial park at the Kinsman site and a residential development at Coltman Road.

Both sites were cleaned using taxpayer dollars. But then Davis' Kinbess LLC sold the Kinsman site – with city approval – to CMHA for a new headquarters. And now Davis' Coltman Road LLC has listed its site for sale.

The city's support of the Coltman grant application was tied to the

projected development, said Linda

Warren, who as Cleveland's director of community development during Jane Campbell's administration submitted the 2003 request for state cleanup dollars.

The prospect that Coltman Road LLC might sell before the residential development envisioned in the application is built rankles her. Warren said the public dollars are supposed to “subsidize redevelopment, not to line the pockets of a private developer.”

A redevelopment agreement between the city and Coltman Road LLC states that after the cleanup, the company “will redevelop the property or cause the property to be redeveloped.”

Internal City Hall e-mails show that some city lawyers — like Warren — see an obligation.

Mayor Frank Jackson said it’s not clear Davis is legally required to develop the site.

“We entered into a contract with him, and if he fulfills it, that’s all I can ask,” said Jackson, who added that he is confident development will happen at the site.

But the mayor also said that in the past, the city has sometimes signed ambiguous contracts. He intends to craft more specific deals that better protect the city’s interests.

“If you’re not insuring the outcome that you want, then you’re not going to have that outcome,” he said.

Davis said last month that the 1.2-acre site is on the market for $1.2 million.

That’s 73 percent more per acre than the $578,990 per-acre price Case Western Reserve University plans to pay University Circle Inc. for a surface parking lot on Euclid Avenue a few blocks away.

“I don’t feel it’s worth what they’re asking,” said Ray Kristosik, executive director of the Little Italy Redevelopment Corp. about the Coltman site.

Davis wrote in an e-mail Friday that his company has done an appraisal and the list price is fair.

He also said, in response to written questions from The Plain Dealer, that selling is only one option under consideration. And Davis said Coltman Road LLC is working to fulfill its obligation by “pursuing a residential development.”

How much money Coltman Road LLC could walk away with if a buyer meets its price is unclear.

According to an August, 2005 progress report provided to The Plain Dealer by the city, the company had about $150,000 in expenses in the project. That was in addition to three years of uncompensated staff time and overhead.

The report did not detail those costs, nor did Davis in his e-mail. But the e-mail noted that uncompensated time for Coltman Road and an affiliated company actually extends back more than six years.

“Our work, in partnership with our public stakeholders has created a substantial neighborhood asset from an unmitigated community liability,” Davis wrote.

As for the federal investigation, he wrote that one of his companies requested it. “We have nothing to hide . . . and are confident that we will be vindicated.”

CMHA declined to comment on the continuing federal investigation.

Contaminated land given to CMHA

The Coltman site stretches like a check mark between aging houses, a pasta factory and elevated rapid-transit tracks. How it landed in CMHA’s lap in 1996 is a story in itself.

The former owner was in his 90s and unable to realize his redevelopment dream, when he asked then- CMHA executive director Claire Freeman if she wanted the site, said Scott Pollock, now the authority’s director of planning and real estate development.

The land sat atop more than two dozen underground storage tanks that contained hazardous substances. Some staffers, including Pollock, were leery of taking on an environmental headache, but CMHA agreed to the deal. The former owner gave the land to CMHA, which assumed about $50,000 for a mortgage and back taxes, Pollock said.

After Freeman was ousted, her successor, Terri Hamilton Brown, decided to unload the Coltman Road liability.

Davis wasn’t scared by the environmental mess. As president of the Beachwood-based Hemisphere Development, he has developed a national reputation for the cleanup of contaminated sites.

Hemisphere became the managing member of Coltman Road LLC, which bought the land in January 2002 with its tanks and abandoned asbestos-filled buildings.

CMHA was freed of the environmental liabilities, but Pollock said the $30,000 sale price “probably” didn’t cover CMHA’s costs of ownership.

Davis said last month that his company “should have paid nothing” for the land. “That was given to them. They were afraid of the liabilities.”

When told CMHA assumed about $50,000 in financial liabilities from the prior owner, Davis said: “Whatever.”

Davis stressed that when his company bought the land it assumed a risk.

Had public dollars been denied, Coltman Road LLC would have been stuck with the entire cost of the cleanup.

In 2003 the city and Coltman Road LLC applied for the state dollars.

The application prepared by Hemisphere Advisors — another Davis company — painted the scene: “A cry for help” from CMHA attracted the development team to the site in the historic Little Italy community. Coltman Road LLC saw past the daunting environmental problems and created a vision for a residential development — the first in this area of the city in more than two decades, the application said.

In 2004 the state awarded the project $900,000 in Clean Ohio Assistance funds. Davis said not all costs were covered by the grant. The cleanup portion of the project was done by August, 2005.

But the land remains vacant.

‘Good-faith efforts’ to redevelop site

Davis wrote in the e-mail that construction can’t begin until his company receives formal approval on the cleanup from the Ohio Environmental Protection Agency.

The city’s redevelopment agreement with Coltman Road LLC says the company will use “good-faith efforts” to work with Little Italy Redevelopment Corp. on a redevelopment plan.

“We were waiting for them to say that they were proceeding, and then the next thing we knew it was up for sale,” said executive director Kristosik.

Kristosik said Davis’ team cooperated with the community during the cleanup. But he doesn’t think a sale is right. “How do you take the grant to clean up that property and then in turn .. . sell that property?”

The Ohio Department of Development — which oversees Clean Ohio — says the program depends on local officials to propose projects that meet community goals.

The intent of the grants is to clean up land. But what happens next is up to local communities and their development partners, said John Magill, director of the Development Department’s Office of Urban Development.

Asked whether he saw redevelopment of the Coltman site as part of an entire project that began with the clean-up, Magill said: “That’s the way the community described the project to the state. We’re funding a grant that comes with an expectation.”

When some staffers at City Hall got antsy about the lack of new development isn’t clear.

But this past September Julianne Kurdila, a lawyer in the city’s law department, e-mailed Community Development Director Daryl Rush. After conferring with Barbara Langhenry, a chief assistant law director, Kurdila believed the city might have a stronger argument about redevelopment.

“Barbara thinks that we can argue that, as part of the background of the contract, it is one of the considerations that the City understood prior to even entering into the contract.

“Although this is not a slam dunk,” Kurdila added, “it is an argument that we can make to ‘force’ redevelopment of the site.”

Four days later Kurdila e-mailed Rush again. “Have you decided whether we will approach Coltman Road LLC regarding its redevelopment obligations.”

She noted that the state development department staff had the Coltman Road site on its radar and “the City should do something.”

Later that month Rose Zitiello, the city’s project manager for the Coltman grant, e-mailed Hemisphere’s Robert Amjad asking about talks with potential developers.

He wrote back that the site had been marketed on a preliminary basis to a select group of residential builders but he didn’t want to list them in the e-mail, since once that e-mail went to the city it would become a public record.

He also said marketing efforts were hampered until an addendum to the sign-off on the environmental cleanup was done.

Less than two months later Davis acknowledged that the site had been listed.

“There has been no decision to sell the Coltman Road property,” Davis wrote Friday. “Coltman Road LLC intends to spearhead the residential development of the property.”

To reach these Plain Dealer reporters: slivings [at] plaind [dot] com, 216-999-4453

cevans [at] plaind [dot] com, 216-999-6139

Forgotten Triangle purchase defended Developer, CMHA deny back-room deals

By Christopher Evans And Sandra Livingston

Plain Dealer Reporters

Thursday,November 9, 2006

Edition: Final, Section: Metro, Page B1

CORRECTIONS AND CLARIFICATIONS

The following published correction appeared on November 10, 2006: Because of an editor's error, a story in Thursday's Metro section about a land deal in the Forgotten Triangle incorrectly reported the amount that developer Todd Davis said his company had invested in the project. Davis said the company invested $350,000 and had other related costs.

Key players on Wednesday defended their roles in a controversial sale of land in the Forgotten Triangle, insisting there were no back-room deals.

The Cuyahoga Metropolitan Housing Authority — which bought the land — said it will hire a consultant to do an operational audit of the purchase and make recommendations for improvement.

Developer Todd Davis — whose company sold the land — said the sale got the required approvals. And he questioned Mayor Frank Jackson’s account of the deal.

(SEE CORRECTION NOTE)

In December, Davis’ company Kinbess LLC sold 25 acres at East 80th Street and Kinsman Road to CMHA for more than $4.2 million, following a publicly funded cleanup of the property. Davis estimated he had invested $325,000 in the land, initially proposing to turn it into a jobs-producing business campus.

A Plain Dealer story last month revealed that CMHA bought the land for Kinbess’ asking price of $150,000 an acre for its new headquarters, despite one appraisal that valued the land at $46,000 an acre.

At CMHA’s board meeting Wednesday, Chairman Laurence E. Talley made his first public comments since the newspaper report, announcing plans for the audit, saying there’s room “for independent analysis and to look at things with a rear-view mirror perspective so we can move forward.”

Talley also insisted that CMHA plans to create 100 new jobs at the Kinsman site by 2009. Previously CMHA said it planned to move 400 existing jobs to the site and hoped new jobs could come through commercial developments such as retail or food service. CMHA offered no details beyond Talley’s statement.

Talley also said the project was done in the open. Yet the housing authority provided no new information that contradicts the purchase agreement, which states “execution of this Agreement has been authorized during an Executive Session.” Ohio law requires public boards to take action in public.

Earlier in the day during a meeting at The Plain Dealer, developer Davis stood by his work at the Kinsman site and said the land wouldn’t have been cleaned up and sold for reuse “but for us being the catalyst.”

Davis and his colleagues worked with officials to secure public dollars for the cleanup, proposing an industrial park for the Kinsman site, which sits in Jackson’s home ward. Kinbess later shifted gears with the sale to CMHA.

Last week, Jackson said that during the summer of 2005 he told Davis he thought the CMHA sale was a “bad deal.”

Davis said Jackson “did not tell me that.”

Jackson couldn’t be reached for comment Wednesday.

The mayor criticized the deal last week, saying it would result in the transfer of jobs, not the creation of new ones.

But last fall, when Cleveland City Council gave its blessing for the deal, Jackson was City Council president and he was listed as a co-sponsor of the legislation.

Jackson said that he was immersed in the mayoral campaign at the time, attended few council meetings and doesn’t remember details of how the proposal made its way through the legislative process.

He said he accepts responsibility for the legislation and added that had he been “paying attention,” it would not have passed.

Davis also disputed that.

“I believe that every council person . . . especially Council President Jackson would have been very careful to have understood the facts of this deal,” Davis said. “And I think people know . . . how the city works. You need to get the approval of the council person to have any major project pushed through.”

Jackson spokeswoman Maureen Harper said the request for the legislation came from the Jane Campbell administration and that Jackson was automatically listed as a sponsor by virtue of his role as chairman of the Finance Committee.

Harper said Jackson didn’t chair any Finance Committee meetings last October and did not attend the council session when the legislation was passed.

Council President Martin J. Sweeney — who served as Finance chairman during Jackson’s absence — said Wednesday that he assumed the deal had Jackson’s support because Jackson didn’t tell him anything to the contrary.

To reach these Plain Dealer reporters: cevans [at] plaind [dot] com, 216-999-6139

slivings [at] plaind [dot] com, 216-999-4453

It seems that the folks who run government agencies have been bitten by the sprawl bug. These photos show a new building away from any other structure. There certainly are few if any restaurants to have lunch within walking distance of this public investment. Perhaps some members of the cleaning crew live within walking distance of work here. Is there a bus line nearby? I suspect virtually everyone who works at this facility will drive to work, by necessity because there is little public transit available. Another example is of the Cuyahoga County Board of Health which is on Ventura Drive in Parma, a long hike to the clinic from the nearest bus line.

Thank you Lee--this construction falls under completely unsustainable.   Unless, of course, the CMHA administration lives in the new Garden Valley Estates at E. 75th and Kinsman, and walks to work.

I can only hope that Kasich stops the massive hemorrhaging of dollars to the Opportunity Corridor and the land speculation that is fueling "development" in the "Forgotten Triangle." 

I would also like to see REAL heads roll in the federal corruption investigation in NEO.  But, that is wishful thinking.

http://www.cleveland.com/metro/index.ssf/2016/12/tenants_charged_in_cleveland_h.html

Even though the case involved the theft of federal dollars, the indictments were handed up in Cuyahoga County Common Pleas Court, rather than U.S. Northern District of Ohio. They also came just two weeks before Christmas and less than a month before McGinty leaves office.