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WOLSTEIN PICKS UP $1.4 MILLION AT STALLED FLATS PROJECTSubmitted by Roldo on Wed, 05/13/2009 - 18:37.
The Wolstein East Bank project is in limbo but that hasn’t stopped the City of Cleveland from feeding Scott Wolstein $1.4 million for land for a future walkway and park along the Cuyahoga River in the Flats. The city, via two government grants, has paid Wolstein $1,417,000 for less than a half acre of land, according to a document made available to me by the city.
The Wolstein Group and Fairmount Properties – the developers - have been promised tens of millions of dollars in government subsidies in legislation passed during a hurried City Council session in May of 2006. Council President Martin Sweeney gave members a 57-page document one working day before the legislation was passed.
It’s so easy to get money from government that I don’t know why there isn’t more development in Cleveland. Oh yeah, there’s no market for it.
That doesn’t stop the flow of freebies to developers, however.
Nothing has been built at the Wolstein development although there is work being done – all government infrastructure construction. The project itself is stalled.
Developers Diversified Realty Corp., Wolstein’s main firm, has been having financial difficulties dealing with debt. It was reported this week that German investors have bought some 30 percent of the firm’s stock.
Officials in Mayor Frank Jackson’s administration say that the city will build a park there someday. No price has been determined, they said.
However, a funding source is known. City general obligation bonds will be used to finance the work along with diverted taxes from Wolstein’s project via a TIF (Tax Incremental Financing) deal – if it is ever built. The TIF takes property taxes from the development that ordinarily would go to the Cleveland schools (about 60 percent), county, city and city libraries and uses them instead for the city park.
The $1.4 million all goes to Wolstein developers. The cost of a walkway along the river and the park is unknown at this time, according to City Planning Director Bob Brown.
On the west side of the Flats private owners have provided public walkways without cost to the city.
The only work being done at the Flats development is government funded sewer and electrical work.
In a Feb. 5 letter, Daryl Rush, director of the city’s Dept of Community Development thank the National Oceanic and Atmospheric Administration (NOAA) and the Ohio Department of Natural Resources ODNR) for funds to pay for the .4647 acres. The area runs along the Cuyahoga River. NOAA and ODNR each contributed $708,500.
Rush said in his February letter that the land had been acquired.
This will primarily serve residents of Wolstein’s project, if he ever builds the $230 million mixed use development of retail, commercial, office and for-sale and rental housing.
Don’t hold your breath.
You may remember the long list of government subsidies promised by various levels of government for the Wolstein project.
If you don’t, here are some of the freebies legislated for Wolstein:
- The Cleveland-Cuyahoga County Port Authority will provide $11 million in loans.
- City of Cleveland will provide $6 million in Core City loans.
- Cleveland Public Power will provide $3.4 million in free services.
- Cleveland Water Division will provide $740,000 in infrastructure costs.
- City of Cleveland will provide another $1 million in general obligation bonds.
- The County, City & Cleveland Schools will forgo $11,140,000 in property taxes under the TIF program.
- Cuyahoga County will provide $1 million in subsidies.
- The State of Ohio will provide a grant of $3 million for “environmental remediation,” matched by a loan from the County of $1 million.
- Tax exempt Parking Revenue Bonds estimated at $8,540,000 will be repaid from city parking facility revenues.
- Tax exempt infrastructure bonds estimated to be $9 million are secured by annual payments by the Northeast Ohio Regional Sewer District.
- The sum of approximately $4,550,000 will be made available through the Federal Highway Administration.
- The federal government has appropriated and the city shall obtain and make available when required for eligibility project costs a grand of $1.4 million from the U. S. Dept. of Commerce National Oceanic Atmosphere Administration. (MARK THIS DONE!)
- All rental and condominium units (some 300) will be tax abated at 100 percent for 15 years. No cost estimate given.
- The city agrees to enact legislation as necessary to amend and extend the CRA residential tax abatement program to assure that all residential improvements are available at the full 15 years at 100 percent. No cost given.
- The Greater Cleveland Regional Transit Authority (RTA)) will construct a transit station on the RTA Waterfront Rail Line for the project “… all at no cost or expense” the Wolstein’s project. No cost figure given.
This is too disgusting and I’m tired of typing. If you want to read the entire list of these give-aways, I suggest you go to: http://www.lakewoodbuzz.com/RoldoBartimole/RB%2005-03-06_Flats_Deal_Disgrace_Lakewood%20Ohio%20Roldo%20Bartimole.html
Are some worried about Socialism? Hell, wealthy developers have a franchise of it here in Cleveland.
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The city only collected to
The city only collected to date about $60,000.00 in property taxes from the east bank annually. The 300 units of housing and if those required $75,000.00 annual incomes then that is $225,000.00 annually in income taxes. The city sees a net gain, or they would not be contributing or abating for that matter.
As of today none of the parcels are abated taxes are being paid as they have been at the amounts they have been. If the TIF abates 60% it still would be a windfall for the city far exceeding any revenue those eight parcels of land generated in tax revenue.
The cost of developing the site requires joint financials or it would not fly, and even with it isn’t soaring.
I'll simply just put you on
I'll simply just put you on the side of developers no matter what.
Put me on the line called
Put me on the line called objective and then check yourself.
The parcels purchased under Flats East Development LLC and are:
101-11-011 tax 2008 $6,021.43
101-11-012 tax 2008 $2,145.27
101-01-013 tax 2208 $11,812.77
101-12-005, tax 2008 municipal and tax exempt
101-13-006 tax 2008 municipal and tax exempt
101-010-10 prior owner did not pay taxes this property has legal issues. 2008 Tax is $12,459.00
101-11-001 tax 2008 municipal and tax exempt
101-12-006 tax 2008 $362.96
Total taxes for 2009 in half year, $32,801.43, full year taxes $65,602.86 that amount represent the total property tax the city received or less in prior years. That being none of the properties paid more in part they all paid less, one did not pay at all.
So how much tax should be paid?
I know that the city can
I know that the city can borrow and or leverage from parking to finance and a big part of that is the 8% tax they levied on all parking in the city. So they can use that to build parking or finance parking and then charge tax on that parking. That’s actually smart!
I think the (+) key on your calculator is broke and I know you do not have TVM function or how to use it.
I have nothing against the developer or invested in him, but some do, we all do! I only meet him once at his Woodstock party, I am sure he would not remember me, but I can see him and his annual compensation at $7,152,401 and that is substantial.
I know that he put his ass on the line with this project it is huge and supper high risk!
I see him in a hole a luxury hole but none the less a hole, and you as shoveling dirt onto him? Why?
The TIF - form of tax
The TIF - form of tax diversion - will take place on what is built, NOT what exists now. The project is slated to be more than $200 million.
The city's 8 percent parking tax is already totally dedicated to pay for bonds for the Browns stadium. You can't use it twice.
Please look at all the subsidies that are scheduled to flow into the project. It is in legislation that passed Council in 2006. The link is provided.
You totally ignore reality.
Bond are used to
Bonds are used to raise captital, the income from parking that is forth coming generates and is new within that project. The bonds backing from water and sewer receipts have values as well, they can be used to determine a relative bond issuance on what is the TVM. They as in the bonds back a project just like the county bond issue backed with the tax. These are all backed with revenue streams that the project generates.
It's smart government financing, it takes reciepts that are new from the project. Then uses them to make it happen and then uses the receipts over time to pay them back.
In this case it is water, sewer and parking.
"The bonds backing from
"The bonds backing from water and sewer receipts have values as well"
I thought bonds were debt not asset, but I'm not smart like lawyers and accountants.
Building access to or
Building access to or updating water and sewer and electrical, each of those have a cost. They also will create usage and with that usage represents revenue streams. The monthly payments made to the utility that dollar amount is and can be leveraged into bonds. The amount over time paid to cover the bonds value. When the bonds paid off then the only loss is the interest paid on the bond.
It is investing, the TIF is based on the appreciation of value around the project and itself, the increases in value increase taxes. That increase leveraged into the project to make it happen.
Every option made to help the project happen, to reduce the costs. The balance then financed based on the potential leases and sales or the space, what is left is profit. If the prices are high for the space then the process of recovering the investment slows. If the economy is bad it actually stops.