OSBORNE DEVELOPMENT DEAL…DONE DEAL OR STILL NEGOTIATING?

OSBORNE UPDATE:
EVERYTHING'S STILL CLEAR AS MUD

On July 23^rd, Council hurriedly authorized a publicly-funded $800,000 economic development package after developer Lance Osborne claimed that any delay would jeopardize his ability to finalize a deal with Fitworks, the anchor tenant he was pursuing for his Catalano’s redevelopment plan.

Residents were completely cut out of the process. They were kept in the dark during the negotiations and denied a meaningful opportunity to weigh in on the development agreement before Council approved it.

Although Osborne told Council that the deal would close in mid-August, September 1^st came and went with no visible activity on the property.

On September 10^th, Mayor Scott Coleman disclosed that, in addition to scoring $800,000 in publicly funded economic assistance ($600,000 of which is an outright grant), Osborne also wanted a tax break from the city----a 10 year, 50% abatement of his  renovation-related property taxes.

Coleman clarified that the abatement wouldn’t apply to the property’s $1.85 million base value---the amount, Coleman said,

“Mr. Osborne has paid as purchase price for the property”

According to the County Recorder’s records, however, Osborne hasn’t paid anything for the property---yet.  September 25^th online records indicate that Giant Eagle still owns the property.

So the obfuscation continues.

ANOTHER TAKE ON THE OSBORNE DEVELOPMENT DEAL

Osborne’s tax abatement request is on the agenda for Council’s October 1^st Committee of the Whole meeting.

President Cathy Murphy stated at Tuesday’s Council meeting that:

“…work to get Fitworks as a tenant was still proceeding.  He (Osborne) expects they will be willing to come in, but he’s also talking other tenants. “

 All along I got the impression that Osborne was the one pursuing Fitworks.

After a recent conversation, however, it appears I may have gotten things backwards.

I spoke with someone who is in a good position to know what’s going on with Fitworks. I have no way to verify what this person told me, but it sure didn’t sound like idle gossip. They said:

• Fitworks was the pursuer and had, in fact, been pursuing both Osborne and Giant Eagle for several years.

• Fitworks very much wanted to go into the old Syms store space on Alpha Drive but lost out to Discount Drug Mart.

• Thereafter Fitworks started talking with Giant Eagle about the Catalano’s property---a 3 year long conversation as it turns out.

• Things should be sorted out by October 1^st---I’m guessing because of notification requirements in Fitworks’ current lease.

So there you have it. 

Osborne hasn’t been pursuing Fitworks---Fitworks has, apparently, been pursuing him.

EMERGENCY, EMERGENCY:
HALLOWEEN IS (STILL) OCTOBER 31^st THIS YEAR!

Both our city Charter (Constitution) and city ordinances limit and address legislation that is passed by Council on an “emergency” basis.

CHARTER 4.10 states:

Each emergency measure shall contain a statement of the necessity for such emergency action, a precise statement describing the emergency, and shall require the affirmative vote of five (5) of the members of Council for its enactment.

HHts Ordinance 17. 02 reads:

Any ordinance or resolution deemed by Council to be an emergency measure shall require three readings … on three different days, unless… suspended in accordance with the provisions of Section 117.01.
Each emergency measure shall contain a statement of the necessity for such emergency action, a precise statement describing the emergency, and shall require the affirmative vote of five of the members of Council for its enactment.

President Cathy Murphy is generally quite careful to give reasons on the record when legislation is going to be passed hurriedly, on an emergency basis, without 3 readings.
Almost always it’s because there is some significant time crunch or looming deadline.

 This was the third agenda item at this week’s Council meeting:

Proposed Resolution providing for the observance of Halloween on October 31, 2013 and declaring an emergency.

Council suspended additional readings and enacted the resolution (Resolution 30-2013) on the spot, as an emergency measure, without 3 readings.

I’m still trying to figure out what the emergency was.

Council wasn’t running out of time.
Halloween was still 5 weeks and more than 2 regularly scheduled Council meetings away.

That, of course, left me guessing:

• Was Council afraid Mayfield Village would beat them to the Halloween punch?

• Did they think that residents were waiting with bated breath to find out whether Halloween would occur this year?

• Did they think residents wouldn't  shop for candy and costumes, thereby depressing the local economy, until Trick-or-Treat night was officially declared?  

I can’t tell you what Council was thinking because President Cathy Murphy didn’t explain the emergency.
She did say that Law Director Tim Paluf 

“advised suspending the 2nd and 3rd readings (of the resolution)."

 It's good to know that no piece of legislation is too small or insignificant to escape the attention of our city’s legal beagle.

But wait a minute.

Isn’t he the one that’s supposed to make sure everyone follows the rules?

SECRETS: THE OSBORNE DEVELOPMENT DEAL

FIRST SECRET:
Developer Lance Osborne Is Looking For More From Highland Heights, Beyond the Already-Promised $800,000 Investment of Public Money 

It turns out that the details of the city’s development agreement (DA) with Osborne weren’t the only things that Mayor Scott Coleman and Council were keeping under wraps in July.

Sources tell me that during the DA discussions, Osborne let city leaders know that he also intended to seek tax abatement for the Catalano’s redevelopment project.

I've heard he wants his property taxes cut for 10 years as part of the deal.

Apparently an $800,000 public money subsidy---$600,000 of which is an “open your arms, we’re throwing money at you” outright grant---isn’t enough for Osborne.
He wants more.

I guess that shouldn’t be a surprise. Developers like to work with other peoples’ money. Who wouldn’t?

With tax abatement, residents’ investment in Osborne and his redevelopment project will inch ever closer to the $1 million mark.

Which raises the question:

For that kind of investment, should the city and its residents settle for increased tax revenue or do they deserve to get a cut of the project’s profits too?

                                                                                                  

MORE SECRETS:
The Excuse For Council's Rushed Vote on the Development Agreement Doesn't Hold Water

In my last posting, I detailed Council’s rush to approve the DA at the July 23^rd Council meeting.

Councilmen Ed Hargate and Bob Mastrangelo thought that Council should take time to consider residents’ comments, hear a 3^rd reading of the legislation and vote on the DA at an already-scheduled special business meeting on July 30th.

But they were overruled.

Moments after residents were given their only—and quite meaningless---opportunity to comment, President Cathy Murphy and Council members Lisa Stickan, Chuck Brunello, Leo Lombardo and Frank Legan voted to waive normal procedures, forcing an immediate vote on the DA.

Their excuse?

It’s one Murphy had to work pretty hard to get Osborne to provide.

At a Committee of the Whole meeting prior to the July 23^rd Council meeting Osborne initially told Council that he had:

“…a middle of August closing date. We have to finalize a deal with the anchor tenant in the next 3 weeks… We will commence demolition on closing, in mid August.”

When asked about deadlines, Osborne said:

“ We are on “show me” basis with the tenant.  The more documentation we can show, the better with the tenant.”

Murphy, however, pressed Osborne on the need for immediate action.
Suddenly, instead of the 3 week timetable he had just discussed, Osborne declared:

“If the city wants to have a 3^rd reading (of the DA legislation next week) it will jeopardize the deal.”

That new spin worked to provide the excuse that the Council majority was apparently looking for to justify their hasty vote.

Murphy commented:

“It’s not my preferred timing but Mr. Osborne has serious concerns about his timing…. Our constituents have let us know they like s to have 3 readings, but they aren’t aware of Mr. Osborne’s time frame.”

Councilman Chuck Brunello said:

"I’m okay about not having 3 readings. The project needs to move forward. It’s time. I hate to lose the deal for one week.”

Only Councilman Bob Mastrangelo expressed skepticism about Osborne’s sudden, prodded insistence that the whole redevelopment deal would fall apart if Council didn’t vote that night.. He also had other concerns. Mastrangelo declared:

“I want 3 readings. It’s rude to give me a copy of the final agreement right before the (July 23^rd Council) meeting without giving me an opportunity to compare it to the version from 2 weeks ago.  There’s $800,000 involved.”

Mastrangelo’s skepticism about the need to rush the DA vote proved correct.

It’s now September ^9th.
There was no closing in mid-August.
Demolition work has yet to begin.

The claimed need for immediate action turned out not to be real. In my opinion,

It was nothing more than a smoke-and-mirrors excuse to prevent residents from weighing in on---and possibly impacting---the development agreement.

MORE SECRETS:
THE IDENTITY OF THE ANCHOR TENANT

It’s the worst kept secret in the world.

Although I have previously refrained, in this blog, from identifying the anchor tenant that Osborne has been pursuing, city leaders haven’t been nearly as discreet.

It was the talk of Community Day.

Residents weren’t engaged in idle speculation. They heard the name from city insiders.

It now can be revealed.

The anchor tenant that Osborne has been trying to snag is Fitworks, which currently has a business office and gym facility located down the road, in Richmond Heights.

MORE SECRETS:
POTENTIAL ANTI-POACHING PROBLEMS?

It’s kind of ironic.
After a lot of foot dragging last year Council finally agreed that the city should join a county-sponsored anti-poaching agreement, which restricts Cuyahoga County cities and municipalities from stealing businesses from each other.

Now, a year later, Highland Heights had decided to fund a redevelopment project that has a Richmond Heights business as the anchor tenant.

The general feeling of city insiders seems to be that Fitworks’ relocation to Highland Heights wouldn’t violate the anti-poaching agreement because of the company’s small size and the city’s indirect involvement---presuming one can call an $800,000 public investment “indirect” involvement.

I have heard from a number of sources that the city recently informed the City of Richmond Heights of Fitworks’ proposed relocation---and the fact that property tax abatement would be involved.

It seems to me that the door has been opened for a potential bidding war…
It’s put up or shut up time for Richmond Heights, if it wants to try to keep Fitworks from moving out of the city.

I have no idea if Richmond Heights will put up a fight…but I keep wondering.

Isn't that exactly the type of bidding war that the anti-poaching agreement was intended to avoid…?