Wednesday, April 23, 2014

We don’t know how sin tax money will be spent

If the “sin tax” for stadiums passes May 6, who decides how much will go to the city of Cleveland, and how much to Gateway?

Who’ll decide what gets replaced first — the Quicken Loans Arena roof or the ramps at Progressive Field or the seats at FirstEnergy Stadium? Can any of it go to pay off construction debt, or will it all go to repairs and new scoreboards?

We don’t know. No one does. The city and Cuyahoga County still have to negotiate how they’ll share the alcohol and cigarette tax money. The negotiations won’t be easy. And they don’t intend to hash it out until after voters approve the tax.

“We do recognize that this is a gap in the legislation,” county councilman Dave Greenspan told me recently. “It is an issue we will need to deliberate on.”

The “sin tax” on alcohol and cigarettes is a county tax. So if voters extend it, the Cuyahoga County Council gets to decide how it’s spent. But city, county and business leaders say the extension is meant for repairs at all three publicly-owned sports facilities. (You can see the Indians' and Cavs' wish lists and a report about the Browns' stadium here.)

The city owns the football stadium, while the public Gateway corporation owns the baseball stadium and basketball arena. How will the money be divided?

“I think it will probably be even,” Mayor Frank Jackson said at the February press conference that kicked off the pro-sin tax campaign. Jackson wants the tax revenue, a projected $260 million over 20 years, to be split equally among baseball, football, and basketball.

But at a January meeting, Greenspan and three other Cuyahoga County council members warned Jackson’s chief of staff, Ken Silliman, not to expect an even split.

“A third, a third, a third is not something I am interested in,” Greenspan tells me. “I’m a big believer that the money follows the need. If in one year, Progressive Field has greater needs than the other two, that’s where money will go.”

The city and county haven’t had to share stadium money like this before. The first stadium sin tax, from 1990 to 2005, was earmarked for Gateway, to build Progressive Field and the Q. When the tax was renewed for 2005 to 2015, the first $116 million was earmarked for building and repairing FirstEnergy Stadium. (The last year or so of the tax will go to the county.)

But if the tax is extended to 2035, the city and county will have competing interests for the same pot of cash. The Jackson and FitzGerald administrations want to negotiate a cooperative agreement to figure out how to sort through those interests.

It’ll be tough. The Browns’ lease is more complex and vague about what the public has to pay for than the Indians’ and Cavs’ leases. The football stadium is newer and is used less often, but it’s bigger, and it’s battered by lakeshore winds. Gateway already has a system for weighing Progressive Field’s repair needs versus the Q’s. But that doesn’t help any with the football stadium -- unless Gateway were to take it over too.

The county will have the upper hand in negotiations with the city, because it levies the tax. But the cost of public stadium ownership is falling harder on the city right now. Cleveland is still paying off $13 million a year in construction debt on the football stadium, while the county is paying off $9 million a year in debt from the Q.

Could any sin tax money go to those old debts? City councilmen Brian Cummins and Mike Polensek have asked that question, and Jackson has entertained the possibility. But it seems unlikely. The county council sounds unwilling to hand over a straight third of the tax money to the city, and the county seems entirely focused on future repairs, not past debt.

Why wasn’t this all figured out before the tax went on the ballot? Greenspan asked that question at the January meeting.

“Those discussions need to happen, in my opinion, before the vote in May,” he said then, “so that the voters understand the complexity and understand the fundamental decision-making process as to how these funds are going to be used.”

He was ignored. Our elected officials would rather present a united front to get the tax passed, then argue about the messy details later.

Friday, April 11, 2014

Sin tax opponents propose $3.25 fee on all sports tickets; is pro-tax side getting scared?

The fight over the stadium sin tax just got more interesting.  After some uncertain steps, the opposition found its footing today. They proposed a simple alternative to the tax on alcohol and cigarettes -- a $3.25 facilities fee on every sports ticket.

"It takes the maintenance cost off the shoulders of those who can’t afford tickets or choose not to purchase them," says the No side's five-page, footnoted proposal, "and places it on those who actually use these venues, more than half of whom come from outside of Cuyahoga County."

At first, the opposition seemed like a pretty small group with a scattered message. But they are making headway.  The Yes side on Issue 7 has decided it can't ignore them anymore.  Are they getting scared?

The Keep Cleveland Strong campaign just sent out a press release saying a facility fee would "punish Cuyahoga County families and sports fans." It quotes three county council members and city council president Kevin Kelley. 

"These various ideas have been hatched and then publicly floated with apparently little thought, and none of them have stuck," says an especially disdainful county councilman Dan Brady. 

But this idea might stick -- at least as the counter-argument the town debates between now and May 6. 

Will Issue 7 be a jocks vs. nerds vote?  Fans surely don't want ticket prices to go higher. The Yes side notes it'll cost $13 more to take a family of four to a ball game. The average Clevelander may well prefer paying 7 cents on a six-pack of beer to that. Maybe the opposition has handed the sin tax side a winning argument.

But maybe not.  Warnings of higher ticket prices could rebound against the teams.  Our ticket prices may be low compared to other cities, but plenty of fans think they're gone up too much for frugal Cleveland.  Think of the anger against the Indians' dynamic pricing system, which raised the cost of cheap seats by much more than $3.25 in the last few years. 

Also, the No side cleverly notes that the Q already levels a $3 facility fee on concerts and all events other than games, and it doesn't seem to have hurt concert bookings.  

Last week, Brent Larkin wrote cryptically that the Yes side's latest poll "shows that the tax extension has a reasonably good chance of passing, although it’s far from a sure thing."  I think that means it's losing so far.  That could change, as the Yes campaign ramps up its message.  But it feels like the debate just realigned with 3 1/2 weeks to go.

Wednesday, March 19, 2014

East Clevelanders don't want to merge with Cleveland

"Cleveland takes small steps toward merger with neighboring East Cleveland," reads a headline today.

Cleveland Mayor Frank Jackson and council president Kevin J. Kelley have asked Cleveland State's urban school for info on mergers. Councilman Jeff Johnson told reporter Leila Atassi Monday night what he's also told me: he thinks the big city should annex its troubled neighbor, for the sake of both towns.

There's just one problem.  East Clevelanders don't want to be annexed.

While reporting in East Cleveland for my new commentary, "A City's Limits," I discovered public opinion there is strongly against a merger. The idea got booed down at a public forum in December. The long-suffering town doesn't want to give up its independence, its City Hall and cops, its mayor and council. Only one out of the town's 12 elected officials is pushing for a merger.

East Cleveland Mayor Gary Norton is against merging with Cleveland. Norton is evasive about this with reporters, and Plain Dealer columnist Brent Larkin is slamming him for not giving him a straight answer. Larkin doesn't know that when Norton was sworn in for a second term as mayor Jan. 2, he came out against a merger.

What's going on? Norton got burned by George Forbes, who claims Norton supports merging. But Forbes told me his conversation with Norton happened off the record, during Norton's reelection endorsement interview with the Call and Post. (Forbes is general counsel at the Call and Post and has a strong say in its editorials.) Forbes, trying to play journalist and power broker at the same time, botched both roles. He told the whole town about the "off the record" conversation with Norton -- or at least, his version of it.

East Clevelanders, who've been abandoned after waves of white flight and black flight, are skeptical that anyone else really has their interests in mind. Any move that comes off like a hostile takeover will backfire. Merger supporters like Forbes and even Larkin are in danger of coming off like Vladimir Putin coveting Crimea.

Johnson's metaphor of a marriage sounds a better note. But it'll be a long, difficult courtship.

For more on the fraught politics of a merger, check out my commentary, "A City's Limits." Written for the April issue of Cleveland Magazine, it's online now.

Thursday, March 13, 2014

After 35 years, Dennis Kucinich’s City Hall portrait is finished at last

Matthew Hunt pauses before the reveal. From an easel, he lifts his painting of a young woman looking over her nude shoulder. Behind it stands a portrait Cleveland has awaited for 35 years.

Dennis Kucinich, his hair still black, looks to one side, his eyes narrowed into a thoughtful squint, serious and enigmatic.

“I was hired to go in and try to find the person behind the name and TV interviews, the stuff that everybody knows,” says Hunt.

When Kucinich was voted out of the mayor’s office in 1979, no one commissioned the traditional City Hall portrait. Moneyed civic leaders, aghast at Kucinich’s divisive two years as mayor, wanted to forget him.

“I wanted a more quiet side,” says Hunt. “Especially because this was such a wrong that was done. I felt that I had a responsibility to try to make it right.”

In 2002, a new generation tried to correct the snub. Then-mayor Jane Campbell, city councilman Joe Cimperman and labor leaders threw a $20 kielbasa and pierogi fundraiser in a church hall in Tremont. The party raised about $12,000.

Then? Silence, delays, small occasional updates in The Plain Dealer’s “Whatever Happened To” feature.

Now, 12 years later, the portrait is finished.

Hunt, 42, won a contest to paint it in 2003. “They said [Kucinich] saw my work, and he really loved it,” he says.

Self-taught, Hunt began painting in 1998 and debuted with a show that year at the McCormick Place gallery in Hudson. He has a gift for painting realistic, psychologically profound depictions of people that invite the question, what is he or she thinking?

Paid a $7,250 advance to paint Kucinich, Hunt tried for three years to meet his subject. First, the then-congressman’s 2004 campaign for president got in the way. Then his office cancelled a post-election photo shoot in Washington. A year later, Kucinich called Hunt to say he’d make it happen. At last, in September 2006, Hunt spent a morning observing Kucinich at his Lakewood office.

“He would look down when thinking about something,” Hunt recalls. “He would hold his left hand to his head, but he would do this sort of squinting. It was really warm the way he did it, but it was very sincere, and it wasn’t for anyone else.”

Hunt watched Kucinich during a press conference and a meeting with aides and spent ten minutes taking reference photos of him. He headed back to his home studio in Copley, that look on Kucinich’s face still in his mind.

It took Hunt seven years to paint it. “I own the fact that it’s taken as long as it has,” he says.

At first, Hunt’s other work took precedence. Commissions rained down. Parents hired him to paint their children, companies their CEOs, universities their administrators.

Then, three setbacks brought Hunt’s work to a halt. He was diagnosed with type 1 diabetes; when it was uncontrolled, his painting hand shook. His basement studio flooded, destroying much of his work. The financial crisis hit, and clients cancelled and retreated.

Now, Hunt has recovered. A sharp doctor helps keep his health troubles in check. “I’m able to work now the way I was,” he says. Jobs are flowing to him again. He recently accepted a commission to paint retired Lincoln Electric CEO John Stropki.

He also turned back to Kucinich. He collected ’70s photos to re-create how Kucinich looked in his early 30s. He studied ’70s suits and tie patterns to paint wide lapels and a diagonally-striped tie.

Thinking hard about Kucinich’s two years as mayor, he decided to add no symbolic props -- concerned that a hint of, say, the Muni Light battle might reduce his subject’s work to a single accomplishment.

Instead, Hunt depicted Kucinich in mayor’s office, sitting on the edge of a bare desk. The viewer looks on from just above him, an unusual perspective meant to evoke Kucinich's populism. “I don’t think he has the need to be above anyone,” Hunt says.

Kucinich’s interlocked hands rest in the foreground, a symbol of him “bringing together people and different sides, and the struggle that he had,” Hunt says. (That’s a generous interpretation of Kucinich’s mayoralty, commonly criticized as divisive.)

Hunt worked hardest at Kucinich’s face, especially his mouth, which is caught between a slight smile and a hint of satisfaction.

“I didn’t want to have a degree of defeat or worry,” Hunt says. “I wanted to convey someone who was in charge, but someone who was taking the issues very seriously. He might be young, but he’s not a boy.”

Hunt painted the final brushstroke about six months ago. He plans to take it to Cleveland’s Bonfoey Gallery for framing.

When will the public see it? That’s unclear. Hunt’s not sure what’s next, because “there’s no client,” he says.

A portrait committee, made up of representatives of two unions and the Community Partnership for Arts and Culture, owes him a second payment of $7,250 if the portrait is accepted. But whose job is it to accept the painting? The committee? Mayor Frank Jackson? Kucinich himself?

The long wait for Kucinich to join the pantheon of mayors is subtly symbolized in the painting itself. In 2006, Hunt noticed that Kucinich wore his watch upside down -- clasp up, face downward. He painted it that way. The clasp is just barely visible under his sleeve. “Time did sort of get flipped,” Hunt says.

Wednesday, March 12, 2014

Stadium boosters & critics debate sin tax at Sterle’s

Mark Rosentraub argues for the stadium sin tax at last night's Civic Commons debate.
Should voters support Cleveland’s stadium deals by voting for the stadium sin tax May 6? Or are we struggling under burdensome leases we can barely understand? Advocates on both sides argued the point last night during the Civic Commons debate as beer flowed at Sterle’s Country House.

Each side brought a numbers guy and a guy who argued from the gut. Mark Rosentraub, an economist who served on the Gateway stadium and arena board, made a case for the sin tax extension and the Cavaliers and Indians leases he helped renegotiate in 2004. City councilman Brian Cummins fired off figures to explain why he still has too many questions to support the tax.

Sounding simpler notes, Tom Yablonsky of the Historic Gateway Neighborhood organization argued that the stadiums have attracted residents and businesses downtown, while lawyer and sports blogger Peter Pattakos, with the newly launched no campaign, claimed the public should hold out in hopes of getting a better deal.

The debate format encouraged lots of back-and-forth, so several major questions about the sin tax were tested pretty thoroughly:

Do stadiums help downtown? Rosentraub, an expert on stadium financing, argued that sports don’t grow a region’s economy, but they do change the location of economic activity – meaning, they direct it to downtown Cleveland. He said 123,000 people commute from outside Cuyahoga County to jobs in Cleveland and pay $177 million in income taxes. The teams are part of “an amenity package that makes Cleveland a good place to work,” he argued.

Pattakos quoted Rosentraub’s writing, which calls sports’ spinoff effect on local business “quite small.” Yablonsky replied that downtown had only six residential addresses in 1990, before the baseball and basketball complex was built, and 62 now.

How else could we pay for this? Pattakos argued that stadium supporters should seek a seven-county tax, like in the Denver area, since plenty of Cleveland sports fans live outside Cuyahoga County. Yablonsky said state law doesn’t allow a multi-county tax. Cummins noted the state legislature changed the law to allow the sin tax extension. (Other Ohio counties can’t levy alcohol taxes.) Why not ask the legislature to allow a regional tax? he asked.

Cummins also suggested adding a $3 facility fee to tickets, on top of the 8 percent admissions tax fans pay now. “Could you raise the fees? Hypothetically, anything is possible,” replied Rosentraub. “Would the fans react negatively? Obviously.”

What are our obligations, even if the sin tax passes? Cummins said Cleveland still owes $128 million in debt from the football stadium’s construction, while Cuyahoga County still owes $88 million in Gateway construction debt. That costs Cleveland about $12 million a year and the county about $5 million a year. “The teams and the campaign have not told us anything about the sin tax paying down any of that debt,” Cummins said. The sin tax extension, expected to raise $260 million over 20 years, is meant mostly – maybe all – for repairs and upgrades.

Cleveland also pays $650,000 a year in property taxes at FirstEnergy Stadium, more than the Browns’ annual rent of $250,000. Meanwhile, the Gateway corporation itself has debts of $422 million, Cummins said, most of which “is probably never going to be paid.”

Yablonsky noted that Cleveland instituted several taxes in 1995 to help pay for the Browns’ stadium. “Those are right now dedicated to pay back the debt,” he said.

Cummins acknowledged that. He claimed the city raises: $27 million a year from those taxes, including a citywide parking tax and the sports and concerts admission tax.

“I actually talked to one of the CEO-presidents of one of the teams,” Cummins said. “He asked me, ‘Councilman, why aren’t you using your other taxes that you created to pay off the debt?’ I said, ‘We’d love to.” The problem, says Cummins, is that money is scarce. The state cut the local government fund and abolished the estate tax in the last few years. That cost Cleveland almost as much per year as the parking, admisssions and other taxes take in.

Can we get a better deal? Pattakos argued that a no vote on the sin tax would send elected officials and teams back to the negotiating table to change the leases. “If voters reject the sin tax this May, the teams aren’t going to leave this May,” he said. “They’re not going to leave anytime soon. We’ll end up with a better deal.”

Rosentraub said he already got the public a better deal in Gateway’s 2004 renegotiations with the Indians and Cavaliers. The deals, approved by the city and county governments, obligated the teams to pay for all maintenance that costs $500,000 or less – carpet, seats, etc. – if the public pays for major infrastructure, including roofs, heating and air conditioning. That, he says, saved the public about $3 million a year.

Yablonsky and Rosentraub cast a no vote on the sin tax as self-defeating, implying the teams don’t have much incentive to renegotiate.

“The reality is, if you don’t pass this, you still have to fulfill the terms of the lease,” Yablonsky argued. “So you put general fund money at risk if you don’t pass this. Effectively, you break the lease if you don’t come up with the terms to [make] the lease work.”

Tuesday, March 4, 2014

Charges grow vs. Bedford judge in prostitution case

Updated 3/5 with prosecutors' motion about Jacob's laptop.

Prosecutors just amped up the pressure on Harry Jacob III, the judge caught up in Bedford’s prostitution scandal.

He’s been indicted on five more charges – in addition to the 11 he was hit with in December, including accepting sex as a bribe and promoting prostitution.

The new charges include failure to report a felony and records and evidence tampering. They add to the question of what really happened between the 57-year-old judge and the women who worked for Studio 54 Girls, the alleged brothel in a Bedford office building.

I told the story of the judge and two of the young women in “The Bedford Judge and the Brothel Bust,” online now in the March issue. Though prosecutors charged Jacob with three felony counts of promoting prostitution, a law commonly used against pimps, I didn’t learn of any evidence that Jacob was acting like a pimp in the traditional sense.

Instead, most of the felony charges against Jacob centered around a single incident on April 20, 2012. That day, the original charges suggest, the judge appears to have had some sort of sexual involvement with two women – and resolved speeding and contempt of court charges against one of them by levying a $250 fine.

Jacob is now charged with two more felonies on April 20, 2012: tampering with records -- a Bedford court journal entry -- and tampering with evidence. The second charge is somewhat surprising, since it requires a defendant to know that an investigation was “likely to be instituted.” The investigation of Jacob didn’t start until September 2013.

“It’s two theories about the same act, dealing with the ticket for one of the women working with the brothel,” says Joe Frolik, spokesperson for the Cuyahoga County prosecutor. “He deals with it in the hallway and dockets it -- not in open court.”

In the only count tied to a new incident, Jacob is accused of failing to report a felony on July 1, 2013. That’s long after the previous indictment suggested he stopped soliciting the young women. Frolik says he believes the felony Jacob failed to report is someone else promoting prostitution. July 1, 2013 is the day Jacob looked up the online ad of a Studio 54 Girl on his laptop while hearing cases on the bench, prosecutors claim.

Jacob also faces a tampering with evidence charge dating to Nov. 2-4, 2013. That’s days before investigators seem to have caught him by setting up a recorded phone call between him and one of the women. “At this point, he knows the investigation is underway,” Frolik says. “He’s trying to destroy records that could be potential evidence.” On Nov. 8, the day after the recorded call, Jacob allegedly looked up information about sex addiction and the Ohio law against compelling prostitution.

The judge is also accused of possessing criminal tools -- a computer and cell phone -- which he allegedly used either to promote prostitution or to tamper with records or evidence. And the prosecutors aren't done. They've filed a motion asking Cuyahoga County Common Pleas Judge Michael Corrigan to order Jacob to reveal the encryption password that protects some material on his laptop.  It may be a close call. Even the prosecutor admits the Supreme Court hasn't decided whether the Bill of Rights allows defendants to keep encrypted material private.

Friends of Jacob told me the charges against him didn’t fit the self-disciplined, honest man they know. Defense attorneys I talked to speculated the judge may have been overcharged. The two indictments portray Jacob differently, as a man who let illicit relationships thoroughly corrupt him. Prosecutors have doubled the number of felony counts against him. This could lead to Cleveland’s most interesting corruption trial since Jimmy Dimora.

Tuesday, February 25, 2014

Kevin Kelley talks vacant housing, council discipline, East Cleveland merger

My Q-and-A with Kevin Kelley, Cleveland’s new city council president, is out now in the March issue of Cleveland Magazine.

Kelley’s election may lead to a more assertive city council than we’ve seen in eight years. His predecessor, Martin Sweeney, valued cooperation with Mayor Frank Jackson and let the mayor's office set civic priorities. Kelley’s agenda for 2014 includes initiatives on vacant housing and gun violence, both still in the study stage.

The 45-year-old councilman from Old Brooklyn talked with me about his insistence on better discipline and decorum in council, his plans to step up home demolitions, and his thoughts on whether Cleveland should annex East Cleveland. Here’s an extended version of his answers. You can read his comments about why he supports extending Cuyahoga County’s alcohol and cigarette tax for stadium repairs in this blog post.

CM: What are your plans for vacant housing?

KK: The council has commissioned a study to look at the effect of demolition and how it affects property values. We need to aggressively attack these houses. Some homes are candidates for restoration, but what’s really causing the devaluing of real estate is the 5,000 we can all agree need to come down. The biggest challenge is not identifying the houses to come down, but identifying the money.

CM: Councilman Jeff Johnson will often make the case: I don’t just want demolition, I represent a historic neighborhood, I want some of these properties preserved, and I want to find money for that too.

KK: Certainly there are some [houses] that are candidates for restoration. But the biggest part of the problem is those that must come down. Even councilman Johnson or those who are active in the historic preservation community would agree that there are homes that are beyond saving. It’s bringing all of our property values down.

CM: At a retreat just after New Year’s, you told councilpeople to show up to meetings, show up on time, understand what they’re voting on, and pay attention to testimony. But only 10 out of 17 councilpeople attended your retreat. Does that prove your point?

KK: No. That was something I wanted to do before we started the session. I knew it was during the holidays, some people told me they were out of town visiting family. If it were held while we were in session, I’m confident we’d have 100 percent participation.

Look at attendance and punctuality since that retreat. Every meeting has started within 3 minutes of its starting time. We’re acting in a more professional manner. I think we’re taking things more seriously. I’m trying to make people more cognizant of the fact that when you sign your signature or cast a vote, millions of dollars are appropriated. When you consider the enterprise funds and the general fund, we appropriate over $1 billion a year. That’s something we need to be aware of, and that’s why I insist everybody be at their seats when the roll is called.

There was not a lot of chatter during the legislative portion of the meeting. There was not a lot of roaming around. The directors have agreed to come to meetings 10 minutes early to discuss any issues councilmembers might have so that please don’t have to roam around during the meetings. Overall, these changes are being accepted by my colleagues.

CM: What do you think about talk of Cleveland and East Cleveland merging?

KK: We need to commission a study that will look at whether this makes sense for both communities. It’s an intriguing opportunity, but we need to look at the cost of providing services to East Cleveland. There’s a lot of risk, but a lot of opportunity. It’s too early to say whether it’s definitely something we should or should not do. We need to take a very sober, thoughtful approach to this.

CM: What are the risks for Cleveland?

KK: The risks are that our budget is very tight. There’s not a lot of extra money. Our biggest challenges are providing safety forces. They take up 55 percent of our budget. Are we able to extend that level of service to what would be a new part of the municipality? Are we able to deal with the infrastructure challenges that East Cleveland poses? We have our own infrastructure challenges, in terms of the conditions of our roadways.

CM: What are the opportunities for the city?

KK: The opportunities are, there’s a lot of gems in East Cleveland. There’s a lot of nice old houses, parks, industry — [GE’s] Nela Park is still there. They have big city problems on a small city budget. If we come together, and that helps our ability to bond projects, can we be better together because of our now increased population, income tax and property tax values?

When we look at the big-city problems some of our inner-ring suburbs are facing, it’s an opportunity to demonstrate to other communities that by coming together, we can solve these problems together. We can make this work, we can do a merger and keep the local character, but get the benefit of working together.

CM: Could this pave the way for other mergers in the future?

KK: If it’s determined that it’s in Cleveland’s interest, and it is done well, and it can demonstrate that because of its merger, East Cleveland is in a much better position and Cleveland is in a better position — then yes, it can be seen as a transformative step that other communities can take and [a way] we can build a better Greater Cleveland.

CM: What was it like to be Kevin J. Kelley when a J. Kevin Kelley in the town next door was indicted on corruption charges?

KK: That was an interesting time! When it first happened, there was quite a bit of confusion. A couple of callers to my office were “so disappointed” in me. It was a tough time. With each subsequent headline, the effect on me lessened a little bit. But every now and then, one of my friends’ moms would say, “Oh, I know Kevin’s going to be OK. I know he didn’t do anything.”