Thurber's Thoughts is back!

photo via Wikia.com

First, please accept my apologies for being gone from regular blog posts for so long.

While writing for Ohio Watchdog, I channeled much of my "thoughts" into those articles. When that assignment concluded at the end of 2015, I decided to take a break. However, I accepted work on another project that had absolutely nothing to do with politics.

That commitment prevented me from devoting time to my blog, but that is also concluded so...

I'm back.

And boy is there a lot to say.

We can start with everyone's favorite complaint:  potholes and the state of Toledo's roads.

For over a decade, I've been warning anyone who would listen that transferring money out of the Capital Improvements Plan (CIP) fund and into the General Fund to pay for every day expenses was a bad idea.

Eventually, I explained, we'd run out of money in the CIP and wouldn't have anything left for capital items - like roads and other expenses with a life of five years or more.

Wouldn't you know it, I was right and that mess erupted in the first part of the year when Mayor Paula Hicks-Hudson and Toledo City Council decided to ask voters to approve an increase in the payroll income tax.

Fortunately, that measure went down to defeat - resoundingly.

But it hasn't solved the problem that the city doesn't have enough money for capital items because they've raided more than $110 million out of the CIP fund.

And it's not just this mayor. Every "strong" mayor had a hand in creating the problem: spending more than what they took in and spending money on non-essential items.

Want to know just how ridiculous things got?

In February 2012, Toledo City Council *discovered* they had about $1 million more in revenue than they budgeted. But they were planning to transfer nearly $12 million out of the CIP to balance the budget. So instead of reducing the amount of the transfer to $11 million, they decided to spend that $1 million extra instead.

And what did they spend it on? A new filing system for city council and a temporary employee; additional funds for demolition of houses; additional inspectors in code enforcement, even though the department said it didn't need any; an executive director to run the previously discontinued Toledo Youth Commission; and a consultant to create an Historic Preservation Plan.

The irresponsible spending continues while former Council finance committee chairman and current City Treasurer George Sarantou, Toledo City Council and the mayor try to find a way to come up with more income rather than find a way to cut spending.

You see, there's no where else they can cut.

(At least, that's the story.)

So that's how we started the year and now we're looking at a sweetheart deal for Promedica, the city and the Metroparks.

Prime waterfront property on the East Side across from The Docks has been sitting undeveloped for decades.  Various developers have come and gone and finally, Dashing Pacific Group bought it.

Their plan was to develop it with shops and housing and take advantage of the wonderful waterfront and the new road and light posts the city installed to help with development.  But they haven't done anything on it yet and the city had a clause in the sale that said it could buy back the property after five years.

And it should tell you something about Toledo when all the developers who've had a chance at this have failed to actually *develop* prime waterfront property.

We must be the only city in the entire country that can't make a go of prime waterfront property.

But back to the sweetheart deal...

The city really doesn't have the cash to buy back the property, so Promedica has agreed to purchase the property from Dashing Pacific.  They will hold it for a bit and then sell it (for the purchase price) to the Metroparks.

The Metroparks will then make this prime waterfront property a park.

Never mind that the Metroparks has two levies that property owners pay.  In fact, the most recent one in 2012 was a 10-year levy that was supposed to generate funds for developing new parks, maintaining existing ones and preventing budget cuts. How much do you want to bet that they'll need another increase when they purchase about 100 more acres and then want to make this prime waterfront property into a park area?

Something about this isn't quite right. Why does Promedica want to purchase the land only to sell it to the Metroparks?

Can't Dashing Pacific sell it to the Metroparks without a go-between?

If the city has the ability to buy back the land, why don't they do so, especially if they've got a willing buyer in the Metroparks?

Are there some restrictions with the funding sources used to clean up the property and install roads and street lamps that prevents it from going directly to another governmental entity like the Metroparks?

Inquiring minds....

And then there is the Southwyck property.  The mall sat unused for - well, no one really remembers how long because it was such a long time.  The city finally got the property from the owner, tore down the buildings and decided to market it as an open area for development.

Oh - and they borrowed money to do the demolition.

Now there is a buyer but the city is looking at a loss on the project. As one city councilman said - they didn't buy the land in order to make a profit...

But here's the thing.  They still have a loan and, according to various media reports, they (or rather you and I) are paying about $70,000 in interest every year on that loan.

So the city is going to pay off the loan with the income from the sale, right?

No - this is Toledo, so wrong!

The city isn't planning on paying off the loan but putting the money into the CIP fund. So you and I and every other taxpayer is going to continue to pay about $70,000 in interest so the city can spend that income elsewhere.

If you're wondering what they're thinking at city hall, see above story about the 2012 budget.

Sadly, this is par for the course.

So that's the start. Coming up I'll take a look at the absolutely insane Toledo ordinance that forces any company doing business with the city to have a union contract - even if they're a non-union company. Talk about forced unionization!  Here I thought it was the union's job to organize but Toledo's Project Labor Agreement ordinance actually puts the city at the bargaining table with project bidders and forces them to adopt a union contract.

That'll be a long post so I'll save it for Monday.

Mayoral transition stories hint at bad things to come

Mayor-elect D. Michael Collins 

In looking online at The Blade, I had three important observations I want to share.

The first one deals with the editorial, "Mayor Collins His challenge is to persuade jaded Toledoans that city government can be a vital, positive force in their lives"

As editorials go, it's not bad, though it is the usual Blade telling their endorsed candidate what to do, which is a really a warning should he not follow their instructions.

No, the problem is the premise in the headline that city government can - and should - be a "vital, positive force" in our lives.

Government is not supposed to be any such thing. Governments exist to protect our individual rights. We grant them the opportunity to serve us as we see fit, giving them the authority to provide essential services like road repair, sewers, police and fire which we'd have a hard time doing alone (though when it comes to police, even that is changing).

Government should be seen as a necessary evil - something that must constantly be watched and guarded against lest it becomes too powerful and infringes upon our individual rights and freedom. It should be the last option - not the first choice - when there is a need.

Sadly, both the local paper and too many citizens don't understand this concept, which is probably why the city is stuck on stupid.

The second one deals with the 3/4% payroll income tax which Mayor D. Michael Collins wants to make permanent.

Since the 1980s, Toledo voters have approved this 'temporary' tax every four years. We've granted city council the ability to divert money from the original stated purposes and now use it to fund police, fire, capital improvements ... and yearly deficits.

We like the fact that we have a say every four years for it keeps a level of accountability present in how the city uses the money. If they don't use it properly, we'll take it away from them.

But like so many other things, a temporary solution was relied upon for every-day functions and the city never really makes any attempt to live without it, threatening us with doom and gloom if we fail to continue to grant it to them.

Collins wants to reduce it slightly, but make it a permanent tax. He said "growth in the economy would offset the loss and that Toledo would benefit from the positive signal the reduction would send to the business community." This just demonstrates his ignorance of the business community - and the economy.

Most people won't notice a reduction from 2.25% to 2.2% and business owners know that. The tax isn't paid by the businesses, but by the employees they hire and pay. And he has not mentioned, as far as I can tell, the impact that H.B.5, a revamp of municipal income taxes pending in the House, might have on the city or his plan.

Think about it: we're talking a $15 reduction for a $30,000 salary or a $12.50 reduction on a $25,000 salary. That's not a lot of economic growth when prices are rising.

But Toledoans will probably fall for it. Yes, stuck-on-stupid comes to mind.

The last thing is this quote from the same article:

“I plan to reach out to Dashing Pacific Group through the Regional Growth Partnership and help them develop a plan for the Marina District,” Mr. Collins said.

Did he not see the TV ads? Put out by a Toledoans for Working Families with a Columbus contact - not the Collins campaign - they portrayed a Chinese flag and said “Mike Bell cares more about creating jobs in China than he does here in Toledo.” They also said he sold the Marina District to Chinese investor Dashing Pacific Group Ltd. “for chump change.”

The ad was a direct attack on Dashing Pacific, something that the Chinese culture does not take kindly to. And since Collins refused to repudiate the ads, it's likely he will be seen as complicit.

If this were you, how receptive would you be to any outreach?

Then there is the arrogance - something Collins is well-known for. He wants to help them develop a plan for the property. How does he know there isn't one already or that he is better qualified than them to do so?

These three items are just a mere indication of what is to come - and it doesn't bode well for Toledo.

Dashing Pacific still interested in Marina District

The good news is that Dashing Pacific would still like to purchase the Marina District - and maybe more of the property than originally included in the offer. The bad news is that the deal still must go before city council and I don't think they've yet learned their lesson to not meddle in other people's affairs. Hopefully, they'll take a look at the offer and decide yes or no without placing in it a ton of conditions intended to reward their friends and special interests.

Press Release:

Letter to Mayor Bell indicates further interest in remaining acreage

(Hangzhou, China) The Chairman of Dashing Pacific Group on Thursday delivered a letter to Toledo Mayor Michael P. Bell reaffirming the group’s desire to purchase the Marina District under the terms of their existing offer and further indicated interest in purchasing the remaining acreage under a two year option.

Earlier this year Dashing Pacific made an offer to purchase 69 acres of Toledo’s Marina District for $3.8 million. There is currently legislation pending before Toledo City Council on which the Mayor will ask for a vote at Tuesday’s meeting.

The hand-delivered letter was a welcome close to the Mayor’s nine day trip to China during which time he met with Ms. Yuen, the Chairman of Dashing Pacific.

The Mayor will meet with media to respond to questions about the deal upon returning from China on Friday, May 27 at 1:30 p.m. in his office, pending the timely arrival of his flight.

'Not-business-friendly' Post #20 - Toledo council still clueless

Even after all the figurative head-slapping (ala Special Agent Gibbs in NCIS) that Toledo City Council received over the last week following their stuck-on-stupid ideas for the sale of the Marina District to Dashing Pacific, they still don't get it.

Dashing Pacific Group is 'reassessing' their interest in the deal primarily because of all the strings city council members wanted to attach for their friends and supporters. Remember, Dashing Pacific was offering to purchase part of the property for $3.8 million - and wasn't asking for anything else! No tax abatements, no grants, no loans, no special terms - unlike previous developers. They wanted to actually give the city money for the property and take ownership.

But that just wouldn't do for most of city council which wanted to make sure this 'deal' benefitted friends and supporters - primarily unions. Everything from deed restrictions to dictating the unions that would work on the project to taking back ownership if Dashing Pacific wasn't where city council wanted them to be in a paltry two years. (As if having the property sit for the last 10 and maybe for another 10 before someone else might offer to buy it was any great alternative!)

Besides, insisting on a time frame for development clearly ignores the market realities of the area. Many investors purchase land when it is affordable or available and hold it until the time is right to actually develop it. To insist that something happen in a specific time allotment shows the conceit of city council members who 'obviously' know better than the buyers.

But our smug city council members just couldn't resist using the power of their positions to interfere and dictate to the potential buyers. Well, why not? They've gotten away with such nefarious and detrimental shenanigans in the past - why should this deal be any different? But it was.

Based upon what Dashing Pacific saw and heard from council - which probably appalled them, as it should - they backed out of the deal. Dashing Pacific, clearly cognizant of the political implications, was too polite to insult city council, so they termed their withdrawal 'reassessing' their interest.

Appropriately, Mayor Mike Bell asked for the ordinance on the sale to be referred back to the administration. As Deputy Mayor Tom Crothers explained to council, the ordinance was to consummate a specific deal and there no longer is a deal, so there is no need for the legislation.

But a stuck-on-stupid council wanted to hold the legislation for two weeks. At-large Councilman Joe McNamara said that holding onto the legislation would send a message that council is willing to work with the investors.

TOO LATE! McNamara's message last week was heard loud and clear and it wasn't one of 'working with' as much as one of 'dictating to.'

McNamara, still whining like a child because he didn't get introduced to the investors, had the temerity to suggest this whole thing was a misunderstanding due to cultural differences. Apparently McNamara is even more clueless than the rest of council to assume that the problem is on the part of Dashing Pacific for 'not understanding.'

I've got news for McNamara: everyone else is clear on the fact that it is council who fails to understand the business world primarily because none of them have ever run a business before. It has nothing to do with culture, unless McNamara is talking about the culture of corruption surrounding the routine use of a political office to reward his union friends by mandating their inclusion on a future development.

District 2 Councilman D. Michael Collins asked for a referral of how much money had been spent on the Marina District and the conditions under which the city accepted the money. His concern is that the City accepted grants and loans that might require repayment of the monies if certain conditions are not met. Now, it's been a decade that we've been dealing with this property and I fail to understand what difference another two or three or five might make. Collins' question is a valid one - and certainly council should know what they committed to when they accepted the grants and loans for the clean-up of the land (why they don't already is an entirely different question for another day). But if that was his concern, he certainly went about expressing it in a terrible, arrogant and condescending way last week.

Council did decide to hold the legislation, but it won't do any good. Council members have proven themselves to be the antipathy of 'business-friendly,' though many in the area already knew this to be the case. Now, our council's reputation in that regard is international.

The only way to salvage the deal - if that is even possible - would be to humbly ask Dashing Pacific if they would still like to purchase the land at the prior monetary offer and, if so, have council pass the ordinance immediately - with no changes or restrictions or mandates.

But that's not likely to happen.

I do hope Bell will be able to convince Dashing Pacific that the purchase is still a good deal for everyone involved. But I won't hold my breath that some on council won't muck it up again. Their actions and comments clearly demonstrate that they can't resist their 'not-business-friendly' antics.


***Side Note: For those of you who may be new readers of my blog, you'll notice the headline for this post is #20. I had to start numbering the 'not-business-friendly' blog posts because there were just too many of them. Fortunately, I've not had as many since Mike Bell was elected mayor, but like a leopard that can't change it's spots, I knew it wouldn't be long before the anti-business members of city council did something worthy of an additional number.

"Not-business-friendly' Post #19: Dashing Pacific and a clueless Toledo council

Yesterday we learned that the Dashing Pacific Group is 'reassessing' their interest in the Marina District. This certainly comes as no surprise to me, though it seems that members of Toledo City Council still don't get it.

From Mayor Mike Bell's letter to City Council:

Dashing Pacific Group has advised the City that they are reassessing their interest in purchasing the 69 acres in the Marina District. Therefore, I am requesting that Council cancel the Economic Development Committee hearing scheduled for Tuesday, April 19th, and refer the Ordinance authorizing a sale agreement back to the Administration at the April 19th Council meeting.

After discussing, last Tuesday, 'draconian' (to use a frequently heard term these days) conditions for the sale of the property, city council members sent a very strong - and negative - message to all investors who might even remotely consider this area for their developments and dollars.

Does council not understand that people with millions of dollars ready for investment have a plethora of rusted-out cities and empty properties from which to choose? They can have their pick of locations and sites and, because of the economy, can usually ask for tax breaks or other 'incentives' from cities - and get them. In our case, Dashing Pacific asked for nothing except to purchase the property.

But council couldn't resist catering to special interests in a vain attempt to look important and curry the votes of certain groups. Even after learning that their 'stuck on stupid' conditions could jeopardize the deal, they're still insisting that they're doing what is 'right' for the community.

Really? Dictating to private investors what kind of employees they can have risks everything for the entire city while trying to placate the union workers who make up only about 13% of the workforce. It's certainly NOT in the best interests of all the residents to put deed restrictions on a sale that would prohibit 87% of the workforce from participating.

From the news article:

Mr. Copeland said he is pro-business — and pro-citizens of Toledo — and that he makes decisions based on “what affects the citizens of Toledo.”

The loss of the development would have a much bigger impact on the 'citizens' than any requirement for union labor at the job site. What part of that equation does union boss Phil Copeland not understand?

And then there was this from the district councilman:

Adam Martinez said, “I don’t think Toledoans have any issue with the global marketplace and competing. The mayor is certainly very focused on economic development and moving at the speed of business. I think a lot of times he gets caught up in that.”

But the mayor may not understand that council members have the responsibility to make sure “we’re protecting our tax base and citizens,” Mr. Martinez said.

Of course businesses 'move at the speed of business.' If they don't, they fail. The failure to grasp this basic concept is another big part of the problem on city council. Business shouldn't have to wait for self-important politicians to figure out how to carve our special conditions to benefit their friends just to be able to go forward with a plan - and certainly not in the economy we currently have in Toledo. Perhaps this is why businesses don't even try in this community?!?

But for Martinez to think he's "protecting our tax base and citizens" just shows how warped his perspective is. He's risking the bigger picture of overall development and a business-friendly reputation to try to guarantee favors for only a small portion of the community - his union friends.

But the arrogance and hubris of Councilman Joe McNamara takes the cake:

Councilman Joe McNamara placed the blame for the setback on the Bell administration, which he said failed to introduce the investors to council and did not prepare them for the public scrutiny the deal would face.

“The mayor had a relationship with the investors, but council did not,” he said. “There is clearly a cultural difference in how business is conducted in China and the United States and I think the Bell administration did a poor job of communicating that.”

You didn't introduce us - what a whiny, childish, unprofessional attitude! The message McNamara is sending is coming through loud and clear: you didn't cater to us, so we're not going to let you get what you want Mayor - and the investors be damned!

And to say that the Bell Administration didn't 'prepare' Dashing Pacific for the 'public scrutiny'??? International investors are most definitely cognizant of the public scrutiny - what they didn't expect is that a community so desperate for investment and potential growth would have representatives on council who were more interested in protecting a small group of friends than in doing what is best for the community as a whole - or that these same petty representatives would jeopardize a deal because of an imagined slight.

Did these people not learn anything from the Westgate fiasco and Costco? And they wonder why companies have little or no interest in doing business here.

District 6 Council member Lindsay Webb said:

“This is still on the table, in my opinion,” she said.

“I think this is an attempt to scare the public and members of council out of asking the questions that must necessarily be asked.”

Well, just because YOU think something is still viable doesn't mean Dashing Pacific agrees with you. But to state this is a scare tactic to try to prevent questions is beyond naive and further demonstrates the total disconnect between the global business world and the inane ideas of council.

If council were just asking questions, that would be one thing, but they're not. They're issuing not-so-thinly veiled threats that unless the investors cater to their small-minded demands, they won't be able to purchase the property and spend millions turning it into something profitable.

And then there was this priceless gem:

Councilman Mike Craig, whose district includes the area to be sold, said cultural differences are getting in the way of a business deal.

“They need to understand, in the United States, in a development this big, you have lots and lots of partners,” Mr. Craig said.

He said he opposed putting a restriction in the deed transfer requiring the use of union labor, as area construction unions are seeking, but said the Chinese investors should meet with the Northwestern Ohio Building and Construction Trades Council and negotiate.

Apparently Craig doesn't realize that in a free society - like we supposedly have here - the 'partners' are the ones brought into the deal voluntarily, not forced upon you by self-interested and egotistical government officials.

But that's not all. Even George Sarantou, who identifies himself as a Republican, went so far as to 'suggest' that Dashing Pacific go directly to the unions to prostrate themselves:

Councilman George Sarantou called for the Chinese investors’ representative, Mr. Prephan, to meet with the trades union representatives so they can show their involvement in other big projects, such as the Huntington Center arena.

Why? Perhaps Dashing Pacific isn't ready to meet with potential workers yet? For goodness sake - they've not even gotten ownership of the property. What a bunch of hypocrites - complaining from one side about not moving at the speed of business while insisting on the other side that the developer meet with building trades before they've even gotten their drawings of the site completed.

Are we fully cognizant yet about how 'not-business-friendly' this council truly is?

Here's some advice for council: It's certainly appropriate to ask for prior developments the individuals have worked on. It's certainly appropriate to evaluate the price they're willing to pay against the marketable value of the property. It's certainly appropriate to ensure they have the financial wherewithal to meet the purchase obligation and to actually do something with the property.

It's NOT appropriate to insist that your friends get the contracts, that your union supporters get the jobs or that the development fit your wants and desires rather than what can actually be successful and produce revenue for the owners and the city tax coffers.

And it's NOT appropriate to assume with such arrogance that you - without an iota of experience running a business - know better than they do what will and will not work.

Apologize for your stuck-on-stupid, anti-business posturing, sell the property and then get out of the way. Even if Dashing Pacific doesn't do anything with the property for the next several years, selling it for several million is better than letting it just sit waiting for something you deem to be 'more worthy' or for a developer who will cater to your trivial, small-minded and irrelevant demands.

Quick thoughts on the sale of the Marina District

The good and the bad in bullet point fashion:

*** Dashing Pacific Group, the new owners of The Docks, has offered to purchase the Marina District. The price is significantly less than the 'investment' that's been made with tax dollars, but then, the 'investment' costs weren't really justified by any return-on-investment (ROI) analysis. In the end, the property is only worth what someone is willing to pay for it. The offer is a good thing.

*** Dashing Pacific is actually offering to purchase the land - as in, give the city money for it. Unlike prior developers, they're not asking for anything other than the sale. Prior interested parties wanted the city to spend money on various things, which the city agreed to do, putting us into the position where the 'investment' was greater than the value of the property. The fact that they want to purchase without other public dollars being spent is a good thing.

*** City Council is posturing about putting demands - or conditions - on the sale: everything from Project Labor Agreements (PLAs) to a business plan to rescinding the sale if the plan doesn't progress as expected. As Mayor Mike Bell patiently tried to explain to council, these ideas scream 'anti-business' and might not sink just this deal, but future deals for economic growth in the region. Bell's understanding of this and his directness in addressing city council is a good thing. The conditions of council are definitely in the bad category.

*** City Council has never required a business plan in the past, so why now? It might be a good thing if they've learned from prior mistakes, but it's a bad thing in this case for a single critical reason: this is a purchase of property that transfers ownership to a private entity. Government has no business dictating the terms and conditions once they no longer own the property. If they don't believe the buyers have the capacity to develop the property into a thriving, profitable venture, then don't sell it. But they'd be hard pressed to make that argument after selling The Docks to the same group. So let the new private property owners do what they must to accomplish the economic growth we so desperately want and need in Toledo. That would be a good thing.

*** Additionally, Council needs to stop being hypocrites on these types of arrangements. They should require business plans whenever they accept a grant on behalf of a development or guarantee a loan (which they've done in the past and for which we are STILL paying). But while members of council might be capable of reading and understanding such plans, I doubt that even half of them have the background and experience or knowledge to adequately evaluate such plans and determine potentials for success or failure. Some have made the argument that banks require business plans - but council isn't a bank and shouldn't act like one. If the venture is worthy of a bank loan, it shouldn't need public monies to go forward. And if a bank won't loan for a project, certainly council shouldn't either. If council would follow this premise, it would be a good thing. That they don't is certainly bad.

Sell the property to Dashing Pacific and then get out of the way. That would be the BEST thing.

Mayor Bell to sign MOU on Marina District with Chinese investors

Dashing Pacific Group is now interested in the Marina District as well as the Docks.

Press release from the City of Toledo:

Bell to sign memorandum with investors interested in Marina District

Toledo Mayor Michael P. Bell expects to sign a memorandum of understanding (MOU) on Tuesday before City Council's economic development committee hearing with investors interested in the Marina District. The MOU is not a solid offer for purchase, but indicates that Dashing Pacific Group is interested in purchasing and developing the riverfront district pending the successful purchase of The Docks restaurant complex.

Dashing Pacific Group made an offer to purchase The Docks in January of this year and Council will contemplate the proposal at their hearing beginning at 10:30 a.m. on Tuesday morning, February 8th. The administration has asked for a vote on the sale at the full meeting of council on Tuesday afternoon.

Mayor Bell will be available for comments following Tuesday's hearing.


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