Frank Jackson apparently wants to be the Mayor of Tower City.

As I’ve said before, doing favors for Sam Miller is a full-time job.

It’s one explanation I can see in offering Forest City Enterprises and others the opportunity to repay long-term loans at a discounted rate.  In other words, long-term loans via the city would be repaid by the borrowers (fat cats) at far below the amount of the original loans.

What you have to know is that most of these multi-million dollar UDAG loans, made during the reign of Mayor George Voinovich and Council President George Forbes, were munificently arranged to give certain favorite developers tens of millions of dollars often at ZERO interest rate.  Favorites were Sam Miller, Al Ratner and Dick Jacobs.  More later.

Usually, the duration of these sweetheart loans was 20 years.  However, I found this week that two for Tower City were for 30 years!  These loans are now due in 2020, but Jackson wants to accept payment now of $885,000 on loans held 10 years for a total $5.9 million, according to a Plain Dealer assessment of the loans.

As an example, one of the Tower City loans for $2.7 million started in 1990 at three percent for 10 years and 5% for the remainder.  No payment of principle for the 30 years!

Why is this being done?  To hand over the reduced payoff money to another downtown developer.  What else.  A sharing of wealth with the wealthy.

To further benefit these developers many of the loans were structured originally so that NOTHING – meaning not a penny – was repayable – not principal, not interest – until 20 years down the road.  (How would you enjoy having such terms on your home mortgage?)

For some, the 1980s were one great big party, thanks to generous politicians.  Now we have Jackson giving us a sequel.

The Pee Dee, in a PR splash of headlines last week, reported that Jackson proposed cashing in on UDAG payments in an effort to receive millions of dollars and thus have cash for more subsidies for downtown development and, supposedly, other city needs.

Apparently, if this goes through, a new batch of public money will find its way into the private hands of developers.

A week before Jackson’s announcement, the Pee Dee headlined a plan for the Warehouse district downtown.  Developer Bob Stark announced a $1.2 to $1.5 billion development of offices, hotels, retail and housing.  Stark has partnered with John Carney, board member of the cash-dishing Cleveland-Cuyahoga Port Authority and downtown developer.  The politically powerful Carney family has often been involved in downtown development and enjoyed subsidies.

How much public money Stark would need went unspecified.  Expect the public tab to be tens of millions of dollars.

Presumably, Jackson wants to use money that isn’t yet payable by taking less than was lent.  The amount loaned will be reduced or discounted by early payment.

What is disturbing about this, of course, is that none of the money has been paid back for years.  Therefore, these developers have had free use of public money for many years.  Further, the interest rate typically was ZERO!

And even more shocking, these developments often have received 100% tax abatements for their construction.

Let’s look at some.

The Key Center and Marriott hotel received respectively $10 million and $7,663,000 in UDAG loans that will be due in 2012.  Jacobs built both.  He has never had to pay a penny of that $17.6 million no-interest loan back to the city since the early 1990s.  Further, both the Key Center and Marriott hotel have had to pay NO property taxes on the new buildings.  NONE.

In addition, Voinovich and Forbes gave Jacobs the City’s Mall A to build a 900-space parking facility underground in front of the Marriott.  This too was tax abated for 20 years.

All that didn’t satisfy Jacobs.  He actually went to the County to have the tax on the land at Public Square (which is not tax abated) reduced after receiving all that City help.  He asked for a decrease of 21%.

Jackson would take less than a 50% payback on these loans to Jacobs.

Downtown Cleveland floats on public money.

Tower City has received other UDAGs, the old post office building, $9.2 million and another at Tower City for $9.7 million.  In all, Tower City properties received some $32 million in UDAGs, fashioned usually for 20 but as many as 30 years.

Meanwhile, Tower City has been seeking and getting hundreds of millions of dollars in property tax deductions in the value of its properties to lower taxes paid.  The Ratners, despite their wealth, don’t like paying taxes.

Further, for years the City has been using some taxes that Tower City does pay, not for schools, not for the City, but to pay off bonds for the Rock and Roll Hall of Fame, diverting the tax money from its usual recipients.

These abatements are called Tax Incremental Financings (TIFs). The city apparently wants to use TIFs in the Warehouse project.  That means even the property taxes paid will not go to the schools and other public needs, but to the desires of the developer.

Miller and the Ratners also benefited as the posh Ritz Carlton got a combined $7.9 million loan (20 years, no interest) and tax abatement.  To show the cost to taxpayers, I refer to something I wrote previously.  From the start through 1997, $5,628,635 in property taxes were forgiven, thanks to Voinovich & Forbes.  Since 1997, those millions of dollars and much more in the 20 years since have been pocketed by the Miller-Ratners at the Ritz.

These public gifts are often accompanied by further subsidies to sweeten already sweetheart deals.

At the Playhouse Square Foundation’s Wyndham Hotel, for example, Cleveland subsidized the 205 luxury rooms at about $100,000 a room!  How’s that for generosity from a poverty-ridden city.

The hotel got a $5.3 million UDAG, a tax abatement worth more than $2 million (at 0% for 13 years and 5% for the next 7 years) and a $4 million state loan from then Gov. George Voinovich (at 3% for 7 years).  Cleveland then added another $4 million loan at 2% for 4  years from community block grant money.

But that wasn’t enough.  The city added a $4.5 million TIF abatement on the Renaissance Building across the street.  The property tax revenue from the Renaissance was used to subsidize the land and site preparation for the hotel.

As I’ve said in the past, the city refused to supply the hotel with toilet paper in its tough negotiating with developers.

Farce has become tragedy in Cleveland.  Or is it the tragic has become farcical.

There are two more points to make about these moves.

First, Jackson realizes he has to have some development activity for his re-election campaign in 2009.  Presently, his tenure has been dismal, and that’s being kind.  So this offers him the opportunity to spread money around for developers.

Second, with talk that the medical mart and the convention center may not be going where the Ratners want it – attached to their declining properties – it looks as if they want to cash in their chips here and get going to New York City.  Good riddance, I say.  They’ve been Takers and Corrupters of local governments.

If they can pull out of loans at Tower City on the cheap, they can help Jackson with some extra cash, with which he hopes to whet the appetite of new developers who hint that they’re ready to invest a billion dollars in Cleveland.  And they can feed him with some campaign dough.

Can Cleveland Survive Depressing Leadership?

We got trouble at Cleveland City Hall.

One Councilman is under recall fire; another in substance rehab; a third wants out; a fourth yearns to be a Congressman; and a few have second jobs and don’t much care; and even more simply don’t want to be bothered.

This is not a combination for hope.

The repute of the Council has often been low but one wonders if this isn’t its nadir.

When an unwell Fannie Lewis, a long-time fighter, recently asked about resignation possibilities, Council President Marty Sweeney, members said, rushed to her home to forestall the inevitable.

Sweeney has been trying to avert a take-down by his colleagues and every vote counts.

Veteran Councilman and former Council President Jay Westbrook and Mayor Frank Jackson have been trying to prop up the faltering Sweeney.

It took a $60,000 buyout of Clerk of Council Emily Lipovan to get Sweeney out of a charge of sexual harassment and keep the transgression private.  The deal, with the help of Jackson, puts an already indebted Council President clearly in Jackson’s back pocket.  And the Council along with it.

Westbrook fronting as a spokesperson for Sweeney adds to the Council President’s indebtedness to others.

Yet, an already feeble Council is reeling from these events.  It only adds to the depressing feelings about the viability of the city.

The situation calls for someone to step up and offer opposition to Sweeney, but the political situation doesn’t auger for anyone to move without assurance that he or she could garner 11 votes of the 21 members.  So far, the opposition has had a weak stomach for confrontation.

No risk, no prize, as they say.

Racially, a near split down the middle means at least a few black Council members have to join with a group of white members who’d like to see Sweeney gone.  The black members, however, have more allegiance to Jackson than to their own legislative body.

This should invite a Council reduction move.  Yet, even this seems too activist for a dying city with sold-out leadership.  Pray for Cleveland.