The City of Cleveland seems to be in a rush to overpay for Shaker Square. And there appears to be a number of conflicting narratives surrounding this issue.
Shaker Square managers the Coral Company attempted to refinance, but their lender, Wilmington Trust, pulled their financing, and now is looking for a buyer. The City of Cleveland wants to buy Shaker Square from the bank for $12M, turn it over to the non-profit Cleveland Neighborhood Progress and development corporation Burton, Bell, Carr. Then the Square would be renovated and sold to a new owner. We can assume, of course, that the bank wants all it can get. But Shaker Square is appraised at $5.6M, and the only offer on the table is for $5M.
Many in the community are outraged, and much has been written on this controversial issue by The Land (here), and Cleveland.com (here, here), in which they reiterate the following questions the public have raised:
What’s the rush? There seems to be an urgency to push this through before mayor-elect Justin Bibb takes office in January. The city has said they are trying to avoid a sheriff’s sale, but that process could surface a legitimate buyer willing to develop and maintain the Square.
Who supports this plan? Cleveland City Council Ward 6 Councilman Blaine Griffin, representing the nearby Buckeye neighborhood, spoke for many supporters when he was quoted as saying the Square was “too big to fail.” But isn’t overpaying for Shaker Square an admission that it has already failed?
Who’s benefitting? The nonprofits would certainly earn fees, and they would then take control of the real estate.
Why isn’t the city using the federal American Rescue Plan dollars as they originally announced? The City says Shaker Square’s problems pre-date the pandemic, so these funds may not be eligible, so the perennially strapped City would dip into its own coffers. But others feel there is more flexibility in the use of federal funds.
Why hasn’t the community had input? LAND Studio began a $400K project to explore turning the 10-acre Shaker Square into a park, and there is still considerable discussion on whether to close Shaker Boulevard to create and program a large, attractive green space. Shouldn’t these community discussions, which ceased once Coral Company put the Square up for sale, be allowed to continue before using public funds to overpay for the Square? It’s a very diverse neighborhood, and more constituents need to be heard from.
One community member who has spoken up is Brandon Chrostowski, CEO of EDWIN’S Restaurant and Leadership Institute, a successful Shaker Square tenant who has offered $5M for the Square, much closer to the $5.6M it is appraised for. He would like to see the process slowed down to allow time for the public to discuss opportunities for Shaker Square and to have input into the use of public funds.
He and others hoping for engaged dialogue were successful in having the emergency ordinance pushed back from the November 29 council meeting to next week’s December 6 meeting. He attempted to speak at the meeting, but was told that the public comment slots were full, so he submitted the letter excerpted below. In this letter, Chrostowski is attempting to correct what he calls “three false narratives” about this process:
- While we are excited to hear the news of the potential investment in Shaker Square we are also concerned at the speed in which this is moving forward as there are many unanswered questions and millions of public dollars involved. We are asking that there be a pause to actively discuss this proposed ordinance in a public forum so that all information is disseminated accurately and allows for a dialogue amongst the community on how we spend our public dollars. As a city of Cleveland (Shaker Square) home owner, commercial building owner who is operating business in and around the area, as well as having our son in a CMSD/charter school, it is deeply concerning and a very questionable use public funds to pay banks double what appraisers say Shaker Square is worth when that many million could go back into our community. Why pay double what the property is worth when there is only one $5 million offer on record? There have been three false narratives that have come to our attention to address:
1) There is a rush to pass this ordinance because by month’s end the judge may order a foreclosure/sheriff sale that will be to the detriment of Shaker Square. This is false and fear-driven rhetoric to encourage an uninformed decision. Not only will this take MONTHS because of its complexity (process documents, sheriff involvement, 3 different appraisers to set a sale price, public listing, ect.) but even after a buyer is identified at auction the borrower has the right of redemption, meaning they can purchase the property back within 30 days for face value of the mortgage plus court costs. Beyond that, the foreclosure/sheriff sale is often a natural part of releasing liens and legacy IOUs.
- 2) The Square needs to be saved and is in degradation. In fact, since the receiver (Newmark) has been appointed we have been receiving timely maintenance and repairs we haven’t had in years: sidewalks, pump for plumbing. As an example, at our newest location, EDWINS too, there was vandalism on the rooftop costing 18k. Newmark took care of it without question.
- 3) This is not a similar investment like downtown or West 25th because with this proposed real estate transaction the price paid for the property is double that of its appraised value, essentially yielding fifty cents on the dollar for our public funds.
- As dedicated and long-standing merchants and residents we still are hoping that there will be a public forum to be informed, engaged and have input how we use our public funds. We filed a motion to intervene with Judge Ashley Kilbane in early August and have spoken with our local councilwoman and councilwoman-elect who expressed our same concerns. We all encourage Cleveland City Council to vote against this emergency ordinance so time can be taken.
With the Justin Bibb administration waiting in the wings offering a vastly different agenda than the outgoing leadership, and with a slew of newly elected Cleveland City Council members also taking office in January, and considering that the public has not had a chance to discuss either the planning of the green space or the closing of Shaker Boulevard or the disposition of public dollars, and given the obviously unwise plan to use taxpayer funds so irresponsibly, certainly it makes sense to hold off on any action until the public has had a chance to weigh in, and newly elected leadership is in place. To do otherwise risks Cleveland City Council and the non-profit agencies being accused of acting in bad faith.
Do we need to be reminded who public servants work for?
COMMENTARY by CoolCleveland creator Thomas Mulready
2 Responses to “COMMENTARY: What’s the Big Hurry To Pay $12M For Shaker Square When It’s Worth Half That?”
Walter Bruckner
Five people move out of Cleveland every day, and another five only shop at the shiniest new malls. Cleveland is a moveable feast, where a small band of hipsters moves from the Warehouse District, to Tremont, to West 25th, then to East 4th, and then to the Flats. Ad Infinitum.
Shaker Square is already dead. Coventry Road is already dead. The Van Aken District, Pinecrest, and the nice, new, modern downtown apartments killed them. The Opportunity Corridor will now finish off all the struggling Heights communities by letting everyone who stays in Northeast Ohio fulfill their wildest fantasy: owning an overpriced, drywall box in North Ridgeville.
That, my friend, is Cleveland. But fear not. In a few years, WVIZ will put on one of those sad, “Remember When” shows about Coventry and Shaker Square. Tommies and The Moreland Courts will join Millionaires Row, Sterling Linder, and Otto Moser’s as more reminders of the town Cleveland used to be.
Ann Abid
It seems odd to me that everyone is so upset about the city spending $12,000,000 to save Shaker Square when few blink an eye when the city spends $80,000,000 or over 200,000,000 to support upgrades to billionaires’ sports stadia.