September 28, 2005
September 28, 2005
Investors in Steelyard Commons, the Cleveland shopping center project, are receiving tax subsidies worth $12.48 million over seven years.
These federal tax credits were funneled through a private, for-profit corporation controlled by the Cleveland-Cuyahoga County Port Authority, a public entity whose board is appointed by the City of Cleveland and Cuyahoga County. The Port Authority was instrumental in the company’s success in winning the credits and received significant revenue for its part in the transaction that used them. Yet these subsidies were granted by a publicly controlled entity in virtual secrecy, with little or no opportunity for public scrutiny or debate. This September 2005 report raises probing questions about this project. The full details of the Port Authority’s involvement with the tax credits and the Steelyard Commons project should be made public, the report concludes, and future credits should require public approval by the Port Authority board.
After the completion of Steelyard Secrets, the Cleveland-Cuyahoga County Port Authority said that it had included incorrect information in an internal e-mail that it had supplied to Policy Matters Ohio regarding the fees and proceeds from the Steelyard Commons financing. While the information on the Port Authority itself is correct, much of the information on Ariel's fees and proceeds on page 10 of the report (see full report) is not. Some of those shown in fact went or will go to other parties. Port Authority President Gary Failor provided a correction to that information. NEODF President and Ariel partner Annette Stevenson asked that it be included in the report.
The following numbers, which show a different division of these monies, are based on Failor’s correction:
a) The $500,000 in fees was not paid to Ariel Ventures, LLC. It was paid to the two owners of NEODF, Cohen & Company Investment Partners (CCIP) and Economic Development Fund (EDF). CCIP, which received $370,000, is owned by some partners at Cohen & Co. EDF received $130,000 (EDF is owned by the three partners at Ariel, Annette Stevenson, Radhika Reddy and Irene Zawadiwsky, Stevenson said).
b) Of prepaid annual compliance fees of $723,404 to be paid over the next 8 years, 70 percent will go to Ariel Ventures and 30 percent to Cohen & Company Ltd.
c) As stated in the report, the Port Authority will be paid 45 percent of the estimated total of $1.78 million to be received on the NEODF loan between now and 2013. However, Cohen & Company Investment Partners will get 40.7 percent and Economic Development Fund, 14.3 percent.
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