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Ed Morrison · No comment
September 24th, 2008
“A public investment of this magnitude needs to be much more rigorous,” says Hunter Morrison. “There are too many unanswered questions. The taxpayers need to ask some hard questions of the county commissioners. And there are answers out there. We didn’t start studying this yesterday.”
Last 5 posts by Ed Morrison
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September 25th, 2008 at 2:31 am
It occurs to me that the CC/MM is our local bailout issue. And no way should we be willing to spend money unless we can see line items, get straight talk, and actual alternatives are considered, discussed. Frankly we have no money for this so to me we shouldn’t be doing it at all. I was once on the fence. The Med Mart sounds fabulous. We have NO money to reinvent a convention center. Use the old one or forget it. (Yeah the Bailout has me pissed and it’s carrying over)
September 25th, 2008 at 11:55 am
Carole:
In the worst-case scenario (which has a relatively high probability) Cleveland will be left with two uncompetitive convention centers in about 10 years. These centers can create a huge cash drain.
In Pittsburgh’s case, public officials are scrambling to cover deficits of about $2 million a year (beyond the subsidies provided by gambling). http://snurl.com/3tygw
In Cuyahoga County, the decision to invest over $400 million is being very carefully stage-managed by the Greater Cleveland Partnership. Remarkably, the two County commissioners who are driving the political side of the equation has been compliant, even in the face of a federal investigation.
You would think that public officials in this environment would be particularly careful to document their decisions. That has not happened.
Remarkably, we have no business plan that explains how Cleveland will establish its market position. We have no market analysis to evaluate the impact of dramatically higher fuel costs (or a financial melt-down and serious recession) on the convention and meeting market.
We have no competitive analysis that clearly identifies how we will compete in this market. We have no customer segmentation analysis that even suggests a Medical Mart is an innovation that the market will accept. (Indeed, reporting by Jay Miller in Crain’s suggested some time ago that a similar effort in Birmingham was abandoned.)
We have no sensitivity analysis to gauge the risks of the project if Cleveland fails to meet market share goals. We have no cash flow analysis to detail operating deficits. We have no management contract that we can examine to evaluate how the risks of this project will be allocated.
The irony, of course, is that a bank requires a business plan for the smallest commercial loan. Yet, somehow, our County Commission feels sufficiently competent to make a $400 million decision without one. In the face of these significant questions, a reporter from the Scene Magazine cannot get a phone call returned.
Contrast Detroit: They are building their medical cluster more intelligently: through collaboration and alignment. This week they announced that Oakland County will support the development of a cluster of health care and life science companies and organizations, called Oakland Medical.
http://snurl.com/3tyte
September 25th, 2008 at 12:07 pm
One more point: As the Scene article makes clear, we have no operational analysis, either. No one has explained how you get that many trucks on and off the site in a competitive amount of time. That’s a big deal. In conventions, costs are driven by logistics, the speed of moving stuff in and out.
September 25th, 2008 at 2:08 pm
This “analysis” argument against the convention center is undercut by the complete failure of the Gateway project. The same people arguing for analysis now touted their analysis back then for Gateway.
If the convention center is to be stopped, it will take direct pressure upon decision makers. At this point, even a federal criminal investigation can’t derail our political bosses from derailing the convention center. By all accounts, it’s a done deal.
September 25th, 2008 at 4:12 pm
Hey Hunter, if you’re reading this:
Where the heck were you when it was Gateway? When your guy Strnisha gave the “analysis” behind the claim of 28,000 jobs?
And you were, um, “Planning Director.”
Your complaints, though accurate, are disingenuous in the extreme.
September 25th, 2008 at 4:45 pm
According to the Cleveland playbook, the conv center will go up, be a miserable failure, and when someone gets pinched for child porn, they will disclose the details about the cozy relationships between the conv center players. Can we cut to the chase and expose the money trail now?
September 25th, 2008 at 8:24 pm
Mark, Justin:
A planning director does not create jobs. A business sector does.
The main failure to create jobs falls to the private sector (the Greater Cleveland Partnership). It took them ten years after Gateway for the private sector to create a business improvement district downtown. Talk about slow.
Check out how a downtown redevelopment strategy works in a place that I had something to do with: Oklahoma City. We developed a coordinated investment plan — with both public and private sectors. And the results are there for all to see: http://snurl.com/3ucn6 and http://snurl.com/3ucst
Milken Institute ranks OKC as one of the fastest gaining cities in its Best Performing Cities list for 2008, ranked 50 overall. (Cleveland by contrast is not moving: 193 of 200 last year; 193 this year.)
Or, check out how Indianapolis (also one of the fastest moving cities) supported its downtown mall with aggressive private sector investments in downtown housing. (Never happened in Cleveland after the investment in Tower City. What did the development community do? Built more shopping malls in the suburbs.)
In Cleveland, you have a business community simply focused on public subsidies and little else. They do not really know, frankly, how to pull off a downtown development strategy. It’s a bit more complex than a strip mall.
You might want to blame the planning director, but, boys, you are aiming at the wrong target.
September 26th, 2008 at 5:22 am
Ed, I don’t think the failure was in taking ten years to build a “business district.”
The failure was in pretending that a project like Gateway would ever create 28,000 jobs. “Good paying, permanent jobs!” like the ads said. It’s simply implausible, business district or no business district.
Hunter was wrong, wrong, wrong about Gateway.
September 26th, 2008 at 12:31 pm
You’re sounding a little dogmatic, Mark.
There’s strong evidence that downtown redevelopment can generate significant job growth. As I said, I spent seven years working with Oklahoma City, starting in 1993, and the results are proving themselves.
We built a baseball stadium, re-vitalized a convention center, and a new library. We attracted downtown hotels and built a canal where only a stream existed. We used launched a business district to create a shared stake in the downtown by the business community. We attracted Sonic to move their headquarters, and built an entertainment district.
Do not tell me (or the good folks of OKC), please, that downtown redevelopment does not work, because it no one will believe yoou.
Exhibit B: Indianapolis.
The failure is not in your planning director; the failure is in a private sector unable to capitalize on an opportunity that public investment creates.
September 26th, 2008 at 2:35 pm
Ed, you’re making my point for me. I agree that downtown redevelopment can deliver public benefits. If the Gateway project had any chance of doing so, yes, that would have constituted downtown redevelopment.
But alas, Gateway was yet another implementation of the Cleveland Way: commit the public funds first, then do the project, then find a justification, and finally start on a plan. That’s why it took ten years!
Remember the slogan, “Build it and they will come”? Turns out, if all you do is build it, no, they won’t come.
I don’t recall Hunter getting out in front of this thing when it was happening and saying “Hey, let’s hold this up until we have a master plan for the south side of downtown, an honest projection of its costs and benefits, and the resources to follow through on it. As Planning Director I’m telling you this is going to be a financial disaster if we go through with it now.”
No, AS PLANNING DIRECTOR Hunter supported the project even though there was no real plan, and the jobs figure (the linchpin of selling the sin tax vote) was known to be a fantasy.
Gateway was (is) a scam. Calling it “downtown redevelopment” when it was in fact no such thing is intellectually dishonest.
September 26th, 2008 at 6:58 pm
My target was not your brother’s work as planning director. (And really, the blame for Gateway can be spread around.) It is your strategy of calling for these plans and analysis as a means getting people to realize that the conv center is a bad idea.
On the surface it makes sense, but it is far too late to have any effect. There is no strong independent press in town to publicize such issues. The only entity that can take action is law enforcement. Expose the cozy relationships, call in the feds, and take cover as the conv center disappears into the ether.
September 27th, 2008 at 1:07 am
Mark:
If you were to study how redevelopment gets done, public investment virtually always leads the way. There are a number of reasons for this priority. First, much of public investment goes into infrastructure — sidewalks, curbs, utilities and so on: stage setting.
Second, public investment by its nature can absorb risks that the private sector standing alone is unwilling to absorb. So, publicly-led, privately supported investments are normally a key starting point. The trick, of course, is to measure public benefits from these public investments. This is always tricky, but the analysis can be done with a sharp pencil, strong analytics, and unbiased perspectives.
(I have no idea how well these economic analyses were done in Gateway’s case, but typically, these analyses fall outside the jurisdiction of a Planning Department and into the jurisdiction of the Economic Development Department. In most cases, because bond funding is involved, a public agency will contract with an outside economic consultant to construct these studies. As Haywood Sanders has documented well, these studies are often overly optimistic.)
Public investment is not enough for successful redevelopment, though. A successful redevelopment requires another category of economic development investment — privately led and publicly supported. Typically, business districts fall into this category.
These types of investments are — by their nature — more market driven. So, for example, in Indianapolis, heavy investments by private developers (supported by public subsidies and expedited permitting) followed the publicly-led investments in infrastructure and public buildings.
The same is true in Oklahoma City. We devised two, complimentary strategies: one publicly-led and one privately-led. It turns out (not surprisingly) that the job generation (beyond construction jobs, of course) comes from the privately-led investments. In Oklahoma City’s case, the City (led by mayor Ron Norrick) guided the public strategy. The Chamber (guided by the Gaylords and Burns Hargis now president of Oklahoma State) led the private strategy.
In Cleveland, there has been no privately-led strategy beyond trying to figure out how to use public money to bail out private investments. We see this pattern repeating.
With Tower City, the investment languishes because Forest City was unable to do any kind of private deal to develop anchors to its downtown mall. And without anchors, the mall is dead.
I have seen no real strategies coming out of the Greater Cleveland Partnership over the last five years. Instead, the GCP seems overwhelmingly project-driven. That’s not surprising, given the passivity of the GCP board and the overwhelming influence of real estate developers in the business leadership.
To blame the City’s planning director for the failure of Gateway is just silly.
Justin:
My comments lead me to your response. In the past few years, I have seen the dysfunctional politics of Cleveland playing out in everything from the casino fiasco and to the convention center/Med Mart. You may be right. The politics of Cleveland may be too far gone.
Until there is a wholesale house cleaning, it seems fanciful to think that much of a transformation will take place anytime soon. In their report of Cleveland a few years ago, the Brookings Institution warned that this was a possibility.
This took place in Youngstown when they slammed the big green door on Traficante. Now the city is well on its way to recovery.
September 30th, 2008 at 3:18 pm
So Gateway, our largest planning failure to date, has nothing to do with the Planning Director?
There’s plenty of blame to go around, but the point is that Hunter (and many others) had all the information I had at the time, and more. I and many others could figure out it was a scam from the beginning, but the guy with Harvard credentials couldn’t.
From Hunter’s official bio:
Bottom line, I don’t think it’s silly to dump a share of the blame for Gateway… on someone who claims credit for its ostensible success.