There is nothing that has happened recently to assuage the concerns I raised earlier in my op ed on Columbus Underground, titled “Soul Searching for Accountability in City Government (October 26, 2011).” Indeed, I have become more concerned, as the Dispatch has recently purchased the formerly independent and formerly alternative “The Other Paper,” as well as WBNS 10-TV, 97.1 The Fan Sports Radio, “Alive,” TheBAG, Columbus Parent, Fronteras, Capital Style, Columbus CEO, Columbus Monthly, Columbus Bride, and the 22 (“This Week”) Suburban News Publications.
The stated reason for these purchases was for Dispatch journalists “to tell the most-compelling and interesting stories in the various communities and editorial convergence.” In other words, in every format the Dispatch will define “the most-compelling and interesting stories” are, and use this “editorial convergence” to make sure only one story gets out. They will tell you what they want you to know, and how they want you to understand it.
With the Dispatch and its editorially-convergent media offerings an active player in City politics (having a 10% financial interest in both the Blue Jackets and the arena, putting $400,000 into the casino campaign, purchasing land to object to the casino rezoning, filing a lawsuit to force the casino to use City water and sewer services), we can be sure that we have very little independent journalism in Columbus. So at a grassroots level, information needs to get out.
This week’s example of a lack of accountability in City government comes with the newest developments in the City refinancing of the Whitney Condominium Project in the King Lincoln District last year. Last year, the Dispatch reported that Rita Parise, the city’s housing administrator, said about the proposed loan to the Whitney developer, “the money is an investment, not a bailout. She said the bad housing market and change in financing rules for condominiums have hurt the project” (“City may aid condo project with $3.4 million,” 11/9/10). The project attorney said in that same article, “the collaborative went to the city of money … the collaborative needs a quick cash infusion.” Parise further said “some of the money from condo sales would be used to fund other housing developments on the Near East Side, and some would go to partially reimburse the city.”
How things change. According to the Dispatch, on December 6th, Columbus City Council “agreed to forgive the loan if the Columbus Metropolitan Housing Authority takes over the project and completes it.” So that “quick cash infusion” for the collaborative, that “would be used to fund other housing developments on the Near East Side, and some would go to partially reimburse the city,” did indeed end up as not an investment, but a bailout – exactly the opposite of what was represented a year earlier when the Council approved the $3.4 million “loan.”
This shows the risk of the City jumping into “investments” without a clear plan. One could argue that while Parise said last year that “the bad housing market and change in financing rules for condominiums have hurt the project.” But the housing market crash started in 2007, prior to the construction of this project, and 2008 marked the end of speculative condo development – which this was [the project spokesperson said they had “six verbal commitments from buyers for units” (Dispatch, “King-Lincoln Construction to Start Soon,” 9/5/2007)].
Why, then, was this 28 unit speculative housing development continued on the basis of six “verbal commitments?” Nobody else was building speculative condos during the period 2008-2010. Where private and other developers had projects in the ground, they were scrambling to downsize, shrink units, and working to convert to rental. The market signals, market correction, financing issues, and developer reactions were lost on this development, which proceeded with a full-build out of all units – even though completion of the project relied on unit sales during construction.
In a Dispatch article (“Stalled condo development to restart with city funds, 6/12/11), the project’ s demise was described as stalling “after the developer … ran out of money.” Steve Gladman, the executive director of the Affordable Housing Trust of Columbus and Franklin County (which was not involved in the project), further clarified saying “there wasn’t enough money to fund the whole build-out.”
One might also argue that the concept of 28 condos priced up to $250,000 on that corner of real estate was never particularly enlightened. In 1997, when “asked if she thinks there’s a market for the Whitney, Near East Area Commission President Kathleen Bailey said, ‘they’re going to find out’” (Dispatch, 9/5/07). Neighborhood leader Dana Moessner said “he has been concerned all along that no units had been presold at Whitney Condos, ‘what we questioned from the beginning was the economic times did not warrant this project going forward’” (Dispatch 11/9/10). Many observers questioned the size of the units, the pricing of the units, the location of this development, and the amenity package long before construction was underway.
While Parise said it would have been poor public policy to let the project die (Dispatch, 12/6/11), one could more rationally argue that it was poor public policy to let the project go forward. And now taxpayers have bailed out an ill-conceived $3.4M debacle. Perhaps most striking is that the City made no attempt to auction the development to the private sector to complete, which might have resulted in some recovery of taxpayer money. Instead, this will be completed as a government project by CMHA.
So what happened to all the verbal assurances? They evaporated, and the taxpayers of Columbus are left holding the $3.4 million bag. But this is nothing, compared to our next story which shows the same lack of accountability.
For one answer to this endemic problem, see http://www.ColumbusCoalition.info, where citizens are sponsoring a ballot initiative that would increase the accountability of our city council members.
Coming soon: we will explore the many parallels of the Whitney project, with the $42.5 million public bail out of the Nationwide Arena, the $81 million public subsidy to the Columbus Blue Jackets, and the $270 million ongoing commitment of public dollars to subsidize the operation of the Nationwide Arena.