Wednesday, July 11, 2007

No Building Left Behind

Southern Ohio Museum: Original No Building Left Behind

     The good news is Marting’s won’t be the site of the new city building. The bad news is the Adelphia site will. Why is that bad news?

      Remember that the first principle of Portsmouth real estate is that no over privileged private party or corporation should ever have to take a loss on a building or piece of land, no matter how worthless or hazardous it is, as long as there are public funds that can be tapped into to bail the owner out, or as long as there is a tax break that can be derived from donating the property to the public, and letting the city deal with the headaches and expenses associated with owning and dealing with the property. This first principle of Portsmouth real estate could be called the No Building Left Behind policy.
      Instead of being free to build from scratch on the best site possible, city planners must start with a building and site that has been unloaded on them with the connivance of corrupt public officials. The City Building Committee Final Report (11 Dec. 2006) listed as the first and presumably most important reason for locating the new City Hall Complex on the so-called Adelphia building site is that the city owns the property. It is like the old days, when ATT had a total monopoly of the telephone industry, including the manufacture and sale of telephones. The policy of ATT back then was you could have any color phone you wanted provided it was black. Under the No Building Left Behind policy, the city or county can erect a new public building or city hall complex anywhere they want provided it is an undesirable site or building that the city has paid too much money for or has accepted from a donor who has stipulated the site or building must be used for a public purpose so that the donor can get a tax write-off.

      Consider the following examples of Portsmouth’s No Building Left Behind policy at work, beginning (1) with the earliest one I know of, the 1977 sale of the obsolete Security Central National Bank building to the city, which then leased it to the Southern Ohio Museum Corporation for one dollar a year for a period of twenty years, with the city, as lessor, having major responsibility for maintaining and insuring the building; (2) the empty and virtually worthless department store that the Marting Foundation illegally and infamously unloaded on the city for $1.9 million; (3) the nearly bankrupt Travel World Agency, which three well-connected Portsmouth businessmen, with Clayton Johnson as their lawyer, “donated” to Ohio U., as a tax write-off; (4) the empty Thatcher house, on Franklin Blvd., for which SSU paid the politically connected Thatchers much more than it was worth and which SSU later sold to a doctor at a $50,000 loss to the taxpayers; (5) Dr. Rooney’s house, on Camelot Drive, the remote and parking-less money pit that SSU paid top dollar for and, with the meter still running, now serves as the slipping and sliding home for SSU president Rita Rice Morris; (6) the empty and otherwise worthless Kenrick’s department store that was taken off George Clayton’s hands with county and federal funds and converted into a Welcome Center; (7) the “sale” of the Temple B’Nai Abraham to SSU for an ungodly sum; and (8) the “donation” to the city of the misnamed Adelphia property, which should be called, the Singer property. Adelphia never owned that property, having only leased it instead from Dr. Herbert Singer, of Los Angeles.

The No Singer Building Left Behind

      The history of the Singer property bears a depressing similarity to all the other shady real estate deals of the last thirty years. Just as you would not know that Martings is really three very old buildings beneath a faux brick façade, the Singer building is actually two old buildings hidden behind a rusting metal façade. What became the Singer property was once the site of an automobile dealership, but after things went kaput in Portsmouth, that dealership and others on Washington Street went out of business. While the history of the building and the date of its construction is something of a mystery, which even the crack consultants of Ameresco Corp. could not unravel, what we know for sure is that at one point local shyster lawyer Mike Mearan owned the so-called Adelphia property. Then, in 1984, he sold it to Dr. Herbert Singer, of Los Angeles. Following his purchase of the property from Mearan, Singer then leased the building for twenty years to Adelphia Cable. I have heard that Adelphia was paying Singer a sizable rent each month. [I was subsequently told by an employee of Adelphia Cable that it was paying $12,000 a month rent, which over the 20 year lease would be $2,880,000 dollars.]

      Because of the massive fraud perpetrated by the family that owned the Adelphia Corporation, that company went bankrupt and the larcenous founder, John Rigas, went to prison. Because of the protections afforded to bankrupt corporations, Adelphia apparently did not need to meet the obligations of the final year of its twenty-year lease with Singer. I was puzzled when Adelphia hastily moved out of Singer’s building to a smaller less conveniently located site. Because commercial property in Portsmouth is notoriously hard to rent, I wondered why Adelphia hadn’t used its leverage to negotiate a new lease for Singer’s building, at better financial terms. Subsequent events would make clear why Adelphia wanted out of the Singer building as fast as possible. First of all, how would you feel as a tenant if the building you were paying good money for had been neglected for some time, and had leaky room in which there was asbestos in the decking? How would you feel, furthermore, if your absentee landlord lived in Los Angeles, over 2500 miles away?

      Following the flight of Adelphia Cable from Washington Street, Singer was stuck with an ugly building that had virtually no financial or architectural value and no prospect of being rented by another tenant. His curiosity getting the better of him, Singer finally made his first visit to Portsmouth to see the property, but only after Adelphia had moved out. At some point Singer hired the controversial real estate agent-developer Neal Hatcher to handle the property. Months turned into years and the Singer building sat on that decrepit southwest corner of Washington and 9th Street, unattended and leaking, like so many other empty commercial buildings in Portsmouth (think Marting’s, think Kenrick’s). The Singer building was almost as bad as many of the buildings that Hatcher owns and neglects.

      Singer was responsible for city taxes on the decrepit property, but in deadbeat fashion he stopped meeting those financial obligations. This was not very civic-minded of him, but what did he have to lose, way out there in California, in stiffing the taxpayers of Portsmouth? But he still needed to find some way to unload the property. Because Hatcher could find no buyer foolish enough to buy the property, Singer hired Mike Mearan to come up with a plan to stick the public with it, and Mearan, a gifted con artist, did. Mearan knows the winding and dimly lit corridors and courtrooms of the City Building and the County Courthouse of Portsmouth the way a proctologist knows a cancerous rectum or Jean Valjean, in Hugo’s Les Miserables, knows the sewers of Paris. What Mearan advised Singer to do was donate the worthless property to the city, stipulating that in accepting the property the city would have to commit to using it for a public purpose. That was an all-important stipulation, because only then would Singer be able to claim a tax write-off from the IRS. Another stipulation that Singer put on the “donation” was that he would not have to pay the $23,000 back taxes he owed on the building. At the City Council meeting 13 Feb. 2006, the council approved a motion from David Malone to excuse $5,707.50 in taxes due on Singer’s property. This was in addition to excusing Singer of the $17,000 plus taxes he had already failed to pay. Councilman Malone,whose math is notoriously fuzzy, is usually accorded the honor of making motions that bilk the taxpayers. The scheme Mearan came up with was to propose to the city that the building Singer was offering be converted into a police station, which clearly met the definition of “public use.”

“Wonderful Idea”

      The public first learned of the Singer-Mearan donation scheme when Hatcher, acting as Singer’s real estate agent, appeared at the 13 Dec. 2004 City Council meeting with Tanner and Stone smoke-and-mirror architectural plans to convert the Adelphia building into a police station. I was at that meeting and I remember that the architectural drawings made the renovated Singer building look like the Gingerbread house in “Hansel and Gretel.” It looked good enough to eat. Who paid for those architectural plans? Singer? Hatcher? Mearan? Or did Tanner and Stone donate their time in anticipation of future fees? According to the minutes of the 13 Dec. 2004 Council meeting, “Mr. Hatcher said he felt it would be a wonderful idea and provided drawings showing the Adelphia Building as it exists and how it might look if converted into a Police Station. . . . Mr. Hatcher suggested an ordinance accepting the building should include an amount not to exceed $500,000 to 600,000 for improvements. He noted the advantages would include parking for the police. He said he felt this to be a good opportunity for the City of Portsmouth . . .” Not wanting to hog all the glory, Hatcher pointed out that the plan was the brainchild of Mike Mearan.

      At the Council Meeting 10 Jan. 2005, Kalb urged members of the City Council to visit the Adelphia building and judge for themselves if the building was worth accepting from Singer. Kalb claimed that someone else was interested in the building if the city wasn’t, which is the familiar tactic that is used in real estate negotiations to get a reluctant party to buy. The same tactic was used by George Clayton to justify raising the price that SSU paid for the Mooney house on Camelot Drive. Playing the role of a political pimp, for which he is well suited, Kalb was in effect saying, “Hey, there are other guys interested in this gal if you ain’t.”

Shyster Lawyer

     Mearan appeared at the 14 March 2005 City Council meeting, identifying himself as “an attorney representing Herbert Singer who is offering the former Adelphia building to the city . . . the intent of Dr. Singer is to give this property to the City for the City to use.” Mearan went on to admit that Singer’s “intent” in offering the building to the city was really not philanthropy but to get a tax write-off, and he could only get that if the property was used for a public purpose. As the minutes of 14 March 2005 state, “Mr. Mearan said that in order for Dr. Singer to take advantage of certain IRS regulations the City could not sell or lease the building because that would set a value on the property and would restrict the amount Mr. Singer can claim as a donation to the City.” The next sentence of the 14 March 2005 minutes reveals how little philanthropy had to do with Singer’s donation. “Mr. Mearan stated that with the understanding that the City would accept the property and use it for City purposes, with a restriction of ten years after which if the city wants to get rid of the building or do whatever they want with the building they could do so.” Do whatever they want with it? In other words, after ten years of public use, which would qualify Singer for the full write-off, the city could shove the building as far as Singer or Mearan was concerned. Once Singer got his tax-write off, he didn’t care what happened to the property, just as he hadn’t cared what happened to the property when he owned it, as long Adelphia paid the rent. Singer had squeezed all he could out of it.

      The City Council bought into the Singer-Mearan-Hatcher scheme and passed an ordinance at the 14 March 2005 meeting "Authorizing the Mayor and the City of Portsmouth, Ohio, to accept a deed to real estate generally known as 807 Washington Street, Portsmouth, Ohio, said property to be used for city-related purposes for a minimum period of 10 years." Kalb reported at the Council Meeting 23 May 2005 that he had met that morning with Mike Mearan, who showed him the deed that signed the so-called Adelphia building over to the city.

      The city’s acceptance of the Singer building was the first step down a long and expensive road for taxpayers. There are some things that are not only not worth the asking price, they are not even worth accepting as a gift. Failing to look the gift horse in the mouth, failing to look for mold and asbestos in the building, the city accepted Singer’s offer. The result was the city ended up paying through the nose for a nag that was fit only for the glue factory. If the Singer building had been a horse, the humane thing would have been to shoot it. Instead, the City Council accepted the building from Singer and, following Mearan’s stipulation about public use, agreed to turn it into a police station. The close examination of the building was made only after the city accepted the building. That examination showed that beneath the rusting metal façade, the Singer building was unsalvageable. The leaking roof was leaking worse, making that asbestos problem even worse, and the moisture was creating black mold, also known as toxic mold, which for a building is like AIDS. The Singer building was an incurably sick building. It was not safe to convert into an outhouse, let alone into a police station. Why hadn’t the city council and mayor made a close examination of the building before they accepted it from Singer? Because too many of our city officials are in office to do the bidding of those with big bucks. They dare not not ask embarrassing questions or try to get at the truth. The truth about the Singer building was the last thing they wanted. So the city was stuck with yet another decrepit old building with asbestos and mold.

No Oxycontin Left Behind

     Did this mean that Singer was going to lose his tax write-off? Did this mean he was going to have to pay the $23,000 in taxes after all? There was little likelihood of that, especially after Mearan became a member of the Portsmouth City Council. Mearan became a member of council not the democratic way, by running for office. Here is how he got on council: After I filed a complaint with the County Board of Elections, charging Tim Loper was not living in the First Ward, which the city charter requires, he was removed from City Council. Mearan was subsequently appointed to replace Loper by the City Council. The City Council did not stop there, because next it appointed Mearan to the City Building Committee. Howard Baughman and the City Council did not stop there, because then they appointed Mearan to chair that committee. Mearan's first act as chair of the CBC was to assign his drug-addicted employee Heather Hren (shown left in photo at work for CBC ) as its stenographer, a position she held until she was arrested for transporting oxycontin from Columbus to Portsmouth in a car Mearan had rented for her. In addition to No Building Left Behind, we have No Oxycontin Left Behind.

      So Mearan was not only appointed to the Council and appointed to the CBC, he was appointed chair of it. In what other city could such a brazen conflict of interest take place without so much as a peep from the press or local law enforcement officials? An attorney representing a client who would get a tax write-off if his “donation” was used for a public purpose, such as a police station or city building, chairs a committee that is considering locations for a new police station and a new city building. What do you think the odds were that the City Building Committee, with Mearan as chair, would recommend the Singer property be used for a police station? And what do you think the odds were that the CBC, once the Singer building was shown to be unsalvageable, would then recommend that the building be torn down and that the site be used to build a new police station and city building? Pretty good chance, I would say.


      What follows is a list of the improvements that the Building Committee acknowledged would have to be made to the so-called Adelphia building to convert it into a police station. (1) Installation of communications and data cabling; (2) Installation of new emergency generator; (3) Modification of existing electric distribution system; (4) Installation of new Heating-Ventilation-Air Conditioning systems; (5) Installation of new plumbing piping and fixtures; (6) Floor cutting, concrete patching, and tile for new locker rooms; (7) Cleaning of wall studs, walls and floors to remove mold residue; (8) Painting of structural steel in older section of building; (9) Painting of all interior walls; (10) Removal and replacement of all interior doors and hardware; (11) Removal and replacement of all flooring materials; (12) Removal and replacement of all of the existing ceiling tiles; (13) Removal and replacement of 50% of insulation above the ceiling; (14) Removal and replacement of 50% of existing drywall; (15) Installation of new energy-efficient windows and exterior doors; (16) Installation of new roof for entire building; (17) Exterior work including replacement of metal siding and painting of masonry; (18) Site work including resurfacing of parking lot and landscaping. These eighteen proposals should have been replaced by one simple proposal: Remove this contaminated building forever from the face of the earth and let the negligent landlord pay for at least part of the removal.

      Why in the world would any public official agree to spend as much money as these improvements would cost to convert an old building in terrible condition when a new one could be built for the same price? Why resuscitate a corpse when you can have a new baby? You can bet the cost of converting the so-called Adelphia building was going to be much more than the $500,000 to $600,000 Hatcher originally estimated. That estimate was so much fairy dust tossed in the eyes of a gullible public. And notice that one “improvement” that seems hardly worth mentioning, removing mold residue, proved enough to scuttle the whole project.

      If Singer had not neglected his building as much as he obviously had for as long as he had, maybe the building would have been worth saving. I say maybe. But why should the public pay for the neglect of an absentee landlord who allowed his property to deteriorate so badly? Because that is a feature of No Building Left Behind. After all the profit has been wrung out of a property and a business, the owner turns it over to the state, county, or city government to let it deal with the consequences. When rail passenger traffic was no longer profitable, turn it over to the government and complain about how inefficiently the government runs things. When the Marting’s department store can no longer turn a profit, sell it to the city government for one last profit squeeze of $1.9 million and let the empty building become a festering political and financial problem for years.

Black Telephone

      The City Building Committee tried to pass off the Singer property, which it was led to by the nose, as the best site for a new city complex. What the CBC decided is the equivalent of saying that a black phone would have been its first choice even if there were fifty-seven other colors and shades available. The corner of Washington and 9th Streets is about as good a site for a new city complex as John Street would be for a convent or the Scioto River for a surfing competition. What is there about that corner that suits it for a city complex? There’s not much to be said for that location. Instead of a view of the Ohio River and the bridge, the only thing you can see from the corner of Washington and 9th is the steam escaping from that crooked smoke stack on the roof of the the Osco factory. If the city had not been hornswoggled into accepting a building that should have been condemned as a health hazard, where might the new city building have ended up? We will never know for sure, because the No Building Left Behind policy dictated that the city building and the police station was either going to be in the Marting’s building or on the Singer property. That is like giving a condemned man the choice between the noose or the electric chair.

      But the Singer site is the lesser of two evils, because no one is any longer trying to claim the Singer building is salvageable, whereas there are still die-hards who will still tell you the Marting building should be converted into a city building. At least on the Singer site the city can start from scratch instead of having to renovate a decrepit 125-year-old department store. The City Building Committee was under a lot of pressure to choose the Marting building for a city hall, but Clayton Johnson had succeeded in making that building so politically radioactive that there is now no chance of his original scheme ever being carried out, even with his obliging tools Kalb and Baughman backing it.

      The best site for a new city building would be the site of the present City Building. If the City Building is going to be razed, then a new one should be raised on the same site. Why? Because it is the most convenient, the most time-honored, and the most scenic spot. And it is downtown. Being downtown was supposedly a major advantage of the Marting building. But city officials, and above all Mayor Kalb, have been angling to make the site of the City Building available to a developer for years. It is too valuable, Kalb says, to be wasted on a mere city hall, on the house of local government. The phrase that gets repeated is "prime commercial property." The CBC even uses that phrase in explaining why the current site of the City Building should not be wasted on a city hall complex: it is prime commercial property. If it so valuable commercially, why has the Ramada Inn, directly across the street, been a financial basket case ever since it was built. The Ramada Inn has survived by housing university students and as a half-way house for people with drug-related problems. The Ramada Inn survived by mooching off the public sector, and we are supposed to believe the land across the street is too valuable to waste on a new city complex?

      The single most important truth about No Left Building Left Behind policy is that we wouldn’t have had any of the shenanigans and headaches and scandals associated with the Marting building and the Singer building if Kalb and his cronies had not been conspiring for years to systematically neglect the City Building with the intention of eventually tearing it down in order to sell the site to some developer. The anticipated tearing down of the City Building was what made the Marting and the Singer rip-offs possible.

      When it comes to saying just which developer is interested in the City Building site, Kalb has been like a coy stripteaser, revealing just enough to pique the public’s curiosity, but not enough to reveal who that developer is. Who is Kalb protecting, who is he hiding? Which developer is it whose name would create a firestorm if it were known he was the one waiting to get his hands on the City Building site? Which developer is it who is ultimately responsible for where the City Building and the Portsmouth Police Station apparently will end up? Whoever ends up on whichever site, keep in mind that all the shenanigans are really the result of the No Building Left Behind policy, according to which a building that has architectural and structural value, such as the Train Depot and the City Building, will be torn down while many millions will be squandered acquiring property and buildings that are actually liabilities, not assets. This is the way things are done in Portsmouth. The question is will things ever change?