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Friday, June 27, 2008
Show Me the Money! Who paid to build Via Vite?
Posted by The Dean of Cincinnati
Photo courtesy of here.
On February 28th, 2007, City Council unanimously voted to enter into a Ground Lease agreement with 5/3 Bank regarding property on Fountain Square. In the lease, the City of Cincinnati agreed to pay all hard and soft construction costs for the building that houses Via Vite restaurant. Those costs were around $2.5 million dollars. When asked, everyone at City Hall denies that the City had such an expenditure—despite the clear language from the 2007 ground lease—but no one has been able to provide documentation to discredit our claim. Today, the City attempted to send The Beacon a document which shows no such expenditure, but it’s several months too early!
Construction began sometime around April, 2007. As you can see from the image above, the draw report sent by the City to disprove our claim is dated December, 2006. That doesn’t make any sense!
Here is a quick recap of our work so far.
1. Michael Earl Patton, The Beacon’s Senior Analyst, discovers the lease agreement.
2. We send email to City Council, asking about the large expenditure.
3. No one save Roxanne Quall’s office responds. She was not on council at the time of the vote in question.
4. The Dean speaks before council, formally asking for a written response to the inquiry.
5. David Crowley writes, with some ideas about why the expense was not as we believe.
6. We visit Crowley’s office to ask for documentation. He sends us to Patrick Ewing.
7. Patrick Ewing says to see either Christine Zimmer or Joel Koopman.
8. Christine Zimmer says to see Patrick Ewing. When we tell her that’s who sent us to her, she agrees that Joel Koopman is the person to see.
9. We find Joel Koopman. We tell him about the February, 2007 ground lease. He says he doesn’t think the City paid $2.5 million, despite what the contract says. He says he’ll get back to us by the end of the week. He does not.
10. After sending a follow up reminder to Koopman, he says information is being forwarded to City Hall for us.
11. We receive the following email from Meg Olberding at City Hall:
Dear [Dean],
I understand from the city’s Law Department that you are seeking information about any city payment for the restaurant structure on Fountain Square.
The City expended $4 million on the entire Square renovation project. The City funded portions of the demolition package for the former Square, portions of the garage restoration package, and the structural concrete package for the renovated plaza and reconstructed 5th Street.
In the outlaying of funding, the City’s money was spent early in the project and the city’s $4 million had been spent by June 2006. The restaurant’s construction began after that.
The attached spreadsheet provides a summary of the expenditures for the Fountain Square project and has a column marked ““City Draw Totals” (11th column over from the left side of the page) that shows on what City funds were expended. This should provide the information you are seeking.
If you need anything else, please do not hesitate to contact me.
Meg Olberding
Assistant to the City Manager/Public Information Officer
City of Cincinnati
801 Plum Street, Ste. 104
Cincinnati, Ohio 45202
As stated above, and as you can see from the picture at the top of this article, the draw report is dated four months prior to the beginning of construction.
So I just sent this:
Ms. Olberding:
Thank you for sending a copy of that spreadsheet. Unfortunately, the dates do not match our inquiry. On February 28, 2007, City Council unanimously voted on a Ground Lease agreement with 5/3 Bank. That agreement states that the City will pay all soft and hard construction costs for the restaurant facility. The construction of that facility did not begin until April, 2007—so a report concerning expenditures through December, 2006 would not address our question.
Can you provide documentation about City expenditures relevant to the Ground Lease in question?
Thanks,
The Dean
Will they finally be able to show us the money? Why is this so difficult?
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27 Jun 2008 at 10:15 pm | #
Cause they are lying. I am sure that they routinely make up and sign contracts with different numbers on them. I am sure that something goes before the council, they vote on it in 2007, but the people at the city just did any old thing they wanted to and didn’t follow the ordinance passed and 5/3 said “ sure just put any number in there and follow the parts that you feel like following, and ignore the rest. Right…
One would think Joel knows a contract when he see’s one. One would think he know what a contract mens, being an attorney and all.
Guess they all think we are stupid not just Bortz.
28 Jun 2008 at 02:33 pm | #
R - are you positive they are lying? You make a statement as if it were fact. Do you have facts to prove it?
They do make a good argument. The City funds appear to have been exhausted before the restaurant was even under construction. Seems fairly cut and dry to me.
Isn’t a ground lease just the rights to use the land? I have a feeling the Beacon doesn’t fully understand what a typcial lease is vs. a ground lease, or whatever arangement they have. I would try that route. Get to the legal department and figure out exactly what’s going on. I don’t fully understand it and can’t make sense of it other than it does not appear to be a typical lease where people pay rent. It does seem however that the City didn’t pay for the building.
28 Jun 2008 at 08:21 pm | #
Read the article linked in the first paragraph of the article.
If you do, you will see this:
Seems pretty clear cut: the City agrees to pay for all hard and soft costs incurred in the construction of the building.
The fact that money for renovating the Square was used by the end of 2006—before this lease arrangement and before anything had been built—is totally and completely irrelevant. So, when you write, “It does seem however that the City didn’t pay for the building,” on what possible piece of evidence can you base that claim?
28 Jun 2008 at 08:30 pm | #
Paragraph 8 is titled “Construction of Building and Alterations and Improvements to Premises.” And it is here where I find it, in sub-paragraph 8.1 (c): “Tenant (that’s the City) agrees to pay for all hard and soft costs, including architectural fees, incurred in the construction of the Building.”
Dean - when you put in () (that’s the City) is that your addition, or are those words actually in the lease? Could it be that the tenant is actually either 3CDC (Fountain Square LLC) or Via Vite?
28 Jun 2008 at 10:58 pm | #
Yeah, if they say one thing and the contract says another, and the latest contract is the valid one. They are lying. Or would you rather I say, distorting the truth? Hey look over there see the pink elelphant?
Or maybe, the explanation given was a total mistake and they forgot the fact that the singed another contraact. If those documents they provide, which are earlier than the one they Beacon found, then yeah, that would not even be distorting the truth. it would be lying.
It is a contract ! are you tell me the possiblity exists that they forgot?
If they are not lying, why not just show the books? Be a whole lot simpler for everyone. Right? 3cdc, “ og thank you Mr Portune, come to me, not the press. “ yes, we will have those documents for you by friday… now is 6 fridays. Too bad, I already have them from some very mad sources who dont like the “ lying and stealing going on in our city departments”.
Lastly Are you sure they are not ? That would be the question after they produce a document over a year before the final one was signed. like a will, last one signed is the contract . and represent it as what is. Thats just dumb
28 Jun 2008 at 11:16 pm | #
Sure its a right to use the land.. then they agree to pay for the cost of the building . Then they said they could lease is to 3cdc, and there you have a restaurnt. which by the way, is in violation of contract by leasing it to someone who would put the same, or like kind restaurant there, but were forbidden to under terms of the lease, by allowing Nichola to open an Italian restaurant there. Are they both not Itlaian? Is Nicholas in the CBD ? Yes, sure is.
Yes, they are lying. I understand this isnt renting an apartment. More than you know.
so show us proof they did not. it seems it would be a simple matter to clear up if this is wrong. wouldn’t it? show us. Even crowely really didnt know and he voted for it.
Prove it wrong.
we have a lease that says so. what evidence do you have they are not lying? I am sure Dean will print it. So you prove they are not lying.
this should be an interesting week for all these structures. What’s happening to 5/3 Bank this week? Word on the street is not good wonder when the other party does an aduit, will they play too? i doubt it, it’s this Sh&* that got them in trouble in the first place. Plus, do you think they will saty in Cincinnati? Nope, not in the tower, so get to work, more office space to LEASE.
29 Jun 2008 at 06:22 am | #
Yes, it’s an addition. You know, to make things more clear. God forbid you follow a link and do your own work.
Feel free to read the whole lease if you like.
The cover page says this:
Clear enough yet?
If you can’t read the whole lease, then here is a snapshot of the official definitions page.
See? When the contract in question says “Tenant,” it means “City of Cincinnati.”
Get it?
29 Jun 2008 at 07:21 am | #
Here is how I read the lease. It is merely a hold harmless contract between the city and 5/3 that the city will be responsible not 5/3 for any improvement costs. This does not mean the city will be the one to pay for the improvements (they could still pass it on to a third party ie 3CDC), it just means they leave 5/3 out of whatever costs do come up.
29 Jun 2008 at 07:48 am | #
Fine, Bearman. Then why won’t the City just prove it? Why such a run-around?
To tell the truth, I don’t even think the City knows whether it did this one way or another!
29 Jun 2008 at 09:52 am | #
It is CLEARLY in the lease. As dean said, I will encourage you to read the entire document. Dean is correct
Ground Lease Agreement
Landlord: The Fifth Third Company
Tenant: City of Cincinnati
Location: Fountain Square, Cincinnati, Ohio
City of Cincinnati was allowed to “ sublease it to anyone, but the idea from the beginning was 3cdc.
read the rest. says speficically for a restaurant. says speficically it cannot be the same type of restaurant that exists in the CBD. so Jeff Ruby could not have put a steak house in there, so why can Niccola’s be the one selected to put in an Italian restaunt? they are in the CBD also, and is an Italiab restaurant.
Says clearly ALL revenues are to be retained by 3cdc for whatever purpose.
The lease for a restaurant in the building in that location is WAY below market value.
I feel the same way, read the whole lease. I did, I have had real estate people, attorney, developers everybody , the city paid for the restaurant except for the interior, which Nick did. and I am not saying he didnt, but I have a strong feeling he didnt. Not personally.
I think this week, with the 5/3 stuff going on, we will be able to look into more of their “ deals. I have found some very interesting SEC filings regarding Fountain Square Management Group LLC , the parking Garage , and parts of the square.
If they go this week, then the books of alot of things will be available to look at.
29 Jun 2008 at 10:11 am | #
Mr Landlord is 5/3 Bank. tennent is the city of cincinnati. they could “sub” lease “ it to anyone , and the Sub is 3cdc. It is actually not a complicated lease .
29 Jun 2008 at 10:26 am | #
Pietoso declined to say what he has invested in the site, but admitted, with a laugh, that it is about $500,000 more than he expected. He has signed a 10-year lease with the Cincinnati Center City Development Corp., known as 3CDC, which in turn is leasing the building from the city. The structure itself, not including Pietoso’s investment, cost $2.5 million to build, said Chad Munitz, executive vice president of 3CDC.
does that help explain the structure ? 3cdc is leasing the building from the city. So the city gets their 100 bucks, and all revenues go to 3cdc to use as THEY see fit. It is not to pay off the debt to 5/3 as I believe was it Crowley said.
The debt for the garage is supposedly used to pay off the inprovements and the loan from the garage. Being that 3cdc is already splitting off the properties, what is to say that 3cdc, or Fountain square management group, could just walk away after they complete the building grab? it would be in a whole other enitity OTR Holdings ( LLC ) , and the bank, or whoever buys them, cannot touch OTR Holdings which will end up with the assets they want. The buildings in OTR.
Then who is responsible for the loans? City of Cincinnati.
Look at what this Leeper guy did in Pittsburg. It is somewhat the same. he was not well liked there. Not at all when it was all over.
29 Jun 2008 at 10:30 am | #
For the last time...Nicola’s is in OTR.
29 Jun 2008 at 12:10 pm | #
But on DCI’s map of the CBD , it is in what THEY designate the CBD . I know where it is. On the map, it goes to liberty street.
Maybe the map is not correct.
29 Jun 2008 at 12:21 pm | #
1420 Sycamore st
http://www.hellocincinnati.com/neighborhoods/Central-Business-District_Cincinnati_OH/72410000/7241/00.cfm
sure looks like its in the CBD map to me. misses being out of it by about a block. But, it is still in it.
29 Jun 2008 at 12:52 pm | #
another map of the CBD
http://www.zillow.com/real-estate/OH-Cincinnati/Central-Business-District if he were half a block west, it would not be central business district. where he is, is.
29 Jun 2008 at 09:53 pm | #
The City’s document proved that the City’s four million was expended on the Fountain Square garage and plaza NOT the restaurant. As I said before the City only put $4 million into the construction of the project. The lease agreement between 5/3 and the City only includes those two parties. The City as the tenant in that agreement is responsible for the costs of the restaurant not 5/3. However, the City passed along its responsibility to 3CDC per the agreements with 3CDC entered into earlier.
Let me repeat, THE CITY DID NOT PAY FOR THE RESTAURANT. You can’t produce a document that shows the City paid for it because it didn’t and so the document doesn’t exist. What does exist is the document provided by the City which shows where its properly budgeted and appropriated $4 million was spent. As I said before there is transparancy in budget appropriations and you can not find a document that appropriates $2.5 million for the restaurant because it doesn’t exist. Give it up guys. You are wrong.
For R - the City has defined neighborhood boundaries not some touristy website. Use this link instead: http://city-egov.cincinnati-oh.gov/Webtop/ws/council/public/child/Blob/18947.pdf?rpp=-10&m=3&w=doc_no='200600765'
Anyone who knows the area, knows that Nicola’s is on the border of OTR and Pendleton, nowhere near the CBD.
30 Jun 2008 at 06:43 am | #
Anon,
Do you understand that showing us a draw request from FOUR MONTHS PRIOR TO THE RESTAURANT CONSTRUCTION has no bearing whatsoever on our inquiry? None. Zip. It means the City spent what it said as of December, 2006. The ground lease was not voted on until February, 2007, and construction did not begin until April, 2007.
You’re telling me that when a multi-million dollar building is constructed on prime City public space—and further when that same building is leased to a private corporation for pennies so that same corporation can make tens of thousands of dollars annually—you’re telling me that when that happens, not a single person is capable of verifying who paid for the project?
Not one person?
Really?
That is totally unbelievable.
30 Jun 2008 at 08:38 am | #
Once again, the dean makes an accusation and demands that the accused prove the accusation false.
30 Jun 2008 at 11:05 am | #
DCI says the CBD runs up to sycamore and liberty.
If I knew the area? hmmm I have owned a building there for 13 years I KNOW the area
Paragraph 8 is titled “Construction of Building and Alterations and Improvements to Premises.” And it is here where I find it, in sub-paragraph 8.1 (c): “Tenant (that’s the City) agrees to pay for all hard and soft costs, including architectural fees, incurred in the construction of the Building.”
I would copy the whole lease for you, but for some reason, the council site is down.But the above paragragh is correct . The dean added “ ( thats the city) “
as he says, show us one single document that says the opposite. Doesn’t say garage. There is no other building. so what is it? Like Dean said, it should be EASY to explain if it is not the case. It is really suspect when they send a different document that is prior to the lease between 5/3 and the city.
I believe too, that council may not know what they voted for. Sure seems like it, or they are trying hard to prove otherwise. One would think they would be better at it by now. what they sent is not relevent to the question.
If it is not true, should be very easy to prove. Why would they not?
30 Jun 2008 at 12:28 pm | #
No. We found a document which says the City paid for construction. The City says they did not. They have no proof at this time to substantiate their denial. We have the ground lease to support our claim.
30 Jun 2008 at 02:05 pm | #
You found a draw request. Did you find the disbursement documents?
30 Jun 2008 at 09:49 pm | #
As I said before 3CDC paid for the restaurant. What part of a two party lease agreement do you not get? What part of the City being the owner of Fountain Square and passing on its rights and RESPONSIBILITIES to 3CDC do you not get? What part of the City did NOT pay for the restaurant do you not get? The City said it didn’t pay for the restaurant and it didn’t. End of story. That was the last draw request for the City because the City funding had ran out. Why would the City have more recent draw requests if they were not asked to pay for the restaurant? The answer… they wouldn’t. You can’t get a document that doesn’t exist. The City put $4 million into the project and it didn’t go to the restaurant. Period.
30 Jun 2008 at 10:53 pm | #
Looks like the Beacon is on a witch hunt again. It appears that the ambitions are not necessarily journalism, but to dig up dirt. Guilty until proven innocent.
As for the City paying for, or not paying for the restaurant. I’ve never tried to look up documents at the City before, but rather than dig through leases and legalize, is there a finance/accounting group that you can go to to find out if they paid an additional 2.5 mil? It seems that if that money actually was spent on the restaurant (which I don’t believe it was), that that’s a large enough amount to be able to track down fairly easily...if it exists.
01 Jul 2008 at 03:39 am | #
READ THE LEASE. if it were different, or they ran out of money, then there would be a different lease. 5/3 has to carry it on their books, and if it were different, they would have a lease stating EXACTLY what the terms were. they are required to by law
Why should the citizens have to pay for an accountant? Open records laws DO apply.
You believe wrong until you show us a different lease than the one the city provided.
Until then, IF it would even remotely be possible, then you are wrong. You say one thing, a legal signed lease by city is what was provided. in it, they agreed to pay for the hard and soft costs of the BUILDING. There is only ONE building on THAT EXACT LEASED SPOT.
Open YOUR books sunshine, and I am sure we could arrainge to have a forensic accountant look at yours. As far as the City, they are required BY LAW to furnish them.
didn’t they tell you no drinking and posting ?
01 Jul 2008 at 09:19 am | #
To the Dean,
Please continue to investigate.
Someone paid for the construction costs.
One would think that any City Council Person could easily clear this matter up.
01 Jul 2008 at 11:32 am | #
Concerned City,
you are exactly right. IF it were something different, it would take about 30 seconds to clear up. Why wont they?
Until they show different, the Lease in their records is correct and legal , and clearly states “ Tenant (that’s the City) agrees to pay for all hard and soft costs, including architectural fees, incurred in the construction of the Building.”
There is only one building on that exact piece of ground that the city leased from 5/3 , and in turn SUB leased to 3cdc giving them the revenue from the restaurant. To do with what they please, not to pay down the debt. The Tennant is still the City. No question about that.
I will say again, 5/3 is required by law to list all assets. That piece of ground is an asset owned by the shareholers of 5/3 bank. If that lease was difffernt, and they decided NOT to pay the cost, there would have been a different lease, without the above statement.
01 Jul 2008 at 11:33 am | #
DCI’s definition of the CBD is not the same as the City’s codified recognition of the CBD as used on all City planning documents. Go to the auditor’s site, or go on CAGIS and see where 1420 Sycamore is located.
01 Jul 2008 at 10:44 pm | #
I think Meg Olberding’s email cleared it up when it said:
“The City expended $4 million on the entire Square renovation project. The City funded portions of the demolition package for the former Square, portions of the garage restoration package, and the structural concrete package for the renovated plaza and reconstructed 5th Street.
In the outlaying of funding, the City’s money was spent early in the project and the city’s $4 million had been spent by June 2006. The restaurant’s construction began after that.”
So maybe it took her more than 30 seconds to draft the email, but it is cleared up. The lease you keep talking about is a two party agreement between the City and 5/3, and that clause in there is only to state that of the two parties to this lease the City, not 5/3 is responsible for the costs of the restaurant. In a two party lease agreement it is not relevant or needed to include a third party like 3CDC since their responsibilities to pay for the Fountain Square project (including the restaurant) is covered under a seperate construction license agreement between the City and 5/3.
Case closed… nothing to see here. All cleared up. If you guys still have more questions or doubts, then I would have to conclude that you are just not very bright.
02 Jul 2008 at 10:17 am | #
The two-party lease is a contract between 5/3 and the City. The city cannot just slough off its obligations under the contract; there has to be another agreement between the City and 3CDC which comes after the lease.
Meg Olberding’s e-mail states that the city intends to assign its obligations under the Fifth Third lease to 3CDC as shown by paragraph 3 of the ordinance. Okay, fine. But that assignment cannot be done by decree. Fifth Third is not bound by paragraph 3, nor is 3CDC bound by a lease that they didn’t sign. There has to be another document.
And if that document states that 3CDC is using the land that the city leased from Fifth Third by taking over all the costs and obligations under the Fifth Third lease at no charge to the city, then the matter is indeed closed. If anon is right, that’s what it should say, or something along those lines. If it doesn’t say that then the matter is not closed.
I will have more to report on this later.