A local attorney is urging the Ohio Ethics Commission to rule that a longtime Cincinnati city councilman has a conflict of interest regarding taxpayer subsidies given to a real estate project in Clifton, and the situation should force his removal from office.
In a letter sent July 8 to the Ethics Commission, attorney Tim Mara alleges that Towne Properties, a firm owned by the family of Councilman Chris Bortz, holds a 50-percent stake in a newly created company established so the project could receive $21 million in Tax Increment Financing (TIF) from the city.
City Council approved the TIF deal at its June 29 meeting, with Bortz abstaining from the vote.
TIF deals rely on revenues generated by new development on a specific parcel that otherwise would go into the city’s General Fund. In other words, future tax gains are used to finance current improvements.
The city will issue $21 million in bonds — essentially debt incurred by the city, similar to how an individual uses a credit card — which will be used to help construct parking, road improvements and other infrastructure for the U Square @ the Loop project. The developer then will repay the bonds using taxes generated by the project once it opens.
U Square @ the Loop is the name given to the complex of apartments, shops and office space that will be built on 4.2 acres across from the University of Cincinnati, between McMillan and Calhoun streets.
The project also includes about $55 million in private investment.
One of U Square’s developers is Towne Properties, the company owned by Chris Bortz’ father and uncle, and where the councilman is employed. After critics — including Mara — raised questions about the arrangement earlier this year, Bortz sought advice from the Ethics Commission. According to comments made to The Enquirer, Bortz said Towne’s involvement with the project was fine as long as his father and uncle created a separate corporate entity to oversee it, apart from the family’s main business.
Here’s an excerpt from a June 17 Enquirer article that featured Bortz’ comments:
“My father’s not an owner of the project,” Bortz said. That step, combined with his abstention on votes, “does everything I’ve been advised to do and does it transparently,” Bortz said.
“If they had advised me that this was some kind of unsolvable conflict, I would have done something about that,” Bortz said, referring to the Ethics Commission.
Mara, however, sharply disagrees with Bortz’ version of events.
Any involvement by Towne in the project while it seeks public subsidies amounts to a conflict of interest for Bortz, Mara says, whether the councilman votes or not.
In his letter last week to the Ethics Commission, Mara wrote, “The creation of a new corporation does nothing to erase the uncontested fact that Chris Bortz is the son of one of Towne Properties’ owners and the nephew of another owner, not simply an employee with no family ties to the corporation. The TIF subsidy for the U Square project will greatly enhance the value to Towne Properties, at least some assets of which Chris Bortz, presumably, is likely to inherit.”
The letter continued, “The message to all who have a conflict will be ‘to circumvent Ohio’s conflict of interest laws, simply file articles of incorporation with the Secretary of State for a new entity and you are off the hook.’ ”
To support his argument, Mara cited comments made by Towne co-owner Arn Bortz — a former mayor and councilman — at a June 27 committee meeting held by City Council to discuss the deal.
Mara wrote, “Note that at the hearing, the Power Point presentation about the U Square development was made, in part, by Councilmember Bortz’s uncle, Arnold Bortz, who introduced himself as being with Towne Properties (not U Square LLC). During the course of the presentation, Arnold Bortz mentioned Towne Properties twice and U Square LLC not at all. Each of the 19 slides in the Power Point presentation bore the logo of Towne Properties, and U Square LLC was mentioned just three times in the slides. So it was obvious to any objective observer that the U Square project is a Towne Properties project. Indeed, Towne is a guarantor under the agreements authorized by the ordinances.”
At issue is what exactly constitutes an ownership interest in a project.
John Cranley resigned from City Council in January 2009 based on advice he received from the Ethics Commission. Cranley asked for the opinion after he formed a company called City Lights Development, which planned to develop a project in East Price Hill.
City Lights also planned on seeking TIF subsidies, and Cranley asked the Ethics Commission if he could avoid a conflict of interest by abstaining from voting on the matter. But the commission told Cranley that wasn’t sufficient.
The commission’s letter stated that “disclosure and abstention are insufficient for you to comply with the Ethics Laws if the (company) will seek or receive any financial benefit from the TIF. If the (company) intends to seek service payments from the TIF, you must either step down from your position on City Council or end your relationship with the (company) before any authorization is proposed to or made by the city.”
By comparison, Chris Bortz maintains he’s merely an employee of Towne Properties, not an owner, so the advice doesn’t apply in his case.
Ethics Commission representatives are reviewing Mara’s letter to see what, if any, action is warranted.
In The Enquirer article last month, Arn Bortz dismissed Mara’s concerns.
“Disclosing the facts and excusing yourself from voting has been how public officials have always dealt with this,” Arn Bortz told the newspaper. “That’s been sufficient for a couple hundred years in our republic. If that’s now considered insufficient, no family with any significant interest in the city will be interested in public service.”
That’s disingenuous, at best.
For starters, who says families with a “significant interest” in the city make the best candidates for public service? It could just as easily be argued that such officials don’t represent the interests of the average constituent and use public service as a venue for self-enrichment or to benefit friends and associates.
Cincinnati has a long history of electing people from well-connected families to City Council, and there’s no evidence we’re any better off because of it. In fact, some would say certain neighborhoods have been neglected as a result.
Moreover, if any of these families truly are interested in public service, is it asking too much for them to refrain from seeking public subsidies during that period?
Council terms only last two years. Serve one or two terms, then worry about making a profit on a private endeavor. While you’re in public office, though, focus on doing what’s best for the public — and not on arranging financing for family members using taxpayer money.
PORKOPOLIS TIP LINES: 513-665-4700 (EXT.147) or firstname.lastname@example.org