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A county advisory panel's recommendation that a development team led by Western-Southern Financial Group build The Banks is stirring allegations of backroom deal making.
The recommendation, which still must be voted upon by elected officials from Cincinnati and Hamilton County, could affect how nearly $200 million in taxpayer money is spent during the next few years.
Critics of the process say the choice was no surprise. County Commission President Phil Heimlich, who has taken a lead role in pushing The Banks project forward, returned $11,000 in campaign contributions from people connected to the Western-Southern team just two weeks before campaign finance reports had to be filed in April.
The contributions included $5,000 from Jeffrey Anderson of Anderson Real Estate, $5,000 from Rob Smyjunas of Vandercar Holdings and $1,000 from Western-Southern CEO John Barrett. The money represented a fraction of the almost $393,000 that Heimlich has raised so far for his re-election campaign, and Heimlich has said he didn't seek out the three donations.
'The worst' wins
Through its Eagle Realty subsidiary, Western-Southern has been involved with several downtown development deals, including the Queen City Square office tower and the stalled Fountain Square West project, currently a parking lot. Vandercar built the Center of Cincinnati project in Oakley, which includes Target and Meijer stores.
Western-Southern was recommended despite being the only one of four developer applicants that declined to guarantee it wouldn't seek public funds.
A three-member advisory panel appointed by county commissioners reviewed and ranked the firms.
One panel member was Deputy County Administrator Ron Roberts, former director of the influential Cincinnati Business Committee (CBC).
Barrett and Reds owner Bob Castellini — who heads yet another county advisory panel, called The Banks Working Group — sit on the CBC's board of directors.
Castellini, whose Working Group will review Western-Southern's selection and make a recommendation to elected officials, is a partner with Tom Williams in the Reds ownership. Williams sits on Western-Southern's board of directors, and his family used to own the company.
"While there was an element of objectivity present, it was also evident there was a fair amount of subjectivity applied to the scoring and ranking," says County Commissioner Todd Portune.
The commission's sole Democrat, Portune has opposed several recent decisions involving The Banks.
"I attended the presentations by the various developers and, with all due respect, (Western-Southern's) presentation was the worst," he says.
Heimlich, however, notes the scores for the three highest-ranking applicants weren't far apart. Western-Southern's status as a local company gave it the edge in the competition but not in the manner that critics allege, he says.
"It was because of that team's local ties," Heimlich says. "They felt that Western-Southern had a vested interest in seeing the project flourish. They have a stake in this community."
The stake hasn't affected the pace of Western-Southern's languishing plans to build a retail complex at Fifth and Race, where the city of Cincinnati has spent about $15 million preparing the site during the past few years.
The cost includes $10 million to raze buildings and move several businesses to make way for a Nordstrom department store in a deal that fell apart, another $3.7 million to help settle a related lawsuit involving Eagle's relocation of a Walgreens store across the street and $1 million to fill in the site and use it as a parking lot until another tenant is found.
For The Banks project, Western-Southern faced impressive competition. Among other firms that applied was AIG Global Real Estate Investment Corp., an Atlanta-based company that developed the 138-acre Atlantic Station project there.
Western-Southern scored 132 points out of a possible 155, based on categories that included development experience and financial capacity. AIG ranked next highest, with 129 points.
Rounding out the list was The Rockefeller Group/ Kimco of New York, which scored 125 points and ranked third; and the Partnership for Lasting Urban Growth (PLUG), which scored 101 and ranked fourth.
The Banks Working Group, a five-member panel headed by Castellini, will now review all of the developer presentations. That group, in turn, will make a recommendation to county commissioners and city council.
"All five members are going to go back over these presentations," Castellini says. "I'm sure we'll come up with our own questions and our own conclusions. It's not a fiat."
Who needs meetings?
The Working Group will negotiate a proposed contract with its recommended developer. Because of tight deadlines for federal grants, city and county officials would face a time crunch if they wanted to reject the recommendation and select another firm. Elected leaders offer assurance that won't happen.
"Deadlines are not going to drive me to make a bad decision," says Mayor Mark Mallory.
Some local officials — including Portune, Councilman David Crowley and others — say The Banks Working Group has too much leeway in how it makes recommendations, and that could affect any final deal.
Although Castellini has promised to make the group's meetings open to the public, that doesn't apply to its subcommittees, where most of its work will be done. Moreover, the Working Group's rules allow an exemption that it can take action "without a meeting, without prior notice and without a vote" if all five members agree in writing, such as exchanging e-mails.
Such closed-door decision-making could hamper efforts at minority hiring and contracting for The Banks, according to critics.
Cincinnati and Hamilton County created The Banks Working Group in April to quicken the process of selecting a developer. Proposed in 1999, the project has stalled over funding and jurisdictional issues, particularly who will pay for $68 million in parking garages. Sales tax revenues were supposed to pay for the garages but are far below projections.
The Banks will involve $200 million in public funding to supplement $600 million in private investment to develop a vacant eight-block area located just north of the Ohio River.
Ideally, The Banks Working Group will select a developer in June, negotiate a deal over the summer, with construction beginning by year's end or early 2007, Heimlich says.
"Bob Castellini made it clear he's going to keep the project moving," Heimlich says. "There's been too many wrenches thrown in the way over the years."
Critics believe insider deals have marred Cincinnati's riverfront redevelopment plans from the beginning, when voters passed a half-cent sales tax in 1996 to pay for the Bengals stadium. For example, Castellini, whose family owned most of the produce warehouses on the new Bengals stadium site, sold his land to Hamilton County for $32 million, although it was valued at only $7 million. ©
