Pay To Play – Euclid Style

Last March Council voted to raise the sewer rates some 32% to cover the cost of WasteWater operations, waterlines and to begin bringing the City into compliance with the EPA.  



Despite a $715,000 appraisal, on Aug 8
Council approved purchaseing
 Alexanders for $900,000 4 to 3



A key element of implementation of the long term plan is the old Alexanders Restaurant property. An underground retention basin will use the current City-owned land plus part of Alexander’s to hold excess storm water until the plant can process it properly. That’s the simple version. The City can acquire the private parcel thru a negotiated purchase or thru use of eminent domain for a public purpose. That being said, the property is pretty useless to the current owner Miles Carter who incorporated 36097 Westminister Road, LLC in November 2008.

Last night Council narrowly approved the purchase of Alexanders for $900,000. The parcel is 53,057sq.ft - a little over one acre. By comparison, in 2010 the City purchased St. Roberts’ 8 acres for $675,000.

Carter’s LLC bought the parcel in Dec 2010 for $600,000. The LLC spent much of 2011 maneuvering a deal to get McDonalds in there.

Miles Carter is a smart businessman. He owns the shopping area across the street. Carter probably knew the City was in negotiation with the EPA regarding improvements to the Wastewater Treatment Plant. So why did he purchase a property that was potentially worthless depending on what the EPA and the City settled? Why did he pursue MacDonalds to buy the parcel for $1.1 million? To my way of thinking, there are 3 possibilities.

1- The City never informed Carter of the risk. 2- Carter knew the risk, but hoped to dump the land and make a cool half million before MacDonalds learned of the risk. 3- There was a tit for tat agreement between the Mayor and Carter.   

In 2010 when Carter was negotiating for the Alexander’s property, the Development Dept had to know about it. If the Administration knowingly let Carter buy the land and pursue a MacDonalds deal without informing him that the City might need it for public use – well, that doesn’t look good for the City.

On the other hand, if the City did inform Carter of the potential seizure and Carter lured MacDonalds in without informing Corporate so he could up the value of the land, well, that doesn’t look good for Carter.

On the third hand, if the Mayor struck a deal with Carter to increase his profits in exchange for a contribution, well that doesn’t look good for the Mayor. It’s also possible that after years of watching the Mayor reward contributors like CT Consultants, K&D, Spies and Mavec with huge profits and sweet deals at taxpayer’s expense, maybe Carter decided to try his hand at Euclid’s particular form of Play to Play.

In 2011 Miles Carter made two contributions to Bill Cervenik’s campaign totaling $1,500. Not a big deal except that Carter hadn’t contributed anything more than $50 to Cervenik for years. That $1,500 donation very well could have gotten Carter an extra $150,000 profit. 

The City had two appraisals done on the Alexander’s property. The first came in at $715,000. The second appraisal came in at $1.1 million and was based on MacDonalds’ moving in. The City offered Carter $900,000 to compensate for MacDonalds, demolition of Alexanders and carrying costs. But MacDonalds had pulled out at the City’s recommendation back in December of 2011. 

No buyer, no property value – Carter was stuck. So why didn’t the City negotiate for the lower price?

Well anyway, enough questions were raised last night that Holzheimer-Gail suggested a second meeting 8/13. Wd 5 McLaughlin - a guaranteed vote for the Mayor - though, wouldn’t be able to make the meeting. Without McLaughlin to hold his hand, no one was sure how Wd 6 O’Hare would vote. It was a risk the Council Prez could not take. A ‘compromise’ to change the legislation from an ‘emergency’ where the Mayor could enact it immediately to a simple ordinance that required a 30 day wait before signing was offered. But Council would have to vote on it right away. It passed 4 (Caviness, McLaughlin, O’Hare, Holzheimer-Gail) to 3 (Scarniench, Jones, Langman). Lynch is still in India and Van Ho had left early.

When I asked Wd 1 Councilwoman Caviness why she cast the game-changing vote instead of insisting on trying to negotiate a lower price, her response was that by changing it from emergency to a general ordinance, the City could spend the next 30 days negotiating a lower price. The woman has no clue how legislation works. Pretty scary.

When I asked Wd 6 Councilman O’Hare why he didn’t ask if the City had tried to get the parcel for less, he said there was no point because of the MacDonalds $1.1million deal. Not as scary, but definitely shameful.

So, in 30 days unless something changes, Miles Carter’s LLC will have turned a 50%, $300,000 profit on a parcel in a little over a year and a half, in a market that’s not moving much, for land that cannot be developed. Financing for the million dollar loan will be made with the money raised from the recent sewer increases.