Last Thursday on the MetroHealth Hospital main campus, Steelyard Commons developer Mitch Schneider made a brief presentation to about 18 people and then, for about an hour, opened the floor to questions. There was a steady stream of questions. Thirty minutes in, a woman asked: Cleveland has a living-wage law, will the retailers honor it? Schneider gave a brief and clear answer.
Schneider said that the tenants of Steelyard Commons would follow the city’s living wage ordinance.
The woman’s follow-up questions was to the point: including Wal Mart?
Yes, said Schneider, including Wal Mart.
What I think the woman thought she heard was that the retailers in Steelyard Commons would pay their employees the living wage set by the city. And, in accordance with the ordinance, I’d bet that she expected that the retailers would also provide health care benefits comparable to that provided for city employees.
But that wasn’t what Schneider said. And it isn’t what is going to happen for workers in Steelyard Commons. It won’t happen because, as I’m sure Schneider knew when he gave his answer, the ordinance does not apply to retailers and it doesn’t apply to businesses that do not receive direct financial assistance from the city.
In a follow up question to Schneider I asked him for clarification. He said:
To the extent that the Cleveland Living Wage ordinances are applicable, the retailers will comply. First Interstate does not, as a matter of routine, examine the legal framework regarding employment law for retailers. If it only applies to companies receiving public subsidy from the City, the requirements would not apply. You may want to refer to the city’s law or economic development departments for clarification on the policy.
I didn’t talk to either Cleveland’s law or economic development departments, but I did run my questions past No Cleveland Wal Mart’s sage blogger, Bill Callahan. Bill confirmed that the woman’s question to Schneider was essentially meaningless. The ordinance doesn’t apply so, of course, the retailers will comply since they don’t have to do anything to do so.
But what about the $32 million the city is giving to Steelyard Commons? First, the New Market Tax Credit is coming from the Cuyahoga County Port Authority. While the city controls the majority of the seats on the board, it is not the city and therefore the $32 million subsidy doesn’t count.
I did ask Schneider about that $32 million and how it was going to be used. His response was that only about 10 percent would actually benefit him, as the developer. That didn’t make a lot of sense to me, but my area of expertise is not real estate development. I asked Schneider to elaborate on where the other 90 percent was going. He said:
The other 90 percent is in the form a traditional construction loan provided by Fifth Third Bank (that flows through the Port) to leverage/produce the 10 percent benefit. The loan bears interest and is repayable in accordance with standard lending practices It’s purpose is to fund project costs and it is repayable as a traditional construction loan.
I’ve passed this along to Bill and I expect that he’ll make much better sense of it than I have.
My Soundtrack: Into Thin Air by World Leader Pretend on WOXY.