(VIDEO) IS CANTON THROWING "GOOD MONEY" INTO A "BAD INVESTMENT" - THE HERCULES PROJECT?

 UPDATED:  9:45 AM

Several weeks ago the SCPR asked a person with considerable economic development experience (from the government standpoint) whether or not the Hercules Project (the former Hercules Engine Company site) on the south side of Canton is a good idea?

Answer:  "No, it is too isolated from the rest of Canton's economic, cultural, commercial and civic centers." 

Hmm?

He pointed out, for example, that the Football Hall of Fame, the Civic Center, the Arts In Stark district, the Palace Theater, and the McKinley Grand are not clustered but separated by considerable space from each other and certainly from the Hercules Project and thereby presents a picture of fragmentation and isolation that will not impress future would-be investors in downtown Canton.

Hmm?

So why was Canton City Council so eager to put $3 million of taxpayer money at risk?

Answer:

• (the SCPR's assessment) Canton is so desperate for something, anything to show that the city is moving forward towards economic, financial recovery that a possibility that Hercules will go belly up is a risk worth taking, and
• it could be to help bail out a major project of Robert Timken, a member of the "We are Canton" prominent Timken family. 
• Sidenote:  It is interesting that another prominent Canton name: Marshall Belden, Jr is also in investor in the effort.

Only Councilwoman Mary Cirelli demonstrated much interest in questioning the wisdom of the move by council in the public sessions on this past Monday.

In council's work session and immediately prior to the vote she probed the transaction that has one more step to go before becoming reality.

No other council members questioned the wisdom of Canton advancing the project the $3 million as a loan.

Lining up to give kudos to the project were:

• Councilman Greg Hawk (Democrat - Ward 1),
• Hawk referred to the Myers Lake failure of a former council to purchase as having been a mistake that council should not repeat on the Hercules Project,
• Councilman Kevin Fisher (Democrat - Ward 5),
• Fisher said that internal council vetting of the proposed loan cured concerns that council might have in going forward and he complimented Williams for his management of the loan negotiations,
• Councilman Thomas West (Democrat - Ward 2),
• West predicted that Hercules will prove to be a step forward in Canton's economic resurgence, and
• Councilwoman Chris Smith (Democrat - Ward 4),
• Smith voted "definitely yes!" when council voted 10 to 1 in favor of the ordinance with only Cirelli voting no.

Also piping in were:

• Law Director Joe Martuccio,
• Martuccio:  explained the legal technicalities, 
• Mayor Healy,
• Healy:  who more on less suggested that Cirelli was way off base in suggesting that the loan factored in [from capital improvement funds]  at all on Canton's low beginning salary for policemen [$26,000] who are paid from the general fund, and
• Finance Director DiRuzza,
• DiRuzza told Cirelli that the finances of Canton were solid

Back on March 12th, the SCPR received an e-mail that raises some important questions about the transaction, to wit:

In an effort to convince certain councilman that the city should agree to use bond offering proceeds for their project, Rob Timken and others are taking a trip to Hamilton, Ohio [SCPR note: the trip was changed to being one to the Cleveland area] in a limo with Councilman West, Councilman Mack and others to show them the "viability" of building a shopping center, convention center, hotel and apartments at the site of the old Hercules Engine plant. 

They leave tomorrow.

But really, who is going to pay $800 a month for a single bedroom and single bathroom apartment across the street from a Halfway House, or how about $1,000 plus for a two bedroom one bathroom apartment, and better yet, $1,500 for a three bedroom and two bathroom apartment. 

It would feel like living in Jackson Township without the view.

Also, you should obtained a copy of the proposal which includes a line item for site acquisition cost of $3.5 million.  Interesting, the Stark County website shows that the site was purchased by the group for $3.0 plus million.  So, are the current owners buying it from themselves to get their money back.

Do we realy [sic] need another convention center when the current one is losing money?  And what will happen to the current one?  What will happen to the downtown hotel which is currently at best annually average 20% occupancy?

Here's an idea, convert several floors of the existing downtown hotel to apartments. 

I guess Healy is pushing the idea hard through his economic development director. 

Will he kick his economic development director to the curb if he fails?

  The SCPR contacted Councilman Mack and here is his response:

Mr. Olson,

Thank you for the email.

In response to the below quoted email-

Last week, in furtherance of my due diligence relating to the potential $3 million loan agreement with regard to Cormony Development's proposed transformation of the blighted Hercules complex, I telephoned Service Director Warren Price.  My primary concern was the sustainability of moderate to high-income housing at this location (i.e., market rate apartments).  In response to my concerns, Director Price recommended that I personally view similar residential projects to facilitate my analysis.  I agreed this was a good idea.

This morning, several people embarked on the viewing that Director Price suggested.  Myself, Councilpersons West and Mariol, Director of Development Fonda Williams, and Bob Timken, Sam Polakoff, and Andrew Goldman of Cormony traveled to Cleveland (not Hamilton) to view similar urban residential redevelopment projects.  As you may expect, this required  me to take a personal day off from my full-time law practice, and I am sure Councilpersons Mariol and West experienced similar inconveniences.  I understand that Councilpersons Dougherty and Babcock also committed to this viewing, but cancelled early this morning due to unforeseen circumstances.  I am sure they will be conducting their own due diligence independently.

During the trip, Councilpersons West, Mariol, and myself articulated several concerns relating to this project to the principals of Cormony.  Most notably, these concerns included the need that construction of this project utilize local union labor, and that the terms of the city financing relating to the project be fair and equitable to the City of Canton.  After vigorous discussion, this trip provided me with a degree of comfort that these concerns will be addressed by Cormony.  Moreover, after viewing the Cleveland redevelopment projects, I am very optimistic that the Hercules project is feasible, and will go a long way in advancing a desperately needed element of our City - downtown living. That said, I will of course reserve final judgment until it is time to vote.

With respect to the expense of today's viewing, please note that all City officials paid their own way.  In the sprit of "Sunshine Week," please find attached a copy of my own individual lunch receipt which I personally paid for.  In addition, we will all be separately invoiced for our own individual share of the transportation.  While the email quoted below characterizes this transportation as a "limo," our actual transportation, as reflected in the attached photograph, does not accurately fit this generic description.

In conclusion, I am proud that Councilpersons Mariol and West joined me on our efforts to learn more about this very important expenditure of tax payers funds.  It is gratifying to know that our City Council takes its duties seriously.

As always, if I can provide you with any additional information, please let me know.

Edmond

Edmond J. Mack

As readers of the SCPR know, yours truly has very high regard for Councilman Mack, in particular.

So there is no doubt that he did exercise "due diligence" and that he has not been part of an effort to steamroller Canton into participating in a unwise venture.

It could be that Hercules will work out.

However, the SCPR is skeptical.

The property was purchased by developers in 2005 (Hercules having shut down in 1999).

Intuitively, to yours truly, this project has a forced quality to it. It could be Canton's version of "too big to fail."  It seems that nearly all of Canton's movers and shakers are squarely behind the effort to get local taxpayer money into the support mix for the project.

The Report quizzed Blake Schilling (at the mayor's State of the City address), the new (as of November, 2012) general manager of the Canton Memorial Civic Center which more or less serves as Canton's convention center, as to whether or not the down-the-road plans for the Hercules Project as a possible convention center poses a threat to his facility.

Answer:  "Wait and see."

Yours truly expected an emphatic no.

Hmm?

Another critic has wondered out loud how the city's planners and thinkers can possibly believe that anyone would want to move into crime-ridden Canton.  The current trend is for folks to be moving out of The Hall of Fame City.

Notwithstanding the telling questions which have been raised about the viability of this project,  the SCPR wishes Canton well on this venture and hopes that yours truly's skepticism is ill-founded.

And Cantonians better hope so too.

For the city can hardly afford to drop $3 million, no?

If it loses $3 million, then it will have succeeded only in digging a deeper hole for itself!