Thursday, December 4, 2014

Still No Clear Path Forward for East Cleveland Budget Woes, But Bankruptcy Remains on Table

Posted By on Thu, Dec 4, 2014 at 1:00 PM

click to enlarge City Council President Barbara Thomas addresses a full house and discusses plans to get East Cleveland out of financial trouble. - ERIC SANDY / SCENE
  • City Council President Barbara Thomas addresses a full house and discusses plans to get East Cleveland out of financial trouble.
East Cleveland might do some things to get itself out of the red, but nothing is official yet — despite mounting pressure from the state auditor and myriad questions from the people.

With the news of East Cleveland's current fiscal emergency becoming too much to bear, Council President Barbara Thomas and Mayor Gary Norton called a town hall-style meeting to discuss some of their plans to ease the city's budget woes. 

Thomas said that there are three main avenues forward: merging with the city of Cleveland (which she is totally against), filing for Chapter 9 bankruptcy (which she adamantly favors) and "bringing vendors in" to negotiate skyrocketing debt. With companies like AT&T, FirstEnergy and Sprint all demanding payment, that last point seems unlikely. 

Last night's meeting was couched in lessons on the foreclosure crisis, which saw East Cleveland's median home price crash from a high of $80,000 in 2005 to a low of $2,800 in 2008. When asked if anyone lived next to a vacant home, nearly everyone in the room last night raised their hands.

Jim Rokakis, director of the Thriving Communities Institute, was on hand to elaborate on the past decade of housing and foreclosure rate data. He explained that when it comes to Cuyahoga County's tax base, where property values drop in one city, tax dollars rise in another. Even something as municipally specific as East Cleveland's city budget becomes a regional issue when viewed through the right lens — hence the merger talks that don't seem to go away.

Outside of the occasional town hall meeting or the mayor's annual State of the City address, these sorts of info dumps are uncommon — even in well oiled municipalities. So Norton struggled to explain how data from the last 10 years impacts the city's current crisis. The word of the night was "context," as Norton repeatedly explained that all of the city's financial problems — which he stressed were "no one's fault" — needed to be placed in their proper context. Why aren't potholes getting fixed? Well, as Norton described it, you can trace the city's decrepit service equipment back to the sub-prime mortgage crisis, which drove people from the city in droves over the past decade, cut the city's tax revenue, and led to a total inability to purchase new equipment or enter into effective shared-service agreements with Cleveland, South Euclid, etc.

"If we had money to patch potholes, they would be patched. But understand: We don't have money as a city to address that," Norton said. "The reason why potholes don't get patched in a lot of cases is because there is not adequate funding.

"The reason why we are here is to provide context. This truth might get more and more naked as time goes on."

Here's a sampling of the city's current problems, as enumerated by State Auditor David Yost in a Nov. 21 letter to the Financial Planing and Supervision Commission:

- East Cleveland can't provide adequate street maintenance due to the lack of working equipment. The city's asphalt warmer, street roller and two street sweepers are in need of repairs that can't yet be funded.
- The East Cleveland Fire Department does not have a working ladder truck, and the cities of University Heights and South Euclid recently canceled their mutual aid agreements with East Cleveland because of that.
- City cell phones have been shut off indefinitely, as Sprint awaits bill payments.
- Anecdotal evidence reveals that doctors are refusing treatment to city employees due to outstanding bills that they believe should have been covered by insurance
- Red-light camera revenue, once cited by city leaders as a major asset, is way down
- The population of 17,000 has been steadily dropping for years, leaving a widening hole in the city's property tax base. And with so many abandoned properties — some of which catch fire or play host to crime — the city is finding itself sending service employees and police officers and firefighters out to homes where no one even lives.

"What we have in East Cleveland is a structural, economic and financial change that we now must take very, very seriously," Norton said. 

Planning for the 2015 budget is under way, and Thomas said the city needs to cut $400,000 immediately. Norton said the city has no plan to begin laying off employees, nor impose any tax levies on the residents. 

As in earlier public comments, Norton explained that the city's biggest asset is its proximity to University Circle. Demolitions taking place in the southwest quadrant of the city — along Euclid Avenue — are giving way to townhouse development and upticks in property values. "We know that one of the most attractive nodes in Northeast Ohio — really in the state of Ohio — is University Circle. They've got a great thing going there," Norton said. "We believe we can capture that node."

Judging by the tenor of comments and mandates from Columbus, it's unclear if that residential development is coming too late — or if Norton's grand plan will end up saving East Cleveland.

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