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Saturday, July 26, 2003

Wells: Let's make a deal


Who's playing this game

map
Remember back a few years ago when the voters decided to change the Cincinnati Charter to give the mayor vitamins?

What the city really needed, it was decided, was a strong mayor. A leader who could stick out his chest and say to the corporate world, "I'm in charge here! You wanna deal? Deal with me!"

No more bureaucratic chair warmers making careers out of moving development applications from one side of their desks to another. When somebody had business with City Hall, we would do business, baby.

They believed in this fantasy over at Convergys during the year they spent planning how to consolidate their headquarters into the Atrium I building. They found out differently when members of city council denounced the proposal worked out with Mayor Charlie Luken and the administration instead of providing the rubber-stamp vote Convergys apparently had expected.

"We thought we had been negotiating with the person empowered to make a deal," Convergys CEO James Orr told the Enquirer editorial board last week. But some members of council want to be Monte Hall. In Let's Make a Deal Cincinnati-style, Orr might be getting deal number one, deal number two or deal number three.

This game involves the biggest tax incentive package in Cincinnati history. If city council blows it and Convergys decides to leave town, it will cost the city hundreds of millions of dollars in lost revenue and investment.

The risk could have been avoided. Luken and the administration could have made sure council was willing to deal in job retention tax credits, a matter of city policy that should have been decided before negotiations began. Council members could have remembered that the mayor and city manager are the ones who should be implementing policy, instead of trying to craft their own deals with the company. Convergys should have counted to five, the number of votes needed to approve the deal, if it wanted to be sure it had the needed support.

The initial proposal - deal number one - offered Convergys with $63 million in tax incentives to keep its headquarters downtown. Your average taxpaying citizen knows the city isn't going to pay him to stay in town, so when a company like Convergys threatens to leave town if it doesn't get what it wants, there is a certain amount of resentment. People start grumbling about extortion and mumbling things like "Remember the Bengals."

Forget it. Convergys isn't demanding anything like a new football stadium. In exchange for the tax incentives, the company will invest more than $100 million of its money in buying and renovating Artium I. Its long-range plans include expanding its downtown workforce and possibly building an addition to its headquarters. And over the next 15 years, the company and its employees will pay several hundred million dollars in state, county and local taxes. Keeping Convergys downtown will be good for the city, and everybody on council knows it.

But part of the package was $33 million in job retention credits. Critics like Councilman David Pepper said job retention credits rewarded Convergys for keeping jobs in Cincinnati that already exist. If Convergys got such a deal, what would stop every other company in town from demanding the same thing? Pepper said Luken was giving away operating funds, which would jeopardize basic services to the neighborhoods.

In an astonishing move, Luken told Pepper to go ahead and negotiate a better deal if he thought he could. Pepper offered deal number two - providing Convergys with approximately the same amount of incentives, but paying for them through bonds. That keeps operating funds for neighborhood services intact, but according to the mayor, limits the city's ability to fund other downtown development projects such as The Banks and the Fountain Square makeover.

Neither plan seemed likely to attract a majority of council votes, which apparently was leading to deal number three - a hybrid proposal being crafted late Thursday afternoon.

Orr and Convergys don't seem to care which deal they get, as long as the dollars add up the same. There is a time limit to this game, however. Orr said Convergys has to have a deal by today, when its option to buy Atrium I expires. After that, he said, the company will take its employees, its investment and its future tax payments and find someplace else to play.

If that happens, a lot of people at City Hall will be blaming each other for losing this game. They should have followed the rules.

---

Contact David Wells at 768-8310; fax: 768-8610; e-mail: dwells@enquirer.com.




EDITORIAL PAGE
Security threats: False assumptions
Sanskrit: Reviving a 'dead' language
Life on the 'net: Sometimes wasted
Wells: Let's make a deal
Readers' Views

 

Jim Borgman
Jim Borgman
Jim Borgman is The Cincinnati Enquirer's Pulitzer Prize winning editorial cartoonist.
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