Upfront

NEWS

Cleveland to Give Rocket Mortgage Another Handout, Economic Development Brain Worm Thrives

THE CITY OF CLEVELAND

will give Rocket Mortgage roughly $1 million over the next five years as part of a so-called job creation incentive package. The grant is now a standard offering, one of the city’s go-to tools in its economic development toolbox. It is equal to 0.5 percent of a company’s new payroll.

Rocket Mortgage, the Detroitbased mortgage lender formerly known as Quicken Loans, is housed under Dan Gilbert’s Rocket family of companies. It plans to expand its Cleveland headcount by roughly 700 employees. The new hires will work on the fourth and fifth floors of the Higbee Building downtown, above the JACK Casino, and will expand the company’s fintech (financial technology) division.

According to Rocket’s Clevelandbased director of government affairs, Wendell Robinson, these positions will not require a fouryear college degree and will pay, on average, $75,000 per year.

In a city council committee meeting last week, which consisted largely of council members prostrating themselves in gratitude before Rocket Mortgage, the city’s legislation was revealed to be a formality. Robinson told Councilwoman Phyllis Cleveland that Rocket was already recruiting for these new positions and intended to begin hiring immediately. The company had received a pledge from the city that they’d get the grant, Robinson said, and wanted to hit the ground running.

City council was just the rubber stamp, in other words. Everything had already been ironed out by the Greater Cleveland Partnership (GCP), Ohio Means Jobs and other partners who assembled the picnic basket of subsidies for the mortgage giant. Everyone was confident that city council would raise no objection of any kind.

They didn’t. Tuesday morning, the city’s elected representatives took turns heaping praise on the mortgage lender. They declared that the deal was “Christmas in February,” (Councilman Joe Jones). It was a wow-worthy “big win for Cleveland,” one that “the entire city should be celebrating,” (Blaine Griffin). Indeed, Griffin said it was one of the best deals he’d ever seen on council. Downtown councilman Kerry McCormack offered his “enthusiastic support,” and Phyllis Cleveland said Rocket’s expansion represented “an investment in human capital in our community that we haven’t seen the likes of in quite some time, if ever.” Basheer Jones called the deal “very very exciting” and told the city’s economic development director, David Ebersole, that he “continue[d] to hit home runs.” (No word on how the deranged 60-year TIF for the Flats East Bank project affected Ebersole’s batting average.)

Unlike the Q Deal, which was praised by a majority of city leaders in equally outlandish terms, the current job creation grant is actually contingent upon new jobs being created. It will be disbursed annually, based on Rocket Mortgage’s new payroll, and will be capped at $975,000 over five years. The city is not bonding out tens of millions of dollars up front based on wildly optimistic projections, as Cuyahoga County did for Dan Gilbert in the Q Deal, increasing its substantial debt burden and downgrading its bond rating in the process. (Mayor Frank Jackson nevertheless saw fit to call the Q Deal the best deal he’d ever seen as an elected official as he signed the city legislation authorizing nearly $100 million

UPFRONT

from Cleveland’s coffers for the arena renovation. Surreal stuff.)

The current grant for Rocket Mortgage will be defended on these grounds and others, most notably that the company could have expanded its footprint elsewhere. That logic should be familiar. It was applied by more than 200 cities across the country during the Amazon HQ2 sweepstakes, the most profound and embarrassing race-to-thebottom spectacle an American corporation has yet devised. Rocket might have expanded at the Quicken headquarters in Detroit or grown its operations in Phoenix or Charlotte, Robinson told council. He said that as a lifelong Clevelander, he campaigned hard for the expansion in Cleveland and worked with GCP to “put [their] thumb on the scale” to help the city land these jobs.

The jobs are a juicy prize, make no mistake. Seven hundred new people working downtown, once the pandemic recedes, is a boon for the economy of the central business district. And as Kerry McCormack correctly noted, the increased payroll is only one way that new jobs benefit Cleveland. All these new employees will also use their paychecks on local goods and services, including downtown stores and restaurants that will benefit from the increased foot traffic and may themselves hire new workers to accommodate. At least some of these new Rocket employees will be moving to Cleveland from elsewhere and will presumably be renting apartments or buying homes in the city.

All that is true. It’s why cities have taken such stupefying financial risks to attract new jobs, and have created such outrageous incentive packages to lure big companies, and, in general, have espoused such ill-advised policies that aspire, above all else, to something referred to as “business friendliness.”

But this is a despicable governance framework — it’s a neoliberal framework, if that’s helpful — in which impoverished cities like Cleveland dole out precious public dollars to wealthy corporations like Rocket, which happens to be presided over by one of the planet’s richest men. All people, certainly the city’s own elected representatives and those who purport to be concerned with equity, should be militantly opposed to such ugliness.

And yet, just as during the farcical Q Deal, Rocket Mortgage was exalted Tuesday morning for its commitment to Cleveland. The hearing is worth watching on YouTube to witness the fanatical scope of this reverence. One after another, council members raised their hands to offer their personal commendations. At most, some of them said they hoped arrangements would be made to “create pipelines” so certain constituencies — CMSD students, Tri-C students, African Americans, felons, immigrants, the functionally and financially illiterate — could have access to these new jobs, or at least access to the opportunity to access these jobs. (The fact that the new highpaying positions do not require college degrees may have been misconstrued; it’s not as if the city’s most marginalized will suddenly become mortgage bankers and fintech software developers.) The general vibe was that thanks to the almighty Quicken/Rocket, Cleveland can become the financial services capital of the world.

All of this jubilation was by the way in the context of greenlighting a subsidy for a major corporation. It’s a small subsidy relative to something like the Q Deal. And one can argue — as virtually everyone does — that 0.5 percent of a company’s new payroll is a small and necessary price to pay for economic growth.

On the other hand, it’s a substantial subsidy: $975,000 is, for example, more than half of the total money disbursed as loans to Cleveland small businesses for operating support during the Coronavirus pandemic. Unlike Rocket, which will get its “job creation grant” in the form of a no-strings-attached cashback each year, the 161 struggling Cleveland small businesses get their survival funding in the form of $10,000 loans. (The city did, for the record, provide roughly $280,000 in grants to 39 small businesses to pay for damage sustained after the civil unrest on May 30.)

Unmentioned and unexplored at the council meeting was the question of whether Rocket would have expanded in Cleveland even without these dollars. In economic development circles, this is sometimes referred to as a “butfor” provision. Would Rocket have moved elsewhere but for the jobcreation grant?

It’s hard to say. Amazon, for one, has mastered the art of securing incentives for locating fulfillment centers precisely where they would have anyway, (near transit arteries in vacant facilities with ample square footage). And while Wendell Robinson said that Rocket is “constantly evaluating” its expansion opportunities in all of its locations, it certainly had available space to expand in the Higbee building and will soon have a brand-new aerial pedestrian bridge to a brand-new parking garage over Ontario, (the planned construction of which has already shuttered one of the last good dives downtown.)

Even if there had been legitimate debate by Rocket execs, and Robinson sauntered over to GCP with his hand out in order to “put [their] thumb on the scale” for Cleveland, every local elected leader should have stared these goons in the face and reminded them the public is right this moment forking over more than $100 million for the renovation of the arena. The Cleveland Cavaliers are also housed under Gilbert’s Rocket corporate umbrella. And thanks to Covid, admissions tax revenue will be drastically lower than projections for another consecutive year. The public will be paying off the upgrade until 2034 and will likely have to exhaust all available reserves in the short-term.

Notwithstanding Gilbert’s fortune, the recent stratospheric growth of which makes ongoing public subsidy for his companies a moral abomination in the poorest big city in the USA, Cleveland cannot continue to play this economic development game and expect to get ahead. Watching this same script play out year after year is enough to make a citizen go insane.

The alternative, of course, is investing in the city itself, creating a healthy place, with healthy people, where companies want to locate and expand. Not because the city is paying them hand over fist to do so in spite of the ghastly quality of life for most residents, but because of successful public schools, robust public transit infrastructure, widespread health and human services, a lively cultural scene and unique small businesses that give any region its flavor and soul. That’s what will move Cleveland forward.

But Cleveland’s leaders are unable to dislodge the economic development brain worms living rent-free in their heads. Their views have been so warped by GCP and the business-friendliness cabal that not only do they continue to hand out public money to companies like Rocket, which are only too pleased to pit poor cities against each other to maximize the private take; they thank those companies for the privilege. -Sam Allard

President of Local Cop Football Team Resigns After Loehmann Controversy

A week after local and national

DIGIT WIDGET

81

Zip codes in the United States where more than 25% of the individual properties are underwater. Twenty of those zip codes are in Ohio. Six are in Cleveland.

7

Ohio Companies that rank among the 100 worst Greenhouse Gas polluters in the United States. They are: American Electric Power (No. 5), FirstEnergy (No. 15), Marathon Petroleum (No. 16), Ohio Valley Electric (No. 55), Buckeye Power Co (No. 73), Murray Energy (No. 79), Cleveland-Cliffs (No. 83).

132

FirstEnergy outages in 2020 caused by foil balloons, the company announced this week. That’s 25% more than in 2019.

$28,000

“Seed money” that local restaurateur Tony George and his family provided to Dennis Kucinich for his potential mayoral campaign. The George contributions represent more than half of Kucinich’s total fundraising to date.

media stories revealed that the Cleveland Warriors, an amateur football team made up of area first responders and police officers, had welcomed Timothy Loehmann, the former Cleveland cop who shot and killed Tamir Rice, onto the team in recent years, the squad’s president has allegedly resigned.

That’s what president Bill Sofranko texted a former player who had organized a protest at a Warriors practice, as first reported locally by Ideastream.

“You win, I resign now back off for the good of the team. Call off your people,” he said.

Ideastream additionally reported that Loehmann is no longer part of the team.

His inclusion was the subject of stories, including by the New York Times, and the subject of concern by former players, all of whom are Black. While some alleged the team took some effort to conceal Loehmann’s identity, others knew and played alongside the former police officer for at least two years.

One former player and current coach who is also Black told the Times, speaking anonymously, “I got to know Tim personally. He was remorseful. He was apologetic.”

Sofranko has said he didn’t question whether Loehmann should have been allowed to play and that Randy Knight, the protest organizer, raised the Tamir issue after being told he couldn’t play on the team any longer since he was no longer an active corrections officer.

While Loehmann continues to fight to get his job back with the Cleveland police after being fired for lying on his job application, he also doesn’t currently work in law enforcement.

Knight, meanwhile, said that six players, all Black, had been forced off the team in the past two years after voicing opposition to Loehmann’s place on the roster. -Vince Grzegorek

Westlake-based Hyland Software Lays Off Nearly 150 Employees, Outsourcing Jobs to India, Poland

Westlake-based Hyland Software, a perennial “top workplace” in Northeast Ohio, has laid off nearly 150 employees in its product delivery department. The mass axing “came out of left field,” according to a former employee, and was communicated to unsuspecting remote workers in a pre-recorded Zoom message on Wed. Jan. 27.

The layoffs reduce the department by an estimated 1/8th, with software developers, quality assurance specialists and testing engineers all unceremoniously getting the boot. Hyland is seen as a “shining star” among tech companies headquartered in Northeast Ohio, (a region which desperately wants to become an innovation hub), but the layoffs confirmed for many current and former employees that the company’s corporate values are waning, its #hylandlife reputation souring.

“This has shaken up the culture of Hyland and absolutely compromised our trust in the company,” one employee said. They and others said the company was coming off a record profit year.

Hyland sent Scene the following statement after our initial reporting appeared on CleveScene. com.

“Hyland is in the midst of a multi-year strategic initiative to build a cloud-first platform for the future while supporting our customers’ success today. A component of this strategy is to hire more than 300 additional technologists and increase our overall employee count by 15 percent in 2021. As we focus on innovating our platform and strategically expanding our global footprint, we have made the difficult decision to eliminate some positions on our current Product Delivery team. We are providing affected employees with assistance in their transitions.”

Current and former employees who spoke to Scene anonymously said that the layoffs felt like a betrayal, especially after Hyland has invested considerable financial resources into HR and marketing to create a corporate brand that emphasizes a “family” culture. CEO Bill Priemer joined Hyland as the VP of Marketing in 1997 and touted the “family” dynamic of Hyland in a recent local magazine profile.

For employees within the large product delivery department, two Zoom meetings were announced for the morning of Jan. 27 with the vague header “Product Delivery Update.” Those who were given a link to a 10 a.m. meeting were greeted with a pre-recorded message from Hyland’s Chief Product Officer John Phelan giving them the bad news.

The 10:30 a.m. folks were also greeted with a scripted message. It assured them that their

MEDICAL MARIJUANA CARDS

• For Medical Marijuana Cards & Treatment Plans • Cards available same day! COMPASSIONATE BOARD CERTIFIED MD MIDDLEBURG HEIGHTS

BE FREE FROM DRUG ADDICTION Suboxone Clinic UPFRONT

positions were safe but noted that a restructuring was afoot. This would include, among other things, local layoffs and a significant ramping up of workforces overseas at Hyland’s offices in both India and Poland.

Over the next 24 hours, employees — virtually all of whom have been working from home during the pandemic — experienced a “collective freakout,” said one employee. They were scrambling to figure out new responsibilities on existing projects with the realization that massive workloads loom, all while trying to delicately ascertain who was “separated,” the preferred lingo of Hyland HR.

One employee noted to Scene that while “ethics” was removed from Hyland’s core values in 2020, “family” still remains. (“We care deeply for one another and help each other achieve maximum personal potential while maintaining a healthy work-life balance,” the Family entry on Hyland’s core values page reads.) It was in that spirit that multiple employees reached out to Scene to decry what they viewed as a rotten way to part with their colleagues, many of whom had been at Hyland for 10 or more years.

“Hyland has been acquiring companies left and right for the past few years, making money hand over fist for its majority owner [the private equity firm Thomas Bravo],” one former employee said. “And with acquisitions, you always suspect that people will be let go. It’s unrealistic to expect otherwise. But it’s the method that has people spooked. You might expect this at a GE, but not at a company with humble beginnings like Hyland.”

The lack of clear communication from Hyland leadership has led to rampant speculation and conspiracy theorizing. Back in June, 2020, CEO Bill Priemer announced that due to Covid cost-cutting measures, employees wouldn’t be able to roll over vacation time from 2020 to 2021. Did he know that layoffs would be forthcoming?

The most common view, employees said, was that Hyland simply made the decision to save money. After all, software developers in Katowice, Poland, make, on average, less than half the annual salary of developers in Cleveland. (Though the office scuttlebutt holds that, relative to other local tech companies, Hyland’s programmers and engineers are criminally underpaid.)

“From a numbers standpoint, maybe it makes sense,” one current employee said. “I guess you’d expect a company to look out for its own bottom line over its employees. But you have to understand, Hyland’s whole thing is that we’re not a company. We’re a family. Well, we got screwed.” -Sam Allard

Irishtown Bend Demolition Underway, Will Reveal Dramatic Downtown Views

The demolition of two buildings on W. 25th Street to clear the way for the Irishtown Bend project began Monday.

Scene reported in July that the Cleveland Metroparks would manage the demolition with funds obtained by the nonprofit LAND Studio through the Clean Ohio Fund.

As we reported then, the demolitions will be the “first major visible step” in the project to create a premiere public park in Cleveland. It aims to stabilize and reimagine the Cuyahoga River hillside along the bend just North of W. 25th Street and transform it into a 23-acre park.

The former Cuyahoga Metropolitan Housing Authority (CMHA) administrative building, and the former CMHA multifamily housing complex known as “Big 8” are the two structures to be demolished. The Big 8 facility was the first to be demolished Monday.

A statement from LAND Studio said that the demolition would clear the way for “dramatic views” of the river and downtown Cleveland which are now obstructed.

“The clearing of these buildings will now give the community a better sense of the incredible potential this space offers,” said Joel Wimbiscus, LAND Studio project manager, in an emailed statement. “Once razed, the curtains will be drawn back to open up a dramatic view of the Cuyahoga Valley and downtown allowing Clevelanders to reunite with a vista that has been hidden for more than 50 years.” -Sam Allard

scene@clevescene.com @clevelandscene