Lisa Bernard-Kuhn reports
The owners of a restaurant that’s in line to receive nearly $1 million in City of Cincinnati financing to open at The Banks owe federal taxes in excess of $49,000, according to Butler County records.
Liz Rogers, president and executive chef of Mahogany's Bar and Grill, was recently named among The Enquirer's 20 Women to Watch in 2012 list. Provided photo.
Liz and Trent Rogers, who live in Liberty Township and own the Hamilton-based Mahogany’s Cafe and Grill, are working to pay off the debt, but the issue has led some Cincinnati City Council members to question the proposed financing deal.
Last Thursday, council postponed voting on the deal after learning that the Rogers had just paid off a $3,900 delinquent property tax bill one day earlier. The financing package would have provided Mahogany’s a $684,000 grant to cover design and construction costs for the 3,520-square-foot restaurant at The Banks, and a $300,000 loan for furniture, equipment and to establish a working capital fund for the restaurant.
City officials say they knew about the delinquent tax issues. In a memo to council, Cincinnati City Manager Milton Dohoney said the city respects the personal information that the administration reviews for all of the projects it considers financing.
“The fact that not every detail of a person’s profile is committed to a report is not an attempt to be less than forthcoming,” Dohoney wrote. “Risk is always evaluated and at the end we make a professional determination whether to proceed. The principals we have interacted with in this deal have been completely transparent with the vetting process. Mrs. Rogers’ product, presentation and adaptability complement the offerings at The Banks.”
Dohoney’s memo notes that Trent Rogers is a 12-year employee of the Ford Motor Co. and a graduate of Florida A&M with a degree in economics. Liz Rogers, a Liberty Township resident, is president and executive chef at Mahogany’s. She recently was named one of The Enquirer’s 20 Professional Women to Watch in 2012. Liz Rogers could not be reached for comment Tuesday.
Administration officials say city financing is the only way to attract small, minority-owned businesses like Mahogany’s to The Banks. Its inclusion fits with the developers’ vision to create a mix of locally owned restaurants and first-to-Cincinnati national chains, officials say.
“You cannot change the status quo without taking some risk, and the city wants to make sure The Banks development is reflective, inclusive and representative of the people who live here and work here,” said Meg Olberding, a spokeswoman for the city.
Whether the financing deal will appear on the council’s agenda today remained unknown late Tuesday. Olberding said the administration stands behind its recommendation.
Councilman Chris Smitherman said he’s disappointed the city did not share the delinquent tax issues.
“It’s opened up a whole new can of worms,” he said. “They have selectively shared parts of the deal, and that’s scary. I haven’t decided whether I’m going to support this or not, because I feel like I can’t get my arms around it. I don’t vote on things I don’t understand.”
Councilwoman Yvette Simpson said she contacted Liz Rogers personally about the debts and continues to support the loan.
“It’s my understanding that this is income tax she owes, it’s not a lien, and she has decided to pay it over time, which she has the right to do,” Simpson said. “The collateral in this deal greatly outweighs the loan amount. She put her business on the line, and the value of that property is almost three times the loan amount.”
Under the proposed deal with the city, the Rogers must invest at least $50,000 into the restaurant’s interior space before they can access city dollars. The couple is personally guaranteeing the loan, which will be secured with the mortgage on their Hamilton restaurant as well as life insurance policies that list the city as the beneficiary to the extent of covering the remaining loan balance.
The loan is to be paid back over 10 years and carries an interest rate at the prime rate plus 1 percent, and will be locked in once a deal is official. The prime rate has hovered around 3.25 percent.
Loaning money directly to a restaurant is uncommon for the city.
“We haven’t done a ton, but we’re looking at more and more,” Olberding said.
In 2010, the city and Hamilton County approved a loan for $5.5 million to The Banks developers Atlanta-based Carter and The Dawson Co. At the time, developers said the loan was needed to cover interior build-out costs for certain spaces and would help lure high-profile tenants including Toby Keith’s I Love this Bar & Grill.
That loan, which was split 50-50 by the city and county, is secured by a third mortgage on the property. That means if the developer defaults on any piece of its financing, the city loan is last in line to be recouped.
An Enquirer review of restaurants that opened downtown in the past year shows no others received direct loans from the city. Olberding said loans to small businesses are done on a case-by-case basis and are just another part of the city’s economic development strategy.
“Small businesses are having a very hard time in general getting traditional loans in this economy,” said Olberding. “The business of the city is typically that of a gap filler. We always take risks. We do it for housing across the city. We do it for development in Over-the-Rhine. We do it for businesses that want to expand.”
Councilman Wendell Young said he has no concerns about the loan.
Vice Mayor Roxanne Qualls and councilmembers Chris Seelbach and P.G. Sittenfeld all said they have asked for more details about the deal.
In a memo sent to Dohoney, Councilman Charlie Winburn called for the city to create a uniform review process for any entity that’s seeking city money. He said the current process “creates gender and racial problems because it’s subjective.”
Among other details, Winburn’s process would call for delinquent taxes to be disclosed.
“The problem is the way the city administration vets people. If they had a uniform policy you wouldn’t have issues like this,” Winburn said. “If we don’t change the policy, we are going to discourage any residential and commercial developers from doing business in the city because they don’t know what’s required of them.”
