Cincinnati Enquirer Exclusive: Consultant suggested officials find someone else for Banks project
Jane Prendergast reports
Cincinnati’s city manager was looking for some diversity in restaurants for The Banks when he heard about a soul food restaurant in Hamilton, tried it and liked it.
The controversial deal to give and loan nearly $1 million in city money to Mahogany’s began just that simply with a meal and a conversation between the city’s top official and the restaurateur whose grits and peach cobbler had people lined up last weekend at her Taste of Cincinnati booth.
City Council voted in February to give owner Liz Rogers of Liberty Township $684,000 and loan her $300,000 to open the first African-American-owned business in the riverfront development. But questions surrounded the decision as details of Rogers’ tax arrearages and other financial problems made big news.
Those questions prompted The Enquirer, through a public records request, to ask the city for more explanation about how the deal came together. The city provided hundreds of pages of documents and emails, which show city officials did know the extent of Rogers’ financial issues – and reduced the size of the project because of them. Early on, a proposal called for Rogers to get $2 million for a much bigger space.
An email from Rogers to the city in October 2011 provides more explanation of her money problems. She said she was sued and prevailed, though not until after she spent a lot of money on legal fees. Her husband, Trent, was laid off from Ford, she wrote, and she had her identity stolen. They closed their advertising agency in June 2011, she wrote, to focus on their restaurant. The Enquirer named her a Woman to Watch in February.
“We are in the midst of getting our lives and credit/finances back on track,” Rogers wrote. “I hope that you have looked at our reports and have seen the good credit and the large purchases we have acquired over the years and have paid on time and in full. Please do not judge us by our unfortunate past credit history. It’s been a tough few years but I am positive we will be able to turn this around. The future looks very promising.”
- Although some council members said they felt rushed into a vote, officials had worked on the deal since at least May 2011, according to the provided emails. Council members just didn’t have all the details the city administration had.
- City officials originally considered giving Rogers more money for a 10,000-square-foot project including a restaurant, coffee shop and banquet hall. Dryck Bennett, a city consultant, advised in June 2011 that he found at least a dozen referrals to collection companies and three mortgages on the Rogers’ home. If the city wanted to stick with the 10,000-square-foot plan, he said, it “probably should identify another operator.”
- Rogers had an investor in the project, which took some focus off her personal finances. He was Greg Gillott, a commercial real estate specialist at Neyer Management and board member of the African-American chamber. But Gillott told The Enquirer on Wednesday that after spending months helping negotiate the deal, he pulled out, saying “it just wasn’t the right fit” for him. Rugless said Gillott was an early partner without whom Rogers was still able to move forward.
- The terms originally proposed had Rogers contributing as much as $200,000 in equity to trigger the city’s help. That amount eventually was reduced to $50,000.
- The grant amount was originally $500,000, but the city increased it to $684,000. That money is to be spent on building the space and outfitting it with furniture, all of which reverts back to the city if something should happen to this restaurant. The city would then have a fully outfitted space for the next user.
The city maintains now the position it did then – that this deal was a risk, but a calculated and worthwhile one aimed at diversifying the food options at The Banks. At one point last year, the administration consulted with former Detroit Mayor Dennis Archer on how to attract minority-owned businesess.
“We absolutely knew we were taking a risk,” said Meg Olberding, spokeswoman for City Manager Milton Dohoney. “And we felt then, as we do now, that it was the right thing to do.”
None of the city money kicks in until Rogers invests $50,000 in equity. She has far surpassed that, said Sean Rugless, president and CEO of the African-American Chamber of Cincinnati and Northern Kentucky. He has helped Rogers through the deal negotiation process; he’s acted as Rogers’ spokesman.
Construction on the restaurant began last week, with opening still set for the Macy’s Music Festival weekend, July 27-28, Rugless said.
“This is not really a black-and-white issue,” he said. “It’s about an entrepreneur with a great product. We talk a lot about the building blocks of great cities, and one is having diverse offerings. This is about adding new experiences to our downtown.”
Rogers didn’t want to talk about the past for this story. Rugless said she’s focused on getting the restaurant open and that she’ll be putting people to work. Carla Walker, former chief of staff to Mayor Mark Mallory who now runs her own communications business, briefly worked with Rogers on the project.
Rugless said the city has required much more of Rogers than it does of most businesses to which it loans money. For the $300,000 loan, she had to put up about more than $1 million in collateral, including the Hamilton business.
She has spent more than the required $50,000, but has not yet received any city money. In some of the city documents, Rogers comes off as overwhelmed by it all. In an email to Dohoney in January about choosing a construction company, she wrote: “Please give me some direction on this. I really need the encouragement.”
The $300,000 loan comes out of the $14 million Convergys had to pay the city last year for failing to meet its job retention projections. The grant was increased to $684,000 as a nod to how much more expensive development at The Banks is than at other places around the city. It is particularly expensive to develop on top of a parking garage, Olberding said.
Bill Fischer, former interim economic development director, used the Calhoun Street development around the University of Cincinnati as another example. The university had to help subsidize the Panera Bread and Buffalo Wild Wings restaurants there because they, like at The Banks, were going into an expensive new development.
“We should all understand that this deal represents a risk that the private sector is not willing to make,” Fischer wrote in a February email. “Small restaurants are risky in good times, so more so now. Also, we are trying to make the Banks inclusive in ownership as well as in construction and that cannot happen without taking some risk.”
Rogers’ restaurant in Hamilton opened in 2010.
At the new location, she expects 30 to 40 people to work on the construction, Rugless said, and 60 to 70 full- and part-timers once the restaurant is open.
Councilman Chris Seelbach was one of three council members who voted against it. He said he didn’t have anything against Rogers then and still doesn’t. He just didn’t feel he was given enough information before the vote. He said he has talked several times since with the administration about not letting something similar happen again.
“I wish her the best,” he said. “I really do. Now we need to get down there and support her. We don’t want her closing in the first year.”