Appetite For Destruction
A South Euclid Redevelopment Plan Makes Sense To Just About Everyone - Except The Owners And Patrons Of The Unique Shops That May Not Survive.
By Rick Perloff
"I'll tell you the thing that drives me the most," confides South Euclid Mayor Georgine Welo, sitting in her office amidst a desk full of notes, newspaper articles, city memorabilia and a sign her mother gave her proclaiming "Never Never Never Give Up." "I don't like the fact that people have to constantly defend why they live in Northeast Ohio or even the city of South Euclid. It drives me absolutely nuts. I look around and I know in my heart that my children were raised in the best place in America - not a good place, but the best place in America. And I just stop and think to myself, "We need to have a high standard that we have here, we need to continue with it.' And that's what drives me."
Although Welo did not grow up in South Euclid, she has come to personify the city - its small-town feeling, pride in neighborhoods and occasional defensiveness about living in the shadow of more affluent eastern suburbs. She also has become the synecdoche for South Euclid's gutsy but controversial decision to demolish and redevelop the northern portion of Cedar Center shopping strip.
South Euclid has adopted a more radical approach to suburban renewal than did University Heights, which is home to the southern side of the strip (across Cedar Road). University Heights accepted a developer's plan to add several new stores, such as Whole Foods and First Watch. But the structure of the mall stayed the same and some of the existing establishments stayed, albeit with an architectural facelift. South Euclid, after years of discussion and frustration with the increasingly dilapidated condition of stores on its side of the mall, opted to invoke the municipal equivalent of the nuclear option: eminent domain. Using the legal and political leverage that eminent domain affords, the city induced the landlords who owned the property to sell their turf to the city. This in turn meant that the shop owners, who pay rent to the landlords, had no lease and had to leave. The stores and restaurants - such as Abba's Market and Grille, Anatolia Café, China Gate, Chipotle Mexican Grill, Jacob's Judaic Book & Gift Center, Peking Gourmet Restaurant and Smokehouse Deli - have either closed or are expected to close over the coming months.
The city plans to sell the property to the Coral Co., a high-profile local development firm that also owns the University Heights portion, as well as other shopping districts, most notably Shaker Square. Coral will ultimately raze the storied shopping center. In its place, says Coral President Peter L. Rubin, will be a thoroughly modern and attractive outdoor mall, anchored by national chain stores and containing offices, residential housing, restaurants with outdoor dining and a park.
The local media have gushed with approval. A Plain Dealer article observed that "in place of a tired mishmash of stores, Coral Co. envisions a gleaming row of retail and residential ... to finish the makeover of Cedar Center." The local weekly, the Sun Press, quoted Rubin and South Euclid officials describing the redevelopment plans in upbeat terms. And at first blush, who could disagree? Rubin's plans seem innovative, and Cedar Center is old - it was built in the 1940s, and urban policy experts note that shopping centers have a 50-year lifespan. Change seems inevitable.
But change involves issues that are far more complicated, conflicted and ethically problematic than those sketched in news articles in the local press. A two-month investigation, featuring scores of interviews with South Euclid officials, shop owners, lawyers, real estate developers and urban policy experts, offers insights into just what happens when a middle-class suburb tries to rejuvenate its commercial base. This is a story of the hopes and dreams of South Euclid's leaders, who want to ensure the long-term survival of their community. It is a story of economic and psychological pain experienced by local merchants who feel let down by the system. And it is a story of how the landlords who owned South Euclid's portion of Cedar Center mall collectively walked away with over $16 million, while the proprietors of the stores that helped build the owners' portfolios received only thousands, and in some cases, nothing.
The atmosphere in Abba's, the once-bustling Orthodox Jewish delicatessen in Cedar Center, was decidedly eerie last November. With the deli scheduled to close in days, boxes, duct tape and wads of paper towels were strewn across the floor. The awards the restaurant received from the Cleveland Jewish News for its kosher food, once trumpeted as signifiers of success, were distractions now, signposts of an era that was swiftly receding into the past.
Abba's, the only kosher restaurant in the city that served Chinese food and featured an array of Israeli delicacies, had a loyal following among Orthodox residents. Those days are gone. "If you had been here last Friday, you would have thought it was condolence calls," lamented restaurant manager Shia Neuman. Customers were upset, and the store's employees - cooks, waiters, waitresses - had lost their jobs.
"I do not want to go on unemployment," Neuman said. "I hope to find a job. I'm not the kind of person who sits back." He was not sure if the restaurant could afford to relocate. "It's a very, very big investment," he said. "Who's going to pay for this?"
A few doors down, Gayle Glick, manager of Discovery Shop, an American Cancer Society-owned business that sells upscale secondhand goods, insisted that she will keep the store open as long as she can. Showing a visitor the Lenox plates, necklaces and clothing people have donated, she said that "the shop on the whole is very special because all the profits go to cancer research. And its purpose is deep-rooted for the community. We're giving back to them with a lovely little object and they're giving of themselves with what they can afford to give." Listening to her describe the flavor of the shop, a customer volunteered, "I love your store. I wish you were staying."
Neuman and Glick tried to be philosophical, but could not hide their anger and sadness. "What the city did was to take it upon themselves to present the facts," Glick said. "They said [the mall] was deteriorating. It never was deteriorating to the point they needed to create a reason to take it. But take it they did and take it they were going to do any way they could."
"You can't fight city hall," Neuman mused, "because, you know, there's lawyers' fees. It's like you have the big bully against this little kid. The little kid can punch as much as he wants. He's going to lose. That's the same thing fighting the city."
Proprietors of several other stores express similar frustrations. Some are palpably nervous about the future. Ken Lam, manager of Peking Gourmet Restaurant, seems dejected as he considers his prospects. Several Peking employees will lose their jobs, he says. The proprietor of Smokehouse Deli, Igor Shkolnikov, says he thought he would close very soon. "I'm looking for another business [location]," he says. "I know how to make sausages." Was he worried? "Of course. It's my baby."
Today the mall is quiet. Most of the shops are vacant, with signs in windows announcing new locations. At night, it feels deserted and the green steel beams that sustain the once-storied structure look creaky and archaic.
Cedar Center has been a major blip on the city's radar screen for over a decade.
Mindful of the deteriorating condition of the mall and the need to expand the city's industrial tax base, former mayor John T. Kocevar commissioned a report from a downtown planning and development firm. The report, completed in 1999, recommended the city develop a mixed-use mall, with residential, retail and office space. Although Kocevar persuaded the property owners to renovate portions of the mall, he said in a recent interview that he was somewhat frustrated with the pace of renovation, especially as he looked at the progress that was being made in redeveloping the University Heights side across the street and at glistening Legacy Village in nearby Lyndhurst. Eminent domain remained a possibility, but he did not want to "run everybody out."
Enter Georgine Welo, a prominent former member of South Euclid Council who was elected the city's first female mayor in 2003.
Although Cedar Center was not a major issue in the mayoral campaign, it soon became a salient agenda item. Councilman Edward Icove recalled that, in 2004, the ceiling of the long-abandoned movie theater fell through, leading to substantial water damage and the appearance of rats. Recognizing that it was time to move decisively on Cedar Center, Welo and her advisers tried to get in touch with the property owners to arrange a discussion. "I personally sent them letters offering to buy their properties at the appraised value that we got from our appraiser, and not one of them even responded back to my offer," says Michael Lograsso, the city's law director. There was "zero response, silence," he adds. (An attorney for the property owners, Sheldon Berns, counters that the property owners believed "the city did not negotiate in good faith and filed suit before they had a chance to respond.")
Welo grew frustrated with the pace of discussion. Concerned about the mall's deterioration and rapidly dropping home prices in the area near Cedar Center, Welo and her advisers began to weigh eminent domain more seriously. In Ohio, eminent domain allows a city to take property for its own use and sell it to a private developer, provided that it can show that it meets a series of conditions, which traditionally include that the property is significantly blighted.
If Cedar Center was in fact blighted, then eminent domain seemed a reasonable way of proceeding. And the evidence of blight seemed to be everywhere. There was the pervasive damage to the theater, fire code violations, plus sightings of rats. A city-planning expert reported collapsed roofs, holes in floors and walls, and the absence of sprinkler systems. There was videotaped evidence of graffiti on walls, a wood foundation rotting away, and garbage piled up in vacated retail space. Law Director Lograsso says that the space above the old Huntington Bank was a fire hazard, and there were abandoned offices, feces in toilets, and out-of-date, potentially dangerous parking in the back of the mall.
"Many of the property owners over the years let their properties deteriorate," says Community Services Director Keith Benjamin. "They did not continue to upgrade their properties to a level of safety and a level of attractiveness that consumers today expect when they go shopping."
Berns, the attorney for the landlords, argues that the property was not blighted, and that "it would have been helpful if the city had spent some money that could have been used in the upgrading of Cedar Center if their goal was to modernize it."
Tearing down only the movie theater, which nearly everyone agreed was beyond saving, and encouraging or funding modest improvement in the rest of the mall would have been a less confrontational strategy. But to Welo, that seemed like a short-term fix, at best. By 2005 she was convinced that the landlords were unwilling to talk, let alone sell, that the blight was getting worse, and that the city's long-term economic future hung in the balance. There was no longer room for compromise. "Cedar Center was going," she said, "lock, stock and barrel."
In fall of 2005, after obtaining expert testimony, council passed a resolution declaring that the South Euclid strip mall was blighted. Eminent domain, the tool of last resort, was now the technique du jour. The battle would continue in the ornate probate court at Lakeside and Ontario.
The landlords challenged the city in court, questioning whether the mall met the legal definition of blight. Ultimately, however, the landlords opted to settle. They faced increasing legal costs and believed that few tenants would want to rent space in a mall a city was determined to take over, according to attorney Jordan Berns. The probate court judge approved the arrangement, and the big fight was over; all that remained were smaller cases between a handful of landlords and shop owners over the amount of compensation.
The city forked over $16.4 million to the property owners, floating bonds to finance the purchases. But the store owners received a comparative pittance. And although a couple of cases are still pending, their outcomes are not likely to alter the egregious economic imbalance. Abba's seems to have received the most money - close to $100,000, according to sources close to the case. Jacob's Judaic Book & Gift Center received a $20,000 check, notes Probate Court Magistrate Heidi Koenig. Anatolia Cafe received a total of $30,000, according to Lograsso.
Other store owners - for example, Chipotle Mexican Grill, Cleveland City Dance, Peking Gourmet Restaurant and the American Cancer Society - could not even file a claim. Their leases stated that if the shopping center were taken under eminent domain, they could make no claim for compensation.
All this is perfectly legal. Even though the store owners' success contributed to the value of the property - and therefore the profits the landlords received from selling to South Euclid - many had no legal claim on the money. A contract is a contract. But here's the rub: Leases are typically written to serve the interests of landlords, not tenants. "Tenants and landlords are not in an equal bargaining position," notes Jonathan Winer, attorney for Abba's. And this is "unfortunately standard" in eminent domain cases, explains Case Western Reserve University law professor Melvyn Durchslag. It is Capitalism 101.
"The tenants are ending up on the short end of the stick. Yet from a purely fairness point of view, your property is not worth a dollar unless you get a tenant who operates a successful business out of it," Durchslag observes.
And so it went. The landlords, who owned the property and had indeed taken risks, collectively walked away with millions. The shop owners, who rented the space and had materially contributed to the owners' portfolios, received mere thousands and in some cases, not a penny. There was nothing the most brilliant or canny lawyer could do. The outcome was legally tenable, if morally unfair.
Peter L. Rubin likes to talk about intersections. "That's what we try to create: commercial intersections, social intersections, civic-neighborhood intersections." Rubin, whose Coral Co. rebuilt the University Heights side of Cedar Center, can hardly contain his passion about redeveloping the South Euclid portion over the next couple of years.
"We don't look at it as our job to remake the neighborhood," he says. "We move into an existing fabric. We look at it as our job to reweave it, as a piece of broken fabric, to weave it back together." Rubin is grandiloquent about his plans, articulated in long professorial paragraphs replete with academic concepts like "civic space" and marketing phrases like "cultural intersections." He wants to impose a common vision on the disparate parts of the Cedar Center area.
"It's not a 12-acre project. It's a district. The corner of Warrensville [Center Road] and Cedar is the geographic and demographic center of the East Side suburbs of Cleveland," he says.
To make Cedar Center look like a district, he intends to use a common color scheme and marketing strategy for both sides of the mall, as well as University Square on the other side of Warrensville Center. He hopes to construct an architectural feature that will span Cedar Road and connect the two sides of Cedar Center, like the arch of St. Louis. "It will let people know: "You're here! You're in the district! You're in the Cedar Center district!'" You will want to go there, Rubin adds, "not just because you want to go to the restaurants, but because you love the experience. You love that intersection with neighbors, different people, diversity, choices."
It is an ambitious plan, requiring lots of capital. Rubin plans to anchor the mall with chain businesses that can afford the rent and have the brand image that resonates with customers. His vision invites questions: Will the redeveloped mall make money? Will it increase the economic vitality of South Euclid? And what are the consequences for the neighborhood?
From an economic perspective, it is a no-brainer to urban-policy expert Dr. Robert Simons, professor in the Levin College of Urban Affairs at Cleveland State University. Looking over a Coral Co. drawing of the project, Simons takes out his cell phone and crunches some numbers on his calculator. "It's about 130,000 square feet of retail, maybe 50,000 square feet of office, and 225,000 square feet of residential. Assuming industry standards, the total growth value is between $50 (million) and $75 million dollars. That's the tax base that will be generated. You get all the income tax of those residents and you've got the income tax of the retail workers and office workers here. It's a real plum."
Simons acknowledges the human costs: many, probably most, of the stores currently in Cedar Center will not return. "It's just a shame," Simons says. "It's very cut throat in Cleveland because there's so little growth in this overall metro. It's Darwinism, it's business Darwinism, survival of the fittest. It's just part of the normal cycle of change."
Others see significant drawbacks. Professor Norman Krumholz, a colleague of Simons' at CSU's Urban Affairs College, laments that the neighborhood will lose "the ethnicity of the shops. People are not drawn to places that look like Roadside America." It was the indigenous neighborhood places - Abba's, Anatolia Cafe with its Turkish cuisine, along with Discovery and Jacob's - that gave Cedar Center its distinctive charm.
"The community lost something special," attorney Winer says. "We have these Disney malls; they are surreal shopping palaces. You can go to Columbus, you can go to Chicago, you can go to Cincinnati, you see the same mall and you see the same stores and businesses selling the same product in the same way. Everything becomes very cookie-cutter. The Center was very different and that is perhaps lost and will never be replaced."
South Euclid residents, who were interviewed at two popular local city eateries, share these sentiments. Jim Lentine, who owns a family hairstyling shop in nearby Univer-sity Heights, spoke for many when he said, "You can go to a Target anywhere. Cedar Center always had individual owners, stores that you couldn't find anyplace else. But I think the project is a very good thing for the city. You got to break eggs to make an omelet."
Welo expects all the tenants to be gone by spring of this year. Some stores have already found new homes. Discovery Shop plans to open on Mayfield Road in Lyndhurst. Anatolia Café will reopen early this spring in the Cedar/Lee area. Jay Steingroot, owner of Jacob's, says he is still looking for a place. Abba's has yet to find a new spot for its kosher restaurant. Abba's former manager, Shia Neuman, is still looking for a job.