Four years after restructuring, Port Authority still a work in progress

Board member: This is not easy work

CINCINNATI - Laura Brunner scattered seeds broadly in her first 19 months as CEO of the Port of Greater Cincinnati Development Authority.

She is confident it will produce a bountiful harvest.

She just can’t say when.

“I had no concept of the complexity of this organization,” Brunner said in an exclusive interview with WCPO Digital, an interview sought after Brunner found herself this month at the center of the city’s parking controversy.

“We cross over with so many different organizations and that is fraught with so much tension,” Brunner said. “It’s really difficult to achieve big goals. But the most exciting thing I’ve realized is that we can achieve bold goals if we’re willing to work hard.”

WCPO Digital asked Brunner to help us evaluate whether the Port Authority is living up to the expectation of business and political leaders who expanded its powers in 2008 and pushed for it to take the lead on economic development projects of regional impact. The Port Authority was formed by Cincinnati and Hamilton County, each contributing $350,000 annually to fund its operations.

During a one-hour interview, Brunner outlined the port’s strategic objectives and key accomplishments to date. She cited the start of demolition at Jordan Crossing in Bond Hill as her most concrete achievement.

“We are going to have a very tangible impact on that community,” she said. “But I think the bigger thing I’ve done is position us for the future, from the staff that we have, the vision that we have, the confidence that we have, the connections that we’ve made throughout the community.”

Brunner predicted the parking lease, which critics have challenged since Cincinnati City Council narrowly approved it in March, will be approved by her board after a due diligence review in August. By year end, she expects the Port Authority will have a clear plan for revitalizing the Queensgate area as a manufacturing and logistics hub. She also hopes to have a new funding strategy that the Hamilton County Land Bank can use to convert thousands of vacant homes into productive use in the Port Authority’s 14 target neighborhoods.

“I’m thrilled I took the job,” she said. “I couldn’t be happier.”

Deals Not Done

And yet, four years after city and county leaders beefed up the Port Authority’s financing, land acquisition and transportation powers, it’s easier to list projects scuttled by the quasi-government agency than to quantify accomplishments on things still in progress.

For example, it is not involved in the development of the former Showcase Cinema site in Bond Hill, the first deal Brunner publicly announced after her December, 2011 hiring. It is no longer pursuing the purchase of the former Hudepohl brewery in Queensgate. Both deals were iced by a failure to come to terms with property owners.

The Port Authority is no longer offering to act as a financing vehicle for the Brent Spence Bridge, an idea that rankled transportation officials in Cincinnati, Columbus and Washington last November.

“That got everybody upset,” said Hamilton County Commissioner Todd Portune, board president of the Ohio-Kentucky-Indiana Regional Council of Governments, the region's lead transportation planning agency. “There have been some high profile occasions where the port has definitely stubbed its toe.”

The parking lease is among them, Portune and others contend.

“Getting involved with this particular deal has put the port in a much higher political profile than they need,” said Cincinnati Councilman Christopher Smitherman, who considers himself a supporter of the Port Authority but favors an end to the parking deal. “My feelings about them could change based on how they’re handling this crisis,” Smitherman added.

Portune thinks the Port Authority jumped into the parking deal and floated a bridge financing plan in part to generate revenue for its economic development mission.

“The original idea was to have a bond development fund that was created out of contributions from the city, the county, the state and the Cincinnati Equity Fund,” Portune said. “Those four entities were going to give the port at least a $10 million development fund to start with. That never materialized. I understand the motivation behind it. But it does not justify the steps they took.”

Brunner said the Port Authority “did not go looking” for either the bridge deal or the parking lease.

In the case of the bridge, Brunner said investment bankers brought the idea to her. She simply proposed it as “one of the possibilities” worth studying by the state transportation officials in charge of the project.

Next page: Parking lease response

On the parking lease, Brunner said the Port Authority responded to the city’s bidding process because it considered “a public-authority model (to be) much better than them selling it to the private sector. I think it’s been clearly demonstrated that what we’re getting from that plan is certainly not going to fund our mission. Furthermore, I don’t know why looking for money to fund our mission is a bad thing.”

The parking plan includes an upfront payment of $316,125 for the Port Authority and about $300,000 a year for 30 years after that. The city would receive $92 million from the transaction, but emails obtained by WCPO Digital showed the Port Authority has requested $27 million of that amount for its future projects.

Fully Funded In Two Years?

Good or bad, looking for money has been a reality for Port Authority backers since the Go Cincinnati Growth and Opportunities Study recommended the group’s conversion into “a single countywide development authority” in January, 2008. That led to city and county approval of a reconstituted Port Authority in August, 2008.

By 2009, the Port Authority had a powerful ally in North American Properties President Tom Williams, chairman of the influential Cincinnati Business Committee and like his father before him, an owner of the Cincinnati Reds. Williams joined the Port Authority board in 2009.

“If we get this right, we’ll have the beginnings of a proper economic development platform,” Williams told business and civic leaders in a highly influential 2011 speech.

You can read Williams' speech to the United Way Tocqueville Society May 3, 2011 by visiting http://goo.gl/t8YMnC.

It was an address to United Way donors in which Williams announced one CBC-funded study that led to the Cintrifuse startup initiative and another that produced an ongoing quest to improve flight-service options at the CVG Airport in Hebron.

On the topic of the Port Authority, Williams called for “an independent organization, with a consistent, bondable stream of income, structured like 3CDC,” also known as the Cincinnati Center City Development Corp.

“When the city and county asked me to help them put together a board a couple of years ago, I agreed on the premise that it would be fully funded within two years,” Williams said in that 2011 speech. “It’s been two years and we’re still screwing around with this thing.”

In an interview Friday, Williams said his view hasn't changed, but he wants to separate the Port Authority's funding requests from the parking lease because the issue is too politically charged.

"It’s not going to get privately funded. The Port Authority needs to be publicly funded if it’s going to be effective," he said. "It needs a stream of income that it can bond against so it can have $40 to $50 million and go out and do the type of work 3CDC has done."

Brunner said a long-term funding solution will emerge once the Port Authority’s development plans are fleshed out.

“In Bond Hill, they’ve continually supported us when we brought forward projects,” she said. “In Queensgate, we haven’t presented a big vision yet, nor in (the land bank initiative). But we will. In both of those, we’re not going to rely just on money from the city.”

Brunner said funding from corporate sources will be part of the mix, but wouldn’t say how much will be raised or when.

During a land bank board meeting this week, Brunner said a patient capital pool similar to the Cincinnati Equity Fund is being discussed but she declined to provide more details after the meeting.

The equity fund was developed in the mid-1990s to jumpstart downtown projects like Fountain Place and the Walnut Street building that houses Nicholson’s Pub and Tavern. More recently, 3CDC used it to stimulate the revival of Over-the-Rhine’s Gateway Quarter and Washington Park.

In fact, 3CDC, the nonprofit development agency that Williams cited as a model for the new Port Authority, cobbled together multiple public and private funding sources for its first big project, the $42 million renovation of Fountain Square. That deal involved funding from the equity fund, Fifth Third Bank, the city of Cincinnati and a federal New Markets Tax Credits allocation that 3CDC received in 2004. Interestingly, the Fountain Square deal was approved by council and was under construction by October, 2005 -- 19 months after CEO Stephen Leeper joined 3CDC.

Also in her 19th month, Brunner said it isn’t fair to compare her “governmental organization” to 3CDC, which was formed and funded by business leaders who had a game plan in place before they hired Leeper.

“He had a very narrow geography and a lot of money,” she said. “What he did was buy property with private money, inventory it and raise money from the public sector to complete individual properties. I think he’s done a spectacular job.

"I’m not saying that I won’t raise money from the private sector, but you know, you have to have a plan,'' she said. "They started with a plan.”

Next page: Is There A The Plan?

Five months away from her two-year anniversary, here are the basic elements of Brunner’s Port Authority plan, based on interviews and Port Authority documents.

·      Community revitalization. The Hamilton County Land Revtilization Corp., more commonly known as the land bank, is pursuing some innovative strategies to acquire and demolish blighted properties abandoned because of foreclosure, delinquencies and tax liens. Ohio Attorney General Mike DeWine recently praised the land bank’s use of Moving Ohio Forward funds, lawsuit settlement money that Dewine earmarked for demolition.

But the land bank is doing more than tearing down properties. It partnered with preservation groups to save historic properties in distress. It hired Building Value LLC to “deconstruct” homes in a way that recycles building materials and trains workers in construction trades. It worked the with county’s mapping and data arm, CAGIS, to develop a visualization tool that helps developers find distressed properties surrounded by stable properties. This identifies “low-hanging fruit," or properties on which private investors are most likely to succeed. And it’s trying to develop that public-private funding platform to help home buyers acquire homes that require more renovations than developers can recover on re-sale.

“In many cases, we’re just going to be a conduit to get to properties into the hands of somebody that asks us or they want to develop it,” Brunner told members of the land bank board July 25. “In other cases, there might be more of a market opportunity for us. We might be able to sell instead of just convey it, in which case we’d have assets to redeploy in other places.”

·      Bond Hill. The Port Authority has acquired 38 acres near the intersection of Seymour Ave. and Reading Road, including the former Swifton Commons property at 7030 Seymour and Seymour Plaza, about 2,000 feet north of Swifton. Both sites were acquired with $6.2 million in city funding that covered about $2.5 million in acquisition costs and $2 million for demolition of Swifton, also known as Jordan Crossing. The Port Authority funded a $20,000 market study showing $100 million in unmet retail need in the neighborhood. It also paid $60,000 for a new Swifton site plan calling for up to 150,000 square feet of office space, up to 80,000 square feet of retail and up to 90,000 square feet of residential space. No leases and no listing contracts have been signed, but the project does have a new name: Midpointe Crossing. In five years, Brunner is convinced a mixed-use development will emerge.

“It will have housing,” she said. “There will be office (buildings). I think we’ll be bringing back retail to that community which is woefully short of it right now.”

The Seymour Plaza site, Brunner said, will be marketed to the same kind of manufacturing tenants that filled the TechSolve industrial park in the last 30 years.

“Its going to be much more attractive once we get it demolished and graded and so forth. We’re going to sell the property for the highest price possible. Our goal is not to give it away,” Brunner said.

·      Queensgate revival. Although it passed on a plan to acquire three properties in the Queensgate neighborhood west of downtown, the Port Authority is working on a strategy that would emphasize its access to rail, river and water assets. The Go Cincinnati plan in 2008 envisioned a green-industry theme for the neighborhood, where the MetroWest Commerce Park emerged from an environmental cleanup  project on the former site of the Queen City Barrel Co. A five-alarm fire destroyed the barrel-recycling business in 2004, leaving behind a site polluted by asbestos and solvents. Brunner sees a future for the MetroWest and other nearby properties as a logistics and manufacturing campus for companies that use large amounts of water in their factories.

“If we get 100 acres branded as a polymer logistics park, we can capitalize on an industry that’s already here in Ohio, leverage resources and transportation assets we already have,” she said. “The goal here is to claim an area as a district, brand it and actively recruit businesses to co-locate. Queensgate in general has a very strong power grid that’s under-utilized right now. It has the convergence of road, river and rail. It has real estate that’s under-utilized and an immense water supply.”

·      Being a port. Inspired by the OKI Regional Council of Government’s freight study in 2011, the Port Authority is developing a strategy for marketing the Cincinnati region as a low-cost transporter of goods. It hired a Lancaster, Penn. –based consultant, Martin Associates, to quantify the opportunity. That report was completed in June. Martin concluded that the Cincinnati port is responsible for more than 6,000 local jobs and contributes almost $500 million in personal income to the Cincinnati economy. Cincinnati ranks 49 th in the nation with 11.7 million freight tons that originate or are discharged here. But that ranking could climb to 9 th if the Port Authority is able to complete a re-designation of its boundaries to include 19 counties that have a economic ties to this region.

It’s a Herculean task that Brunner hopes to complete by next March. After that, the Port Authority will develop marketing campaigns that tout area barge and rail service to business and trade groups. Martin Associates said four areas of freight shipments hold the most potential for Cincinnati:  steel, polymers, containerized grain shipments and liquid natural gas products pulled from the Marcellus Shale explorations now popping up in eastern Ohio.

Is The New Port Authority Working?

Those involved in re-constituting the Port Authority say they haven’t seen enough from the organization to know whether it’s working as intended.

“I know there’s a lot of projects in the works, but I don’t think there’s enough evidence to say those projects will be successful. I think they need a good five years,” said Chris Bortz, who left city council in 2011 and is now president and CEO of Towne Construction Services in Batavia.

Former Hamilton County Commissioner Tom Neyer Jr., now a managing principal at Cresa Corporate Real Estate Advisors downtown, said Brunner’s lack of completed projects could be a positive sign.

“If there were a lot of staccato victories out of the chute, I would be concerned that the port was doing stuff that any private developer could be doing,” Neyer said. “The very purpose of the Port Authority is to do really big, really complicated, long-term things that the conventional private developer couldn’t manage by themselves.”

Kroger Co. Vice President Lynn Marmer, vice chair of the Port Authority board, said the organization is pursing a big agenda with a lean staff that’s “impressive” and “knowledgeable.” Marmer used different adjectives for Brunner, starting with “terrific.”

“She is incredibly smart, a good leader and strategic thinker. She brings to the port a wealth of experience and connections and knowledge,” Marmer said. “She’s a very strong and capable leader.”

Marmer also counsels patience for those looking for the Port Authority's first big win.

"This is not easy work," she said. "If it were easy it would already be done."

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