Creative destruction: How developers are shaping the future in Over-the-Rhine

'They just really don't want us here'
Posted at 8:54 AM, Feb 06, 2020

On a sunny Monday afternoon in 2018, Over-the-Rhine developer Jim Uber hit the send button on an email venting his frustration over drug dealers across from his building in the 1500 block of Elm Street.

“Just witnessed a buy, out of a car turning on Elm out of the cell phone lot,” Uber wrote to Ean Siemer, who developed an apartment building next to his own. “Repeated all the time. Not what anyone wants to live around.”

Copied on the Feb. 12 email was Cincinnati Police Officer Brendon Rock and Sara Bedinghaus, a development officer for the Cincinnati Center City Development Corp., or 3CDC.

The email was submitted as evidence last summer in an eviction case against Cinci Wireless Tech Inc., a cell phone store at the corner of Liberty and Elm streets. An investment company controlled by 3CDC bought the real estate in 2017, becoming the phone store’s landlord. It argued the store failed to maintain its parking lot, even after being notified that lighting and other improvements “were needed … to reduce the frequency of criminal activity on the premises.”

Hamilton County Visiting Judge Guy Guckenberger rejected that argument last October, but not before 3CDC filed a second eviction lawsuit against Cinci Wireless, claiming it failed to pay its July rent. That case is scheduled for a hearing Feb. 10.

Both of 3CDC’s claims are false, said Cinci Wireless co-owner Firas Allan. He thinks his store is Cincinnati’s newest victim of gentrification, as Over-the-Rhine developers march north toward Findlay Market and FC Cincinnati’s $250 million stadium rises a few blocks to his west.

“Just the type of clients we have, I don’t think they want us Downtown,” Allan said. “Trying to push us away and get different businesses here that they approve of, that they like.”

Citing its pending litigation against Cinci Wireless, 3CDC declined to comment for this story. Uber and Siemer also declined to be interviewed.

The case is an example of the “creative destruction” that defines urban redevelopment in Over-the-Rhine, said Frank Russell, director of the University of Cincinnati’s Community Design Center. He has studied Over-the-Rhine for decades. He also lives there and invested in its redevelopment.

Frank Russell, director of the Niehof Urban Studio at the University of Cincinnati

“To disrupt an industry is considered now to be a very progressive approach to innovating and creating new products and new ideas," Russell said. "Well, the same thing happens with urban environments."

Creative destruction can be healthy “to the extent that the destruction does not displace in a radical way and does not destroy the very environment that you’re trying to enjoy,” Russell said.

He didn’t want to take sides in the legal spat. Russell said 3CDC has generally tried to minimize damage from redevelopment.

“I won’t say that we are a model of best practices for minimizing displacement, but I will say that there have been efforts and partnerships which have aspired to minimize that destructive side of the creative process,” he said.

Former Cincinnati Councilman Jim Tarbell agreed with that assessment. He’s a fan and former customer of Cinci Wireless.

“They were kind, generous with their time and fairly priced,” Tarbell said. “I can say firsthand they have been a useful service to Over-the-Rhine.”

But Tarbell also thinks developers have a right to influence the environment that surrounds their projects. He’s hopeful the store and 3CDC can reach a settlement but doesn’t fault 3CDC for pursuing eviction.

“3CDC didn’t get where it is without playing hardball,” Tarbell said. “I won’t say mistakes haven’t been made, but on balance, what they’ve accomplished in Over-the-Rhine is amazing.”

The squeakiest wheel

Regardless who wins, the court case is a fascinating inside look at how developers force change on a neighborhood by being a squeaky wheel. None are squeakier than Uber, an environmental engineer who bought his two-story residence at 1529 Elm Street in 2010. Hamilton County property records show he paid $41,000 for the home and spent $309,520 to fix it up.

In 2012, Uber doubled down on the neighborhood by acquiring a six-unit apartment building next door to his home. He paid $15,000 for the building and $607,836 for the rehab completed in 2017, records show.

By that time, Uber was a one-man neighborhood watch program. He successfully sued the owner of a building at 1546 Elm to declare the property a public nuisance. Uber’s 2015 lawsuit was aided by the city of Cincinnati, which joined in the complaint against owner Aaron Etzler and accused him of owning “blighted properties throughout the city of Cincinnati.” The case ended with a series of settlements that resulted in the 2019 sale of 1546 Elm and several other properties to OTR Holdings Inc., which is controlled by 3CDC.

As the abatement case proceeded, Uber worked with Cincinnati police to document drug dealing at 1546 Elm, which houses the L&S Market and is next door to the Cinci Wireless parking lot.

“The folks on Elm have collaborated to put together a composite of confirmed dealers, support crew and vehicles that support the active drug trade around L&S Market on Elm,” Uber wrote to Detective Brian Trotta and Officer Brendon Rock in October 2017. He copied two other developers and two 3CDC executives.

Two months later, he copied the same group with the subject line: “2 deals in 2 minutes.” He expressed his frustration that police weren’t using his security camera or a room in his building for surveillance.

“Just what else do you want me to do? Please tell me and I’ll do it,” he wrote. “Or do you maybe think this is what I deserve, for deciding to live here?

L&S Market owner Ermias Tesfu said he isn't aware of any drug dealing among people who gather on the street near his store.

"I've been here for 14 years. I don't have a lot of problems," he said. "They do hang, but we make sure they move from here."

Next came the February 2018 email in which Uber complained the Cinci Wireless lot was being used for drive-through drug deals. And that’s when the relationship between 3CDC and its cell phone tenant began to turn sour.

Life on Liberty

Allan contacted WCPO in December to complain that 3CDC was threatening his livelihood by pursuing an eviction against his Palestinian-owned company, which has a lease for 123 West Liberty Street that expires in 2023.

“If relocating were an option for us we most certainly would relocate; however, this is simply not an option,” he wrote. “We purchased this business solely based on its prime location. Cell phone stores are required to keep a certain distance from other carrier locations which makes it hard to find a spot. In addition, we were grandfathered in as a multi-carrier location which is no longer granted to new locations, only to existing locations.”

Cinci Wireless occupies a half-acre lot at the corner of Liberty and Elm streets

Allan and a partner bought the business in 2013 and signed a 10-year lease with the building’s owner, New Horizon Properties LLC. A 3CDC investment company, 15th and Race LLC, paid $1.5 million for the half-acre parcel in March 2017, becoming the store’s landlord.

Two key elements of the lease would define the legal battle to come. The contract requires Cinci Wireless to “carefully preserve, keep in good order, protect, control and guard” the property. It requires the landlord to “not use the parking area or the ingress and egress area of the premises in an unreasonable manner so as to interfere with the normal flow of the business.”

Allan considers the store a key asset to his business, providing customers access from three streets and offering ample space for promotional activity, including neighborhood grill outs. Over time the store has become a gathering spot where low-income residents buy phone cards, pay their Duke Energy bills and sign up for prepaid, no-contract phone plans from Metro PCS and Boost Mobile.

“The neighborhood, they know us, know us by name,” he said. “We know them by name. We’re, you know, friendly to them.”

Customer James Pope said the store sometimes pays him to do odd jobs. He’s seen the company offer discounts to customers who can’t afford to pay.

Cinci Wireless co-owner Firas Allan, left, chats with customer James Pope

“They help us,” Pope said. “They really help us.”

Jim Uber is not a fan.

“While my wife and I were walking home tonight we witnessed two dealers selling drugs and prostitutes out of the cell phone lot,” Uber wrote to 3CDC’s Sara Bedingaus on Feb. 20, 2018. “Drive in from Elm, drive out onto Liberty. A fence would put a big dent into that trade.”

Bedinghaus responded that 3CDC was planning to partially fence off the lot and install construction dumpsters. Uber liked that idea.

“Please consider strategically placing them across the driveway onto Pleasant Street,” he wrote. “There is still plenty of access from Liberty but the drivers may feel pressure from being ‘trapped’ inside the lot and unable to get away.”

Two months later, court records show, 3CDC Asset Manager Tyler Zurick emailed Bedinghaus to say plans for a fence would be delayed because 3CDC would be “turning that area into an official parking lot.”

Allan said he was not aware of these conversations until 3CDC accused him of allowing “illicit criminal activity” on his parking lot last summer. That’s when he first saw the emails and a police affidavit to support 3CDC’s claim for eviction. But 3CDC did notify Allan in April 2018 that it wanted to modify his lot to add “a public parking component.”

Emails and letters compiled for the court case show how things progressed from that point:

  • On June 14, an attorney representing 3CDC told Allan it planned to “block drive on Elm Street and modify traffic pattern." His letter adds: "It is clear the new parking lot design … will not be unreasonable and will not interfere with the normal flow of your business."
  • On June 27, 3CDC shared renderings with Allan showing two ways the lot could be restriped to allow 6 to 9 parking spaces for his store and up to 31 additional spaces for 3CDC’s use. "The number of spaces allocated to your client is based on our observations" of how it uses the lot, a 3CDC attorney explained.
  • On July 10, Allan’s attorney offered a settlement to surrender some spaces in exchange for a rent discount of $1,000 per month.
  • On September 24, Allan’s attorney asked 3CDC to delay changes to the parking lot, alleging it “interferes with our use of the leased property.”
  • On September 26, 3CDC rejected Allan’s request. "Landlord will work with tenant to ensure its customers have parking,” wrote 3CDC General Counsel Caitlin Felvus. “Landlord will not, however, leave the parking lot open to illicit activities in which tenant is at best complacent or worse, involved."

Two days after that exchange, Cinci Wireless sued for breach of contract and sought an injunction to prevent changes to its parking lot. That led to a counterclaim in which 3CDC sought a termination of the lease and eviction of Cinci Wireless, based on an alleged failure to maintain the parking lot as required by the lease. As the case headed for trial, 3CDC transferred the property’s ownership to OTR Holdings Inc., which also owns the building where L&S Market operates. And it closed the Elm Street entrance to the cell phone lot.

After a bench trial in August, Hamilton County Visiting Judge Guy Guckenberger rejected both claims and ordered 3CDC not to use “any portion of the parking lot in a way that unreasonably interferes with plaintiff’s business, excepting as moot, the point of ingress-egress removed as of the trial date.”

By the time Guckenberger’s ruling was filed with the court in October, 3CDC had filed a second eviction case against Cinci Wireless, alleging it failed to make a July rent payment to OTR Holdings. Affidavits show there was confusion about how the rent was to be paid.

Allan claims 3CDC told him in January 2019 that it would refuse all rent payments, so he began writing checks to 15th and Race LLC through the Hamilton County Clerk of Courts. The clerk’s office accepted his payments through June of 2019 but refused the July payment because it wasn’t payable to the clerk of courts. Allan said he offered to write a check to the clerk but was told it couldn’t be accepted without a court order.

An employee in the clerk’s office, Nicole Alley, agreed that she instructed Cinci Wireless to make its July rent check payable to the clerk of courts but it “never returned with a check made payable to the correct party so the clerk’s office never received” the July rent.

A third affidavit from Adam Gelter, executive vice president for 3CDC, said Cinci Wireless “never told OTR Holdings that it tried but failed to deposit the rent payment with the clerk’s office.” So it served an eviction notice on July 31 and ordered Cinci Wireless to leave the premises by August 7, 2019.

“It is both illogical and unjust to allow OTR Holdings to pursue this eviction for nonpayment when it refused to accept the very payment it now complains it did not receive,” wrote Matthew Fitzsimmons, an attorney for Cinci Wireless in a motion to dismiss the eviction claim.

A third place?

So, what can be learned from the creative destruction that’s now underway at the corner of Liberty and Elm Streets?

Tarbell said Uber should be praised for his impact on the neighborhood.

"He's somebody who spent a lot of his own money improving an existing building and putting eyes on the street versus a vacant building," Tarbell said. "He’s taken steps as a result of that investment to address some of the illegal activity that’s going on there. That’s a good thing. His story is a really constructive, very impressive one."

Russell, the urban planning expert from UC, said it’s possible that a settlement could be reached by evaluating the cell phone store’s role as a “third place.” That’s an academic term for neighborhood anchors, including churches, libraries and barber shops, that allow people to grow more attached to their community.

“Having these places for social interaction is incredibly important,” Russell said. “I don’t know the nature and depth of what the social interactions are at that cell phone store but it deserves to be understood and decisions can be made about that.”

Allan doubts any settlement can be reached. He just wants to be left alone until his lease expires in 2023.

“I have a family of five that I have to support,” he said. “My partner has a family of five. Three kids in college. We all rely on this business. A lot of people in this community rely on business like us. And they just really don’t want us here.”

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