Monday, May 21, 2018
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Undue diligence

The lack of due diligence by Toledo Mayor Mike Bell's administration in reviewing the credentials of people who want to do business with the city is causing embarrassment at One Government Center today. Still, that's a smaller price to pay than the $50,000 the city nearly invested in a project led by a local developer with a sketchy, and public, record.

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It's understandable that a proposal to build a sports and retail complex on the site of the demolished Southwyck shopping mall in South Toledo would appeal to the mayor. The 55-acre property near the Reynolds Road corridor is one of the city's most conspicuous eyesores.

Yet in its eagerness to announce the project last week, the mayor's office failed to do basic research about one of its principals that a Blade reporter conducted without breaking a sweat. The newspaper reported that the lead developer of the Southwyck project has been sued three dozen times in Lucas County over such issues as back taxes and foreclosures.

The developer was part of a group that was approved to receive public money a decade ago to renovate a historic apartment building in central Toledo; that project failed. He also headed an adult group home in the Old West End that went into foreclosure and is closed.

After The Blade shared this information with the mayor's office, Mr. Bell said he would withdraw his request that City Council approve a $50,000 loan to advance the Southwyck project. He cited the plan's likely "inability of financing."

Yesterday, the mayor demoted Deputy Mayor Tom Crothers, his office's point man on the Southwyck project. But these developments don't end the matter.

Although the mayor acknowledged his administration had discussed the project for a year, he said the revelations about the developer's background "fully surprised" him. He insisted that with "enough checks and balances we would have figured it out before we ever loaned them any money." It's hard to see the basis for that confidence, because the would-be developers have been vague about key details of the Southwyck project and of the partnership they represent.

This episode would be troubling even if it were an isolated incident. But it isn't. Mayor Bell displayed a similar lack of curiosity about the Chinese investors who bought the Marina District site with the intention of redeveloping the property.

The Blade reported in February that one of the two investors has a background in information technology, not property development -- a fact she did not disclose to the mayor's office. The other principal built his business connections as a government bureaucrat in China. More than a year after the sale of the property, not much appears to be happening at the Marina District site.

It isn't clear whether the Southwyck project will proceed without the city loan. The development group would have to buy the property, although its partners and the current owners claim to have settled in principle on a purchase price.

The developers say they plan to tap private equity, but have not secured funding. The timetable for the project's completion is undetermined.

The fate of the Southwyck site is likely to become an issue in next year's mayoral election, especially if it continues to deteriorate. Of equal concern, though, is the Bell administration's seeming penchant for letting its enthusiasm about pursuing economic development get ahead of exercising adequate caution.

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