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It is well past time for Toledo City Council to take a firm stand on forgiving debts on loans made with the public’s money

The Blade/Dave Zapotosky
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Toledo City Council is hitting on a radical notion — that developers who get loans from the city should repay those loans. And it is not sitting well with at least one developer.

Developer Bruce Douglas, who borrowed $500,000 from the city in 2002 to build the 52-unit Uptown Apartments on 14th Street, said he never expected he would have to repay the debt.

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The project, Mr. Douglas said, never turned a profit. That’s why he wants to sell the property to Watermark Partners, though he would need city council to forgive the loan before he could do that.

Council surprised Mr. Douglas — and many observers — by voting against forgiving the loan.

Councilwoman Yvonne Harper pressed the issue, calling for a vote rather than shuttling the issue off to committee. She called on council to do a better job of scrutinizing such deals before granting loans or abatements.

That seems obvious to most people, but it’s an unconventional idea to many in Toledo city government.

Toledo has an unfortunate history of not expecting developers to repay loans.

A Blade investigation in 2015 showed that the city had failed to collect nearly $2.4 million in loans to developers over the previous 25 years.

Some companies that had received loans ostensibly to promote desirable development — downtown housing units, or redevelopment in the Warehouse District, for instance — went under before they could repay them. Others went bankrupt. Still more just quit paying.

The Blade’s review of the enterprise development loan program showed that 41 loans, many from the 1990s, had been written off as “uncollectible.” The Blade initiated the analysis after the Hicks-Hudson administration sought to expand the program.

Mr. Douglas said he may have to declare bankruptcy because of council’s refusal.

Real estate development is a risky venture. That’s one reason why cities are willing to offer loans to help developers bring beneficial projects to their communities. And Toledo should always be looking for opportunities to leverage public money to help developers revitalize the city.

But it is not reasonable to expect taxpayers to assume all the risk or to take a bath when projects fail to deliver expected profits.

As Councilman Peter Ujvagi said, “We can’t always let the taxpayers of Toledo hold the bag.”

It is well past time for city council to take a firm stand on forgiving debts on loans made with the public’s money. The next step will be for city officials to toughen up the standards for these loans before they are even made.

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