City Takes Cleveland to Court

[Spartan]

The City is planning to take Arthur Cleveland III to court.

"Cleveland is the majority owner of the Marriott at Renaissance Park. As such, he is obligated to make lease, loan and tax payments to the city that total more than $20 million over the next two decades, which the city would then use to pay its own debts.

Cleveland owes the city $400,000 in arrears on the hotel's land lease and $566,500 in property taxes that came due and went unpaid last week."

The city has guaranteed the loans through the Community Development Block Grant funds of which Spartanburg is scheduled to receive $789,283 in 2006 to be used in "a wide variety of projects."

They slid this line in at the end: "Off the top of my head, I would say housing projects planned for Thompson Street and Piedmont Street would lose funding," City Manager Mark Scott said Monday night.

http://www.goupstate.com/apps/pbcs.dll/art.../601240388/1062

Its a bit trickey how the housing projects will suffer because of Cleveland's inability to pay for this projects. I think that he should sell it to someone who CAN pay for it, and use the money to pay off his debts, or work on projects that will be within his capactiy to pay for.

However- think about the other revenues that the hotel generates for the city. Think about all of the out-of-towners that have come and that will come because of it. They come and spend money around town, and downtown. More successful businesses in Spartanburg will create more business in itself- which in turn is good for the everyone in the city. Losing the hotel would have a greater impact than some empty building. I am certainly not saying that the housing projects should be ignored, but this is a special case. Besides that, the money would come from the CDBG (which is how they guaranteed the loan to Cleveland), not the city's coffers. I very firmly believe that the ramifications of losing this hotel would be far worse than the delay of a couple of housing projects. The City can't afford to not pay for this project.

[goodbye]

GSABusiness has an interesting feature article on this story in the current edition. This man was really kind of idiotic to think he could reject the advice of professional investors who specialize in the hotel industry. He has also created quite a royal mess for the entire city of Spartanburg to have to clean up in court.

[hub-city]

I'm glad the city finally joined the lawsuit. They have been very patient and supporting of Cleveland. What is so frustrating is while this is an ownership issue, most people will read the articles and think that the hotel itself isn't successful. This hotel has been a great asset to our city. I still like to go over every now and then just to walk around the lobby and convention areas. It is awesome.

As far as the housing projects, I'm not sure, but the city says it may have to use grant funds that would have gone to those projects to pay the bond off. Regardless of what is said on the news, the city does not want to use tax payer funds for this projects. They do use hospitality and accomidation taxes, but I view those as choices for citizens, not a forced property tax. If I don't want to pay the hospitality tax, i don't eat in the city.

I just hope this is resolved and with the arts center, Renaissance Park can be the development that we all hoped it would be.

[Spartan]

Agreed. But the hotel continues to do well, despite its owners. I expect that they will find a new owner without too much difficulty.

The city may have to use the CDBG funding to pay for its share. Thats how they guaranteed the loan. The bad news is that the new budget is proposing cuts to the CDBG program. That would be bad news for everyone.