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Mar
20
Three stories, all related. If not now, soon.
The number of payday lending stores licensed in Ohio continues to grow, from 107 locations in 1996 to 1,638 locations in 2007, a more than fourteen-fold increase since 1996. Fees in Ohio are usually $15 for every $100 borrowed for a two-week period, which amounts to an annual percentage rate of 391 percent. The study also used testers to visit payday lending stores, finding that all 36 stores visited charge the maximum interest rate and fees allowed by current Ohio law. An analysis of an average family budget confirmed that low-income families had little opportunity to pay a loan back with the high interest rate and short pay back schedule. The report recommends an interest rate cap on payday loans.
You can read the report here, executive summary here, and press release here.
2. From WCPN, a report (audio and text) on the Med Mart and convention center deal being signed today:
County negotiator Fred Nance will present a memorandum of understanding to the County Commissioners that puts what was agreed to verbally last week on paper. As part of the deal Merchandise Mart Properties will manage both the medical mart and the convention center. The Chicago-based company will also invest 20 million dollars into the project.
…
The entire project—a combination of tradeshow halls, showrooms, and a conference center is estimated to cost 400 million dollars. The county’s financial obligation will be capped at roughly 40 million dollars a year or the annual amount generated from the sales tax increase. Madden says the county will receive 100 percent of the naming proceeds.
Still no location has been determined yet. The current convention center and Tower City, which is owned by Forest City Enterprises, are strong candidates. Just this week, Forest City laid out a plan that would connect a center and mart in the Tower City complex.
Hmm. So, on the off-chance that more than $40 milllion is brought in by the .25 percent sales tax we never approved (but was okayed by the commissioners without a vote), what happens to the surplus? Anyone? We get refunds or something?
Eh, given this third story, we probably won’t have to worry about any surplus but rather additional taxes to add to the miniscule amount being pitched in by MMP ($20 million).
3. Also from WCPN, in audio and text, on Cuyahoga County’s population decline. I wrote last year about the stalled revenues coming into this county. I still question how that fact will play into the chimera of being able to raise the necessary money for the Med Mart/Convention Center deal in the first place. Now, read the CPN report:
Once a year the Census Bureau ranks the size of the nation’s counties, and Cleveland State demographer Mark Salling says the local news hasn’t been good for a number of years
SALLING: Since 2000, Cuyahoga County has lost more population than any other county in the country.
That’s about 98,000 people, over that time span. Salling adds that the surrounding counties also haven’t faired very well, but their losses have been masked by the people they’ve gained from Cuyahoga. Delaware County, north of Columbus ranks as the fastest growing community in the state, and in the top twenty growth regions in the country. By and large the nation’s growth areas continue to be in the South and the West, with places like Delaware and Kendall County near Chicago bucking the trend. If there’s any good news for Cuyahoga, it might be that last year’s loss of some 13,000 people is less than the previous year. But, Mark Salling says that may not be the place to look for a sliver lining.
SALLING: As there are fewer people to leave, we’ll see smaller numbers of people leaving.
Oh.
By Jill Miller Zimon at 7:57 am March 20th, 2008 in Politics
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14 Responses to “Storm ahead: Ohio payday lending run amok, MedMart deal & population decline”
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The ammount MMP is paying almost seems criminal to me. I still maintain that if this really that great of a deal, more private investors would be lining up to sink their money into it.
Hi Jill,
I am soooo glad that I never helped any NEO’s get into a franchise Payday Loan/Cash Advance opportunity. The Franchise brokerage group that I left last year, thankfully,-Frannet, STILL HELPS THESE FRANCHISES FIND FRANCHISE OWNERS. {And then receives a fee from them for doing so.} It is so old school.
I do not have any franchise brokering agreements with any of them!
Joel Libava
Back on March 13th I posted the following:
Once the deal is made public, the answers to the following questions may be illuminating.
1) Last summer the county commissioners promised (if memory serves) that tax payer money would not be spent on the medical mart, but only the convention center. Does the deal include any public spending on the medical mart?
2) In addition to the medical mart, MMPI was seeking a management contract for the new convention center. Is MMPI given special consideration in the awarding of such a contract?
3) MMPI’s investment in the med mart is be $20 million, but that could conceivably include funds already expended (e.g., costs of feasibility studies) or in-kind contributions. Is MMPI’s $20 million investment in the form of newly committed cash? (This question is based on a posting by Roldo Bartimole.)
Well, now we’re closer to the answers to the three questions above.
1) The commissioners broke their pledge not to use tax payer money for the med mart. The convention center and med mart will both be financed by the tax payers.
2) MMPI was given special consideration in the award of a convention center management contract. Why do I say that? Because the contract will be awarded without bid.
3) According to the WCPN story, “the 20 million [that MMPI was supposed to contribute] will be expected to go toward initially the recruiting of permanent tenants for the medical mart portion of the project.” I’d like to see a careful accounting of exactly what that $20 million is spent on.
Now that more details of the deal are beginning to emerge, I’ll post some more questions:
1) Why is MMPI being given ownership of the convention center for twenty years? (That’s right, MMPI will OWN the tax payer-financed convention center.) Why wasn’t it given a long-term lease?
2) Profit-seeking companies that own $400 million complexes normally pay substantial property taxes. How much tax abatement will MMPI receive?
3) At the end of twenty years, the county and MMPI will determine whether ownership of the convention center reverts to the county. How much might the county have to pay to regain ownership?
4) Does Cuyahoga County have enough statutory bonding authority remaining to sell both $400 million in general revenue bonds for a convention center + at least $90 million in general revenue bonds for the Juvenile Justice Center? If it doesn’t, will the voters be presented with a bond issue to finance projects that the convention center squeezes out?
If the state leaders would begin to focus on bringing renewable energy companies and manufacturing to the state that would provide living wage jobs, the need for more payday lending stores would not increase.
Dennis Spisak-Independent Candidate for State Representative-60th district
http://votespisak.tripod.com
Greg – I assume you mean criminally small?
Joel, that’s why you da pro.
Anon what DO you do for a living?
Great questions. We’ll try to keep following – I know several Ohio bloggers are trying.
Dennis – thanks for reading and commenting AND identifying yourself as a candidate for office. Good luck – can you tell us where the 60th is?
Now that the memorandum of understanding (MMOU) between MMPI and the county commissioners is available, the answer to the question below becomes clearer.
1) Why is MMPI being given ownership of the convention center for twenty years? (That’s right, MMPI will OWN the tax payer-financed convention center.) Why wasn’t it given a long-term lease?
Based on the MMOU, it appears that the county will float bonds for the convention center, then loan the bond proceeds to MMPI. MMPI will use the loan to build a convention center/med mart that it will initially own. MMPI will lease the CCMM to the county under a lease-purchase agreement (essentially, rent-to-own in twenty years). The county will then use sales tax proceeds to make its lease payments to MMPI. MMPI will use these lease payments to pay back its loan to the county. The county will then use the loan payments to pay off the bonds.
Sound convoluted? You bet. (The above description probably oversimplifies, but captures some major money flows.)
Susan Miller points out a line from the MMOU, “The County understands that it is the intention of MMPI that the rentals to be paid under the Lease will be qualified income for REIT purposes.” I assume the reason for the complex string of transactions described above (and initial ownership of the CCMM by MMPI) is largely driven by tax considerations for MMPI.
People read should read Susan’s post. The collective citizen journalism on the Med Mart/Convention Center has been outstanding and we have a real archive building.
I can’t really speak for everyone, but I have to believe that they feel like me: we would all LOVE LOVE LOVE to be proven wrong on our skepticism. But it just sucks to be burned over and over.
Payday lending is a scourge on our families and our communities. The payday lobby is doing their best to overturn House Bill 545, which ends the usurious practice of charging 391% interest on payday loans. The out-of-state payday lobby is spending millions of dollars on misleading advertisements suggesting that 391% amounts to financial freedom!
391% interest is not freedom! Usury is not freedom! End predatory payday lending in Ohio by voting yes on issue 5!
http://www.yesonissue5.org
As you’ve probably noticed, the payday lobby has been working overtime in our state to convince voters that 391% interest amounts to financial freedom. Between the millions of dollars in ads and the enumerable incidences of payday lending circulators lying and deceiving voters, November’s Issue 5 will be confusing at best.
Here’s a video with Ohio voters detailing their experiences with payday lending petitioners: http://www.youtube.com/watch?v=zDoeXujagE4. This Sunday, the payday lobby submitted their signatures to the Secretary of State. I’d bet that a nice percentage of those signatures will be thrown out due to a large number of unregistered voters. There are thousands more signatures that were clearly collected under false pretenses – some people believing that their signature will help to “lower interest rates” on payday loans, which is completely contrary to the truth.
The Plain Dealer has a good editorial that may help clear up the issue for voters: http://www.cleveland.com/editorials/plaindealer/index.ssf?/base/opinion/1220171618297310.xml&coll=2%20
Spread the word! Vote Yes on Issue 5 for lower interest rates!
http://www.yesonissue5.com
Oregon essentially killed Payday Loan by lowering the APR that can be charged. There may be a couple left, but thousands gone.
If any payday lenders decide to close, that is their decision and their decision alone. Over 1,000 of our state’s 1,600 plus payday loan stores have applied for licenses to operate under the new law.
Again, let’s keep in mind that over 300,000 Ohioans, each year, are trapped in cycle of debt. The average borrower is stuck recycling these loans for 18 to 24 months! Being in a spiral of debt for so long is not good for our families, our communities or our economy. The only thing the debt trap is good for is big profits for the payday industry and their lobbyists!
Vote yes on issue 5!