Photo By Sean Hughes

Cincinnati‘s city manager wants this Fourth Street building to be sold to the highest bidder.

Some Cincinnati City Council members want to sell a piece of city-owned property downtown at what critics allege is a sharply discounted price. If the sale is approved, it could give the proposed buyer potentially hundreds of thousands of dollars in profit that otherwise would go to the city, the critics say.

Councilman Jeff Berding proposed selling the vacant building at 33 W. Fourth St. for $250,000 to MMF Realty, the company that currently has a long-term lease to redevelop the site. A recent city appraisal, however, pegs the property's value at $780,000, and city administrators want to sell the building on the open market to the highest bidder.

MMF Realty was given a lease in August 2004 and was supposed to create offices and shops there. Under the lease, city officials reserved the right to rescind the agreement if no development occurred after a specific period of time.

With little progress after 3 1/2 years, City Manager Milton Dohoney Jr. and his staff began the legal process to declare MMF in default of its lease so all rights would revert to the city.

At least three other developers have expressed interest in the site, including one that offered the city $1 million for the property. But some council members worry that MMF would fight the action in court, which could prove expensive and effectively freeze all activity at the site until the lawsuit is resolved.

Besides Berding, other council members who support the deal with MMF are Chris Bortz, John Cranley and Leslie Ghiz. Supporters had planned to push for a council vote March 26, just days after the plan was unveiled publicly, but Mayor Mark Mallory asked for a delay until other members had more time for review.

Bortz, who heads council's Economic Development Committee, concedes that Berding's proposal could have been handled better procedurally. But quick action was needed to avoid the April 4 deadline set by city administrators to declare MMF in default, which Bortz believes would trigger a lawsuit.

City administrators have been overly aggressive in declaring MMF in default to pressure the company into redeveloping the long vacant site, Bortz says, adding, "This is a negotiating strategy."

MMF recently began work in the building's interior to comply with the city's concerns.

"They did exactly what the city asked them to," Bortz says. "They are trying to cure the issues that the city says are a problem."

That's too little too late, according to city administrators.

Dohoney issued a memo last week reemphasizing his opposition to the sale and asking council not to approve the deal. MMF was first notified 13 months ago in February 2007 to begin developing the site or the city would consider other options.

"The city has received numerous inquiries over the past three years as to the availability of the property from interested businesses," Dohoney wrote in his memo. "All parties were referred to the Redeveloper's agent, but in the past three years no tenants were signed and subsequently no significant construction has been commenced beyond preliminary demolition work."

Allowing MMF to buy the building now sets a bad precedent for other development deals, the city manager added.

"Due process as defined in the Lease Agreement has been diligently and scrupulously observed," Dohoney wrote. "It is essential that the integrity of all contracts and agreements executed by the city manager, on behalf of the city of Cincinnati, be upheld. The city is expected to deliver on our end of a contract it is only right and fair that we hold our development partners to the same standards that we invoke for ourselves in terms of contract performance."

MMF Realty is affiliated with Madison Marquette, the company that redeveloped the adjacent McAlpin building into condominiums. Some business insiders say sluggish sales of the high-priced McAlpin condos has caused a financial crunch at the firm that makes redeveloping the vacant building more difficult.

Shortly after the mayor asked to delay the vote, the city's Law Department advised council members that Cincinnati's charter requires that any proposed sale of city-owned property must first be reviewed and approved by the Planning Commission. That group doesn't meet again until Friday.

If the Planning Commission votes to oppose the sale, it would take at least six votes on the nine-member Cincinnati City Council to overturn the action.

Some critics also question Bortz's involvement with the deal; Berding told The Cincinnati Enquirer that Bortz asked him to shepherd the deal through council, prompting opponents to wonder if Towne Properties a development firm owned by Bortz's family has any stake in the sale.

Although Towne has a decades-old partnership with Madison Marquette, it is limited to another property and Towne has no other business ties with the firm, Bortz says. The firms are part of a consortium of several companies that hold development rights to Fountain Square West, which allow them to build atop Macy's, but that project has stalled for years.

Further, Bortz notes that the proposed deal before council requires MMF to split any profits with the city if the property is resold within two years of the initial sale. If the city and MMF are involved with a lawsuit over the lease, no sale can occur, he adds.

"You can't sell what you don't own," Bortz says. "In order for us to sell it, we'd have to cancel the lease. In order to cancel the lease, you have to declare them in default, and they will fight that." ©