On Thursday, Sept. 20, Western & Southern lost an appeal of an Anna Louise Inn zoning issue, which essentially upheld the Historic Conservation Board’s right to issue a conditional use permit and allow the Inn to proceed with its planned renovation. Less than 24 hours later Western & Southern had released an economic study it commissioned and spoken to The Enquirer for a front-page story touting the benefits of redeveloping the Anna Louise Inn into a hotel instead. Within three days the Business Courier and Fox 19 followed up with stories on the study.
In the meantime, Western & Southern lawyer Francis Barrett acknowledged the company’s refusal to pay $3 million for the Anna Louise Inn in 2009. Barrett told CityBeat it wasn’t necessarily a mistake to refuse to raise its offer from $1.8 million but that the company would be better off if it had taken the deal.
“No question,” Barrett said outside the Cincinnati Business Development & Permit Center after the Zoning Board of Appeals ruled in favor of the Inn.
“It’s like everything else in life — you go with the information you have at the time,” Barrett said. “I mean, 20/20 hindsight, yes, they would have offered $3 million in 2009.”
From 2005-09 Cincinnati Union Bethel (CUB), which owns the Anna Louise Inn women’s social services agency, considered selling its building in the upscale Lytle Park neighborhood because it needed expensive renovations. But in 2010 CUB secured $12.6 million in city- and state-distributed federal loans for historical renovations and affordable housing. Realizing it had missed its opportunity to purchase the building, Western & Southern sued to block it. Since that time the two sides have been embroiled in a series of legal and zoning challenges that have been wearing out appeals boards across the city.
[Read German Lopez's commentary, "W&S: A Bully by Any Other Name," here.]
“Initially, what happened was, as I understand it, (Cincinnati Union Bethel) had it appraised and they thought it only had a fair market value of $1 million,” Barrett said. “Cincinnati Union Bethel then talked to [developer] Miller-Valentine and one other group … and they offered more money and they were upset with Western & Southern because these other entities offered more money. But those were contingent contracts that never came to fruition. But then after that is when, in good faith, Western & Southern did offer $3 million. They’re still offering three million.”
Media reports about the dispute have consistently mentioned Western & Southern’s $3 million offer, but none except CityBeat has noted that Western & Southern only offered that much after Cincinnati Union Bethel got the funding to renovate (“Surrounded by Skyscrapers,” issue of Aug.
15). Eagle Realty President Mario San Marco on Dec. 1, 2008 offered Cincinnati Union Bethel $1.8 million for the Anna Louise Inn and then declined Cincinnati Union Bethel’s $3 million counter offer. Eagle Realty is the real estate arm of Western & Southern.
“They knew when they made that $3 million offer that we weren’t going anywhere,” says Stephen MacConnell, Cincinnati Union Bethel president & CEO. “We had always wanted to stay there but we couldn’t figure out a way to renovate. But when they did decline that last opportunity that’s when we found out about the tax-credit financing.”
During the zoning board of appeals hearing, Barrett argued that the Historical Conservation Board lacked the jurisdiction to grant a zoning permit because of technicalities related to the renovation design and intended use. Barrett said afterward that the Anna Louise Inn’s use changed when it implemented certain social programs including the Off the Streets program, which helps women involved in prostitution turn their lives around. The Off the Streets program began in 2006.
If the use first changed in 2006, why didn’t Western & Southern step in until 2010?
“Because it was understood that they were going to move,” Barrett said. “They actually approached Western & Southern and they asked Western & Southern to buy their building. So Western & Southern always understood they were going to move. They were going to help them move and they are still willing to help them build a state of the art facility for the Off the Streets program.”
MacConnell points out that Western & Southern has spent considerable resources during the past year and a half on its various legal challenges and public relations campaigns, even commissioning the recently released economic study in an attempt to argue that the neighborhood would be better served by relocating the Anna Louise Inn.
“Now they’re spending thousands if not millions of dollars trying to get our property,” MacConnell says, “when now, I think their study will show, it is worth so much more.”
The Economics Center at the University of Cincinnati, which is a nonprofit and is independent of UC, wouldn’t release the cost of the study to CityBeat, but Stephen Samuels, director of business development, said such a study typically costs $20,000-$30,000. Western & Southern Advertising & Media Relations Manager Jose Marques told CityBeat in an email that, “Western & Southern commissioned the study, as we clearly stated in the news release, and that is all the information we are releasing.”
The economic study relies heavily on construction costs and revenue projections provided by Western & Southern. According to its executive summary, “the client, Western & Southern Financial Group, provided detailed projections for the costs of construction and operations.” The study’s methodology states, “the hotel’s annual expenditure projections for 2014 were provided by a leading hotel development and management company via the client.”
The study found that building a hotel in the neighborhood would result in an annual economic impact of $11.8 million for 30 years, including $1.5 million in annual tax revenue for the city. MacConnell points out that renovating one of the many properties Western & Southern owns in the neighborhood might also produce such economic benefits.
“We were never contacted to have any input on the report,” MacConnell says, “and if the numbers that were reported are correct, we could stay where we are and they could build a hotel where the Guilford School is, or 400 Broadway, which is their property. Leave us where we are and we would be a renovated building as we want to be.”
The Anna Louise Inn has been in the same historical building since 1909, when the Charles P. Taft family donated the building to Cincinnati Union Bethel and named it after their daughter. Next month the 1st District Court of Appeals will hear arguments in the Anna Louise Inn’s appeal of Judge Norbert Nadel’s May 27 ruling that the Inn is a “special assistance shelter” rather than “transitional housing,” which set in motion the Inn’s attempts to secure zoning approval from the Historical Conservation Board in the first place.