How Brooklyn tried to keep American Greetings

"I think we gave them as much as we could as a small city," Mayor Richard Balbier said of Brooklyn's blue-collar roots.

Image may be NSFW.
Clik here to view.View full sizeLisa DeJong, The Plain DealerThe Brooklyn city seal hangs on the wall in city council chambers. The city has been both praised and blasted for American Greetings' decision to leave for Westlake.

BROOKLYN, Ohio -- The city's attempt to keep American Greetings Corp. from leaving town included up to $10 million in incentives -- money to help the company renovate its aging headquarters, reduce its taxes and ease its traffic headaches.

Of the five cities American Greetings considered for its new headquarters, only Brooklyn presented a formal offer (pdf), an effort to keep its largest employer.

City officials thought their chances were good until American Greetings announced on May 20 that it would move to Westlake by 2014.

The decision was devastating to Brooklyn, which depends on the Fortune 1000 company and its $157 million payroll for 13 percent of its annual budget.

In recent weeks, facing criticism from some residents about how much the city tried to keep them, Brooklyn officials agreed to discuss what went on behind the scene, including details of their financial offer to American Greetings. That package came on top of state incentives of up to $93.5 million over 15 years.

"I think we gave them as much as we could as a small city," Mayor Richard Balbier said of Brooklyn's blue-collar roots.

American Greetings had little response.

"The decision to move to Westlake was made by an independent committee of the board of directors of American Greetings with an eye focused on what is best for American Greetings, period," spokeswoman Patrice Sadd said.

Nevertheless, the decision has intensified concerns about cities luring employers from one part of the region to another. Cuyahoga County Executive Ed FitzGerald last week introduced an anti-poaching policy designed to prevent cities from going after one another's employers.

Westlake Mayor Dennis Clough said Friday that no one tried to "poach" from Brooklyn.

"The company apparently targeted certain cities where it was interested in relocating to" and invited them to make offers, Clough said.

Westlake's only written offer (pdf) came the day city officials learned American Greetings was coming. That letter, dated May 19, offered $11 million worth of infrastructure improvements as well as help with financing, tax-exempt loans and grants.

American Greetings' decision came after 1½ years of uncertainty.

The company first announced it was looking for a new home on Jan. 6, 2010, and Brooklyn officials reached out to the company immediately. They said they weren't invited to the company's offices until a month later.

Brooklyn knew that American Greetings was facing structural issues with its 53-year-old building. So the city's formal offer included at least $650,000 a year over 10 years to help the company repair and modernize its aging headquarters and parking facilities at One American Road.

The City Council also created a community reinvestment zone specifically for American Greetings that chopped 75 percent off real estate taxes for 12 years on all new construction.

It also offered to get the company a $1 million forgivable loan from the Cuyahoga County Department of Development, as well as help it borrow low-interest industrial development revenue bonds.

The city's income tax was a more complicated matter.

Image may be NSFW.
Clik here to view.View full sizeLisa DeJong, The PDBrooklyn Mayor Richard Balbier

Balbier said that shortly after becoming mayor, he offered to ask voters to reverse a 2009 vote to increase the income tax to 2.5 percent from 2.0 percent. He and City Council President Kathleen Pucci told the company they were confident "the tax reduction would be overwhelmingly approved" if the company would stay.

Balbier said Weiss not only refused, he asked the city to cut its rate to 1.5 percent and give back the taxes it had already collected.

Balbier, facing the prospect of laying off city employees to cut costs, said there was no way he could give back tax money. "You just can't take the taxpayers' money and give it to a company," he said.

Some residents think the 2009 tax hike drove the company away. They want the city to let voters knock it back down to 2.0 percent, but Balbier said there are no plans to put it on the ballot in November.

American Greetings itself has said the tax was only one of several factors it considered, along with the costs of updating its facilities vs. building new, the need to recruit and retain creative employees and the changing greeting card industry.

Instead, Brooklyn offered to create a Job Retention Tax Credit similar to what the company later got from the Ohio Department of Development. It would eliminate the company's taxes on its profits for the next 15 years. The city also proposed a Job Creation Tax Credit if the company created new jobs in Brooklyn.

Brooklyn also created an exemption to its tax code for executives who exercise stock options, which took effect July 1, 2010.

State Rep. Tim DeGeeter, whose district includes Brooklyn, said that after hearing how the city offered to reverse the income tax vote, "I believe Mayor Balbier did everything he could to keep American Greetings there."

To reduce the company's property tax bill, Brooklyn not only offered to buy a vacant 26-acre parcel at the south end of the company's property, it also offered to build the company an underpass to Interstate 480, so it wouldn't have to deal with congestion on Tiedeman Road.

That property is twice the size of the site American Greetings is buying for its new 700,000-square-foot headquarters south of Crocker Park in Westlake.

"You could move 200 yards over with all your people and go into a new building," Balbier told the company. "I thought that was a good deal, but they just weren't interested."

Brooklyn also considered buying land where the company has a walking track, the site of the former Memphis Drive-In. The city estimated that would save the company more than $890,000 over 15 years.

In all, the city's offer -- made in July 2010 -- was worth $6.5 million to $10 million over 15 years, said Economic Development Director Fran Migliorino. But American Greetings never responded, Balbier said.

The company continued to consider sites in Ohio and Illinois before announcing March 7 that it would remain in Northeast Ohio. Besides Brooklyn, the company considered Beachwood, Brecksville, Independence and Westlake.

"I'd call them every couple weeks, and the response was always: 'You're still in the mix, mayor. We'll get back to you,' " Balbier said.

Image may be NSFW.
Clik here to view.View full sizePlain Dealer fileAmerican Greetings headquarters in Brooklyn, Ohio.

On May 19, Chief Executive Zev Weiss called and said the company had selected Westlake for its headquarters.

Balbier and Brooklyn officials were left to wonder why their offer was rejected.

"We were always told that we were going to have a final opportunity to come in and maybe make a deal," Finance Director Dennis Kennedy said.

Vince Adamus, president of Metro Development Agents in Highland Heights, was economic development director in Beachwood as American Greetings considered sites.

He said Brooklyn went the extra mile to keep the company.

"I really don't think they can be faulted for losing American Greetings," he said.

Balbier said the city hasn't decided whether to keep the name American Way on the road leading into the company's property after it leaves.

"Let's put it this way," he said. "I've gotten several suggestions from residents on what to rename it."