Workflow One: Your “investment”- the poor financing the wealthy

The bankruptcy reorganization of Workflow One story I broke yesterday had my name being uttered with some expletives in the executive offices at the corner of Monument and Patterson. Apparently, releasing the internal memo was bad form on my part.

But, let’s ask the really hard questions about this business. How much have the taxpayers paid to support this corporate entity? And why?

Finding compensation information for executives at Relizon/Workflow One online wasn’t easy. I’m not a financial analyst- but I’m sure someone can. My guess is that the leadership of this house of cards has been making over half a million a year- while asking the people of Dayton to subsidize their taj mahal.

Starting with the first CEO- Rodney Heeden in 1998 as Relizon was still part of Reynolds & Reynolds:

                                  ANNUAL COMPENSATION        LONG-TERM COMPENSATION
                                       -------------------------  ----------------------------
NAME AND                                                             OPTION          LTIP           ALL OTHER
PRINCIPAL POSITION            YEAR     SALARY ($)    BONUS ($)     AWARDS (#)     PAYOUTS ($)   COMPENSATION($)(1)
-------------------------    -------   -----------   -----------  -------------   ------------  -------------------
David R. Holmes                1998      541,025       556,636        322,000        541,025          45,121
---------------
Chairman of the Board,         1997      480,575       277,784        226,640        480,575          43,436
President and Chief            1996      466,575       487,095        439,600        466,575          38,232
Executive Officer

Robert C. Nevin                1998      303,907       310,702         31,000        243,126          45,529
---------------
President, Automotive          1997      295,056       194,674         22,360        236,045          40,716
Division                       1996      286,463       302,985         18,480        229,170          36,977

Rodney A. Hedeen               1998      268,750       198,640         21,000        215,000          11,441
----------------
President, Business            1997      233,600       148,663          5,520        173,493          11,078
Systems Division

EDGAR ONLINE – REYNOLDS & REYNOLDS CO – DEF 14A – 12/28/1998.

that’s $714,831 a year- as they were negotiating with the Port Authority claiming need of taxpayer  help.

Now the funny thing is, depending on who you ask, the Relizon building either cost $18 million or $27 million:

The City of Dayton site says:

Relizon (Workflow One) In the heart of downtown Dayton, the Port Authority built this $27 million office facility in 2001. It is now home to Workflow One, which was formerly known as Relizon. In 2009, legal firm Deloitte announced that they would be moving into the building in 2010. The adjacent parking garage was part of the project and it is also used by season ticket holders for the Dayton Dragons, an affiliate of the Cincinnati Reds baseball team.

via TIF Projects.

Or the DDN had it lower:

DAYTON – As the Relizon Co. begins moving into its $18 million corporate headquarters in downtown Dayton, the local port authority director says he expects more restaurant and office space development to follow.

Last month, Relizon started shifting workers from Kettering to downtown. By April, the company expects to move 500 workers to the new building, which sits at the site of the former Sears, Roebuck Co. department store property at Monument Avenue and Patterson Boulevard.

The move also will pave the way for some location changes for employees of the company’s former parent, Reynolds & Reynolds Co.,

via RELIZON; HEADQUARTERS READY, FILLING – Dayton Daily News | HighBeam Research – FREE trial.

Maybe the newspaper had it lower, by not including the $8+ million that went into site acquisition- that the county paid to the group that bought the old Sears Building for $200K plus a $1.5 million option on the land- the group that included County Administrator Deb Feldman’s husband and father in law.

Moving back to the executives that ran this company into Chapter 11- after Hedeen, came a chap named Greg Mosher. I couldn’t find his compensation- but I did find his political donations: where he had an extra $40k or so lying around to donate to Republicans.

Knowing that this isn’t the finest research and information available- I’m just going to make a generalized statement of what needs to happen: the little guy needs to stop financing the big guys who then buy our politicians off.

So- why don’t we pass a referendum in Ohio banning all tax dollars to private companies- or at least, put the following restrictions in place:

  • Any company that receives a tax break or incentive, must have a firm limit on executive compensation that limits top executives from being paid more than 7 times the lowest paid person or private contractor at that company.
  • Any company that accepts a tax break or incentive, is forbidden to donate to politicians for the period of the incentive or break via their top executives or PACs. Any company or executives that donate more than $250 to any politician in the 2 years previous may NOT be eligible for any tax breaks or incentives. If you have money to donate- you have money to operate without tax payer support.

It’s time to shut down the Port Authority that may be in violation of the State Constitution anyway. I’ve just found this organization, the 1851 Center for Constitutional Law,  that actually takes the time to read the Ohio Constitution and tries to enforce it- as in the case in Gahanna:

Legal Center: Gahanna High-Interest, High-Risk Loan Plan Is Unconstitutional

September 8, 2010 By 1851 Center for Constitutional Law

1851 Center Threatens City Officials with Court Action

Columbus – The 1851 Center for Constitutional Law, a nonpartisan public interest law firm, yesterday notified Gahanna city officials it will file a court action if the city moves forward with a proposed $375,000 high-risk venture capital loan fund. The legal center will pursue the case on behalf of Gahanna taxpayers in the event the city council approves the proposed ordinance.

Gahanna City Council recently proposed an ordinance permitting the mayor to contract with the Economic and Community Development Institute (ECDI) for the creation of a venture capital loan fund. The fund would issue high-interest and interest-only loans to local businesses and individuals considered high-risk by conventional lenders.

1851 Center Executive Director Maurice Thompson advised Gahanna City Council against this constitutionally prohibited plan during Tuesday evening’s council meeting. After Thompson’s presentation, council members decided to postpone a vote on the ordinance by two weeks while they review the consequences of the impending legal challenge.

“Gahanna’s proposed ordinance is crafted to assist purely private interests, while placing public money that rightfully belongs to Gahanna residents and taxpayers very much at risk,” said Thompson. “The Ohio Constitution strictly forbids this type of reckless and irresponsible fiscal policy.”

Specifically, the Ohio Constitution (Section 6, Article VII) prohibits the city from “raising money for or loaning its credit to any private company, corporation or association.” According to Ohio Supreme Court precedent, this constitutional provision is intended to protect taxpayers from the risks associated with the failure of a private project. (Emphasis mine)

via Legal Center: Gahanna High-Interest, High-Risk Loan Plan Is Unconstitutional — Ohio Constitution.org.

It would follow that most real estate development projects are purely speculative, despite the signing of long term leases. Even “Entrepreneurs Centers” are exposing taxpayers to risks associated with the failure of a private project. Unless the money is directed to the provision of public services- those that are available to all citizens, it’s time to end this farce that funds political careers and then in turn results in “crony capitalism” or “corporate welfare.”

Workflow One is just the latest example of government intervention where it has zero business.

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3 Responses

  1. joe_mamma October 1, 2010 / 11:17 am
    Coincidently…GM has resumed its political contributions…  http://blogs.wsj.com/washwire/2010/09/21/gm-resumes-campaign-contributions/
     
     
     
    I would rather see a referendum creating a level tax rate for all companies instead of going the compensation regulation route for tax breaks.  The compensation regs are just arbitrary and a meddling bureaucrat’s wet dream…why 7x?  Why not 8x or 6x?  It’s easier to just level the rate.   
     

    Brilliant or Bozo? Thumb up 0 Thumb down 0

  2. truddick October 1, 2010 / 4:38 pm
    Agreement here.  I’ve long advocated that we need a national constitutional amendment that mandates that no legislature at any level may levy a special tax or exemption for individuals or corporations (with, of course, provisions for the government to negotiate repayment terms with those who owe back taxes).
    Until all governments are held to this fairness standard, we will suffer from municipalities and states thinking that they must extend sweetheart tax deals in order to be competitive with one another.
    Added benefit: municipalities and states will then have to compete using education, workforce, infrastructure, and culture–things that benefit all citizens and not just one company at a time.

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  3. Rodney Hedeen March 31, 2011 / 11:27 am
    Is down town Dayton better or worse with the Relizon(Workflow One) building and parking garage?  You decide because getting a company to move downtown in 2000 was a real leap of faith.

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