The news that the state auditor would place East Cleveland in receivership “hit us all like a lightning bolt,” the city’s law director said Tuesday.
Now this suburb in fiscal emergency is thinking about striking back in court. East Cleveland might sue to stop a court-appointed receiver from taking over city spending decisions.
City leaders and residents debated the prospect of a lawsuit at a City Council meeting Tuesday night. Council could meet again as soon as Monday to make a decision on suing.
The moment marked a major decision point for a city buffeted by financial troubles and steep population decline for decades. Should East Cleveland give itself up to a takeover of its finances, or should it put up a fight?
Mayor Lateek Shabazz and his staff made their case for suing quickly to defend the city’s home rule authority. East Cleveland was being used as a “guinea pig” for a new state law giving the city’s power to “some guy in Columbus” — a situation one staffer likened to having a “dictator.”
Shabazz asked council to stand together with him in in fight.
“Our children are watching us,” he said. “We have to show our children you don’t take a beatdown. Nobody — you’re just as smart as anybody who walks this planet.”
Auditor Keith Faber said this week that it was time for local and state leaders to stop kicking the can down the road. He has asked Attorney General Dave Yost to file a motion with the Ohio Court of Claims to place East Cleveland in receivership.
A receiver would be charged with guiding the city out of fiscal emergency. The appointee would be able to make decisions about the city’s spending, revenue and staffing.
Shabazz’s opponent in the Nov. 4 mayoral election, Sandra Morgan, said a lawsuit would be a “waste of money and time.” She argued that the mayor and City Council would still have say-so under a receiver, even if they lose some power.
Morgan served as interim mayor this year after the indictment of Mayor Brandon King and before a court ruled the job belonged to then-Council President Shabazz. She said that receivership could help the city clean up its finances.
“It’s a mess, and I think that the state auditor is going to be helpful in clearing things up,” she said in an interview, “allowing us to move on with the business of the city.”
Residents were split on whether receivership was in East Cleveland’s best interests. Some viewed it as an unwelcome takeover of an independent city. Others saw it as a chance to begin again after years of political and financial turmoil.
“This is the end of the East Cleveland government as we know it,” one resident, Che Gadison, told Signal Cleveland.
At Tuesday’s council meeting, Gadison sat a seat away from Linda Sanders, who took the opposite side of the argument.
“Receivership is a good thing,” Sanders said in an interview, “because you need to start all over here.”
A time of change for East Cleveland
East Cleveland has taken many knocks over the decades. The state placed it in fiscal emergency in 1988. The population has shrunk by more than half since then. The city climbed out of emergency status in 2006, only to drop into it again in 2012.
Along the way, the city lost the Cleveland Clinic’s Huron Hospital, a major employer. Tens of millions of dollars in legal judgements piled up, including for police misconduct.
Now the county land bank is assembling vacant property for new development. The project is not far from Cleveland’s University Circle neighborhood, the bustling home of hospitals, museums and Case Western Reserve University.
Gadison linked receivership with that new development, which she views warily. With a receiver, the state could help with “delivering the city over” to University Circle’s expansion, she said.
“East Cleveland has been a victim of purposeful neglect for the sole purpose of driving the city down,” she said.
She saw signs of neglect on Euclid Avenue, just at the end of her street. There, weeds are growing out of the curbs and choking stormwater drains, even as homeowners are charged sewer maintenance fees.
Sanders grew up in East Cleveland and moved back home to take care of her ailing mother. She has her own infrastructure complaints about pockmarked streets and broken fire hydrants. She also expressed some unease with what she saw as gentrification in East Cleveland.
But she said that receivership sounds like a good idea for the city. In Sanders’ view, the city’s leaders “are not making good decisions.” Now, “they really don’t have an option” besides receivership, she said.
That doesn’t mean she’s happy about it.
“But I hate that they have to do that,” Sanders said. “I hate that we have to go through that.”
