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Name behind Pasco's new mall evokes respect

Peers say Richard Jacobs stands for quality.

By CHUIN-WEI YAP
Published June 3, 2007

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CLEVELAND -- From his 30th floor penthouse, Richard E. Jacobs looks down on the skyline he helped transform.

It's no longer the Cleveland that, in 1978, became the first U.S. city to default on its debts since the Great Depression. Or the one whose oily river caught fire in 1969 and became a national joke.

Today, tourists flock to the Rock and Roll Hall of Fame and Museum. Cleveland's downtown is marked by buoyant occupancy rates. Its top locations bear the Jacobs touch.

He developed the tallest building, 57-story Key Tower. He built and named nearby Jacobs Field, home to a baseball team he returned to respectability.

Like his city, Jacobs has come a long way. As a kid in the Depression, he made soup by pouring hot water into empty peanut butter jars. Now, at 81, the dealmaker is winding down a career that has built an empire of more than $3-billion and won even his rivals' respect.

But what could be his last big project promises to change the face of Pasco County, Florida -- more than 1,000 miles from his penthouse.

The Richard E. Jacobs Group now has all the permits it needs to turn 100 acres of cow pastures into more than a million square feet of stores, cinemas and restaurants.

Other notable mall developers wanted a crack at prime real estate just off Interstate 75 and State Road 56, less than a mile north of the Hillsborough County line. Jacobs won.

"We looked at his past projects," said landowner Robert Sierra. "It was his reputation for quality that swung the deal."

Pasco's policymakers hunger for the mall's estimated 4,000 jobs and $9-million in yearly tax revenue. But not everyone is happy.

Environmentalists vow to sue. They argue the development risks polluting Hillsborough County's water supply. They say Jacobs hasn't done enough to protect wetlands. They fear traffic gridlock.

Which brings us to this oddity: Central Pasco is Commuterville. People typically head south to Tampa for jobs and recreation.

Now, for better or worse, Cypress Creek Town Center promises to reverse that flow.

Private first class

Jacobs has built more than 40 malls in 15 states.

You're not likely to hear him talk about them. Jacobs rarely grants interviews. He wouldn't sit down with a reporter for this story.

"I doubt people would say, 'Oh, there's Dick Jacobs,' if he walked across Cleveland's Public Square," said George Knepper, a retired history professor and one of Jacobs' high school classmates.

Before he built malls and offices, Jacobs was an Akron native whose first job, at 13, was peeling potatoes and taking orders at Swenson's drive-in restaurant.

As the Great Depression laid off a third of Cleveland's oil and steel workers, friends say, the family got by mostly on the wages of Jacobs' father, Goodyear Rubber and Tire Co.'s manager of government sales. Richard and his brother David chipped in with odd jobs.

"They were comfortable, but Dick and Dave made their own money," said Oscar Hunsicker, now 84, an Akron lawyer and one of David Jacobs' best friends.

The brothers were close, though their relationship was not always equal. They became partners in development after graduating from Indiana University's real estate school, but Richard was the more public voice of an otherwise quiet pair.

As joint owners of the Cleveland Indians, David held 25 percent of the team while Richard held 75.

But friends and associates say they made most decisions together.

Knepper said he's surprised Richard Jacobs turned out to be so focused and successful.

In high school, Jacobs was known more for his sense of humor, not his drive.

In the 1943 yearbook at Akron's Buchtel High School, he was voted wittiest in class. His pet peeve was "anything that requires mental exercise."

With World War II looming, Jacobs quipped that his ambition was to go from "private to private first class in one year."

He ended up a lieutenant, briefly stationed in the Philippines and Japan.

Win some ...

The business started small, 53 years ago.

After a stint with the now-defunct S.D. Stanson development firm in Akron, Jacobs went into partnership with his brother. They began with small strip malls.

"He just went up the ladder without being noticed," said Al Spalding, 78, a former broker at Stanson.

Anonymity ended in 1986.

That year, the brothers bought the Cleveland Indians, then struggling and rudderless, from the estate of trucking tycoon F.J. "Steve" O'Neill.

By the time Jacobs sold the team for $323-million -- a 700 percent profit -- in 1999, the Tribe held the record for the most sellout games in major-league history.

The turnaround mirrored Cleveland's.

His Galleria at Erieview, an upscale mall, opened in 1987 and was the first major retail venture in downtown Cleveland since the 1920s. Key Tower's opening in 1991 ushered a decade of downtown revitalization.

"Dick put a lot of money and effort into downtown Cleveland, when hardly anyone else was doing that in those days," Knepper said.

Over the years, Jacobs earned a reputation for quality, which helped him swing the deal for Cypress Creek Town Center.

The Sierra family had penciled in mall titan Edward DeBartolo as its choice to build the center.

But DeBartolo was reinventing his company at the time, and patriarch Robert Sierra said the family sought a replacement.

By fall 2003, Glimcher Realty Trust and the Simon Group were off the shortlist. It was down to the Westfield Group or Jacobs. Sierra said he leaned initially toward Westfield, because the corporation ran malls in Brandon and Citrus Park.

"But they didn't build malls - they just bought and ran them," Sierra said.

Won over by Jacobs' track record, the Sierras picked the Cleveland crew.

Sierra remembers what his old friend DeBartolo said when he told him the news.

"Bobby," DeBartolo said. "We've worked with Dick Jacobs before. You'll enjoy your relationship with him."

The small world of mall developers is rife with rivalries, and Sierra would remember DeBartolo's praise for a competitor.

... Lose some

Critics say Jacobs' successes came at Cleveland's expense.

Look at the $110-million tax abatement he got for Key Tower, said Roldo Bartimole, who runs Cleveland's anti-establishment newsletter, Point of View.

For all its revitalization, poverty and homelessness are still powerful undertows in the city. Cleveland topped the U.S. Census Bureau's ranking of poorest big cities in 2004 and 2006. It rated among the best cities for business meetings, but the poverty rate is twice the national norm.

One could argue this is none of Jacobs' business, but it might explain the resentment some felt for his tax breaks.

"The abatement is much too generous," said Bartimole. "Even if you want the tax abatement, at least give something to the city later."

Jacobs, who divorced in 1983, has had his share of bumps.

In 1999, he tried to derail a proposed tax in Columbus, Ohio, that would have indirectly benefited a new mall being built by his rival, Herbert Glimcher, and endangered one of Jacobs' malls in the area.

He bankrolled a campaign claiming the tax revenue -- a variation of Florida's impact fees -- would personally benefit Glimcher. In fact, the revenue would be part of public road building funds.

Jacobs lost the vote, and the committee he backed was fined $10,000 by the Franklin County prosecutor for misinformation.

Piecing his life together through dozens of published articles, a picture emerges of a mostly affable man whose sense of humor sometimes landed him in trouble.

In 1999, controversy swirled in Cleveland as Michael White, the black mayor, failed to block a 40-member Ku Klux Klan rally at the downtown Justice Center.

Jacobs was not a fan of White. He was a political ally of White's rival, former City Council chairman George Forbes. In a moment of ill-advised flippancy, Jacobs decided to amuse guests on his private jet by putting on a white hood and brandishing a sign that read, "Which Way To the Justice Center?" When news got out, the joke fell flat.

Jacobs was so prominent in city development that the Cleveland Plain Dealer got heat for reporting the incident 18 days after it happened even though its editorial page editor was on the plane at the time. Jacobs' antics came to light only after an anonymous letter was sent to Plain Dealer editor Doug Clifton.

"Jacobs went beyond bad taste," Steven Litt, the Cleveland Plain Dealer's architecture critic, would later write.

Jacobs' malls are also not immune to capricious markets.

The Galleria at Erieview is a reminder that business fortunes can shift swiftly. It opened as the glitziest kid on the block, but occupancy rates fell in later years, and it was nearly closed when a new buyer took over from Jacobs in 2003. Today, the mall is anchored by a bank, not a high-end retailer.

Some losses are personal.

In 1992, David Jacobs died of pneumonia. He was 71.

In his eulogy, Richard would recall how they made peanut butter soup during the lean years, said Bob DiBiasio, spokesman for the Cleveland Indians.

Twelve years after their father's death, David's children sued Richard Jacobs for allegedly mismanaging the family trusts. They later dropped the lawsuit, though the rift remains.

Last month, Jacobs countersued, demanding to be paid for his work as their trustee.

'It's their day'

The Cypress Creek project seems to contradict Jacobs' business strategy. In 2000, he began a massive selloff to prepare his estate. CBL & Associates bought 21 of his properties for $1.2-billion. Another 11 went to the Westfield Group.

The Jacobs Group shrank. It now employs about a tenth of a workforce that used to number more than 1, 000.

By leasable space, the Jacobs Group was the fifth-largest mall owner in the nation in 1999. Today, it has fallen off the mall magazine Retail Traffic's annual ranking of top 100 mall owners by gross leasable area.

Who will succeed him at the company?

"We've had a succession plan in place for a few years now," said Bill Fullington, the company's spokesman.

He said he can't disclose the designated successor but said it would be from within the company.

But no one should mistake winding down with losing steam. Associates say Jacobs' big selloff essentially exchanged his mall interests for cash, stock and seats on the boards of the trusts that bought his properties. The Jacobs Group is still opening malls, including the new Gulf Coast Town Center in Fort Myers.

When Jacobs does pass the baton, don't expect a lot of fanfare -- at least if that day in November 1999 is any indication.

The scene: Jacobs Field. Jacobs had just sold the team to Cleveland lawyer Larry Dolan. Reporters swarmed the stadium.

Terry Pluto, an Akron sportswriter, hurried in for the press conference, when he ran into Jacobs walking out, alone and otherwise unrecognized.

He told Pluto he had had fun with the team. He complimented the Dolans. He had left them to deal with the press.

"It's their day," Pluto recalled Jacobs saying.

"It's over."

Jacobs turned and walked away.

He looked like any other businessman, gray-haired and slightly stooped, unnoticed in the crowd.

It was time to build something else.

Times staff researcher Carolyn Edds contributed to this report, which used information from the Cleveland Plain Dealer and the Akron Beacon Journal.

[Last modified June 3, 2007, 06:51:59]