This is Chapter 9 of my memoir: “The Imperfect Logic of the Heart.” The book is available on Amazon. I am reprinting it here chapter by chapter.
The U.S. Congress passed the Tax Reform Act of 1986 (TRA) (Pub.L. 99–514, 100 Stat. 2085, enacted October 22, 1986) to simplify the income tax code, broaden the tax base and eliminate many tax shelters. Referred to as the second of the two “Reagan tax cuts” (the Kemp-Roth Tax Cut of 1981 being the first), the bill was also officially sponsored by Democrats, Richard Gephardt of Missouri in the House of Representatives and Bill Bradley of New Jersey in the Senate.
By enacting 26 U.S.C. § 469 (relating to limitations on deductions for passive activity losses and limitations on passive activity credits) to remove many tax shelters, especially for real estate investments, the Act significantly decreased the value of many such investments which had been held more for their tax-advantaged status than for their inherent profitability. This may have contributed to the end of the real estate boom of the early-to-mid 1980s as well as to the savings and loan crisis.
After the Tax Reform Act of 1986 passed, I was out of business. Although I knew the law was coming, I managed to ignore the inevitable for a joyous year before it passed and instead concentrate on reintroducing myself to Cleveland. Soon I would be like the kid who was typing his answers to the bar exam when his ribbon broke. I would just sit there forgetting I had a pen.
I had let other friends live in my townhouse rent free for the last six months after my restaurant friend got his own place. They had not treated it well. Temporarily (as you will learn) I had a pile of money for something different in my housing options. Something big enough for my kids and their friends to visit.
I went house hunting with a real estate broker but found that most of the houses looked basically the same. I wanted something contemporary but nothing I saw excited me. When I was a young lawyer in a world of the lawyer uniform, button-down shirt, wingtips, Brooks Brothers three-button suit, the only way I could assert any independence was to dress differently. I discovered in Toronto, Canada a new approach to style, a place where men wore double- breasted suits and tie shoes that didn’t look like you were going on a 10 day forced march for the army. I co-opted the Canadian style for myself, including a briefcase with a shoulder strap. And I wasn’t gay.
I wanted a house that also reflected my sense of style and quickly realized my only option was to work with a blank slate I could remake. I finally found it in a suburb close to Chagrin Falls and the adjacent parks I admired. It was hidden in the woods on a three-acre lot. An old “A” frame. I loved it on sight but the problem was it was a wreck. I believe it started its life as a hunting lodge years before the suburb of Moreland Hills had single family homes and had been largely neglected since.
It had a natural septic system and a nearby creek and a rotting porch that surrounded the elevated house. This was not a house that a bank would take kindly to so I knew it would be a tough sell for the owner and that I would be able to get a great price by paying all cash. I intended to get a mortgage after I fixed it up.
I knew what I wanted it to look like but I didn’t know any of the trades that could make my vision a reality. Betsy was friends with a decorator who had a look that wasn’t mine. My grandmother would have used her Yiddish to described his look as ungapatchka. (Urban dictionary definition: “overly ornate, busy, ridiculously over-decorated, and garnished to the point of distaste).” But he knew the trades and was a ton of fun. Old ladies hired him for the constant party he offered as well as his limited decorating palate.
Paul liked me, which helped me persuade him to sign on. He was a gay man and we had mutual gay friends. I made a deal with him. I told him upfront that his style and mine were completely at odds.
“Beautiful, Paul, just not my kind of beautiful.”
I needed him to coordinate the work on my house. He could charge his normal markup on labor and materials. I wasn’t trying to beat him out of his fees, just compromise his ego. It had to be a “home by Richard home,” not Paul. He agreed, convinced that I would give him full rein once he started. I didn’t. He fought me the first day and then never again. I wanted the brick fireplace painted while. He said that was a horrible mistake. We fought and I reminded him again of our deal and then that was it. He complied and was a great help.
A retired shop teacher from Heights High School built the furniture in the master bedroom, which was upstairs where the loft overlooked the main room. The dresser and bed were fixed permanently into the walls. The fabric on the walls and blinds allowed the room to black out even in bright sunlight. All the lighting in the house was converted to halogen. The kitchen was torn apart and wooden cabinets were installed with modern appliances, Subzero refrigerator and a trash compactor. The high lofted ceiling was painted white and the floors sanded and pickled. The Israeli deck builders tore down the old deck that surrounded the home and rebuilt it in a few days with a choreographic display worthy of an old Hollywood movie.
I had a sauna built from scratch this time. The master sauna maker did not speak English but smiled a lot. The sauna in my townhouse never got hot enough so we used a larger heater. Anodized aluminum railings were installed around the stairways and deck.
Some of my favorite pieces of furniture in the house were acquired from the manager of the Cleveland Higbee store. The store was closing and I found some fabulous antique pieces in a Laura Ashley display. I asked the manager what would happen to the furniture when the store closed. He didn’t know or care but if I wanted to buy it, all I had to do was make him an offer. I did. All cash and it was mine. I bought my couches in New York from Ligne Roset with Paul’s decorator card and discount and had them shipped. I bought Paul’s beautiful wooden dining room table to be used instead for my office desk downstairs in the room with the sauna. The other bedroom was more traditional and became my son Steven’s room.
During the home rebuilding I had an unexpected house guest. But that is an entirely different story.
Lisa called from California to ask how everything was going on my return to Cleveland.
“How are the kids?”
It was a perfectly delightful conversation. I thought: Congratulations Richard, you ended a relationship successfully. You were still friends. But there was more.
“I have a few weeks’ vacation due and wondered if you would mind a visitor for a few days.”
Actually, I welcomed a “visit” since I had just distanced myself from a relationship that I suspected was becoming dangerous. I had been in an intense sexual relationship with a waitress who was morphing it into something more. I was not a welcome participant and it was becoming ugly. She was actually stalking me. Lisa would be a good buffer. And my kids would enjoy seeing her.
What I didn’t know was that Lisa was not flying up as I had assumed but driving from California to Cleveland in her Ford Fiesta with most of her earthly possessions. I learned of this for the first time in a frantic phone call from Albuquerque, New Mexico. Lisa’s car had become ill and she was stranded. Of course without considering all the consequences I told her to get a hotel room and await further instructions.
My next phone call to her told her the time I would arrive in New Mexico. I flew there, had her car fixed, (a one-day job,) and then stuffed myself into her little beast and drove Lisa and her things to Cleveland. Why didn’t I drive her back to California? I don’t know except it seemed like a step backward at the time and against the forward momentum of my life. Codependency seeking?
Lisa and I stayed in the new house during the renovations and while I was at work in my new office, she made it clear to everyone who would listen that this was her new house and that if there were questions about anything they should be directed to her. From the first day Lisa arrived, I plotted ways to get her to go home, but I learned she had quit her job and once again I felt stuck. Lisa’s father called the house. I said Lisa was sleeping let me wake her. He said: “No, don’t do that. Just tell her her mother died.”
I thought this was incredibly callous. I learned later that her mother in her final days of alcoholism had checked into a hotel and drank herself to death. The entire mother, daughter, father alcoholism thing seemed so foreign to me. Who could of guessed I would understand this so much better in just a few years.
Months later I would pay for Lisa to move out into an apartment I found for her. She found a real estate job working for another friend and ultimately I helped find her a husband.
We both worked out at the same health club. There was a guy there that I knew had his eye on Lisa. I let him know Lisa and I were just friends (I didn’t add, friends with benefits). Ultimately they would become “a thing” and get married. I was not invited to the wedding. I have never heard from or seen Lisa since.
What I did notice was that my pile of money was shrinking quickly. Concord’s deals were over. They had moved on as a new public deal that I learned about at a sales meeting. They did not include me. Basically they were moving in another direction and I wasn’t invited. I did have one last play with them.
They had over 300 K mart freestanding shopping centers that had only one tenant and no opportunity for increased income beyond K Mart’s rent. The Concord boys knew about a tax structure but really had no idea about managing real estate. They had not even done a proper lease analysis of the centers.
In one week of 14-hour days in New York, I revamped their management department, reviewed all the leases, refined their budget, saved them a fortune, and introduced the parking lot kiosk idea which added a new stream of income to all the centers. You have seen the coffee and photo stores in parking lots. They had not.
That week cost them my income tax bill, which they happily paid. I had made them a new fortune but my Concord career was now officially over.
So that helped my bank account but then there was my father’s disaster, Larry’s divorce, and a nasty lawsuit.
In 1977 Williamson, West Virginia suffered the Great Flood. The Tug River, which separated downtown Williamson between two states West Virginia and Kentucky, reached levels that covered houses and most of downtown. Damage was over $200 million and over 2000 people were left homeless. Flood insurance was impossible to get then and most businesses lost everything. Few reopened. The Schwachter building, which housed my dad’s clothing store, the business he had inherited from his father and owned solely after buying out his sisters, completely flooded. My dad had already moved to Florida and my parents were running the business long distance. My dad flew to Cleveland and I went to Williamson with my dad as soon as the National Guard soldiers would let us in. When we arrived the waters had receded but everything, all the inventory had been soaked in the flood waters and there was structural damage to the building. I rented a truck and loaded it up with all the inventory, and drove the truck to Cincinnati, and had it all laundered at a coin-operated laundry. The clothes were all ruined from a commercial standpoint but clean and wearable. I drove back to Williamson with the cargo and my dad and I gave them free to families in need.
After four days of doing what we could we left. I had a new passenger to deliver to my mom. A three-week-old poodle puppy that had been promised out to a family that could no longer handle a new mouth to feed. The new arrival rode home with us. My mom happily took the dog.
Strip mining had helped speed the waters that stoked the flood. If you cut down the trees the water runs more swiftly off the mountains. Today the Corps of Engineers has protected the town with retaining walls. Back then the only relief was the SBA’s government loan guarantees to reopen businesses. My dad was determined to reopen and got a loan. Years later I would learn that he had personally guaranteed his loan. The store reopened but never regained its former glory and closed. My dad would have been fine if he had just sold the building, paid off the loan balance, and walked off with the difference.
But when I returned to Cleveland from California he was excited about plans to convert the building into a bed and breakfast. Larry, who was now living in West Virginia and had been managing the store, and blamed unfairly for its loss of business, would supervise the reconstruction. No one was dumb enough to loan my dad the money except for his ego inflated son Richard. It took my dad exactly nine months to lose my entire college fund for both kids. Eventually I was able to sell the building “as is” to recover some of the loss, but so much for the now empty college fund.
I fared better with Larry’s divorce. That only cost me $10,000 but years later when Larry died it cost me a six-month court battle over an insurance policy.
While I was in shock over the end of my tax shelter career, cocaine became a prominent part of my friends’ daily entertainment. And part of mine. Cleveland was discovering the powder about the same time that California had grown tired of it. Paul had huge quantities that he wanted to hide from his boyfriend so he kept it in the crawl space in my bedroom behind the dresser drawers. Cocaine hurt my nose and dried out my eyes. Its only value to me was another ego fulfillment device. I had it for my friends and my friends liked to come over and play. My spirit was riding on empty.
I thought resuming a legal career might be an option so I became “Of Counsel” in a law firm downtown in the Terminal Tower, which was undergoing renovation. I would have to build a practice from scratch and after six months I hated the trip downtown and thought there must be other alternatives. Next stop was a guy who specialized in government housing, who proved to have an ego even greater than mine at the time. It couldn’t work. That lasted three weeks. Another friend in the financial planning business wanted me and at his urging I actually became a Series 7 broker and got an insurance license. But we butted heads and I lasted a few more weeks there than at my previous effort.
I sold my townhouse, which I had rented out after my new house was built, and so I had a few more dollars in my stash to figure out my life. But I was adrift and had no woman in my life and little direction except for my new increased involvement with my kids. I was learning how to be a father. But unsettled and lonely-when along came Tamma.