Cleveland Got the Short End of the Med Mart Deal

Who got screwed on the Med Mart deal? Well, you did as taxpayer, definitely. However, so did the city despite the $20 million deal for its properties -- 18.5 acres of prime downtown land.

The $20-million was hailed as a victory for Mayor Frank Jackson. I'll bet this $20-million shot in the city's fiscal arm will be used up in a year or two by the Jackson administration.

Perfect example. Ralph Perk sold the city’s sewer system for $32 million back in the 1970s and used up the money in a couple of years. He did the same thing when he sold the Cleveland Transit System to its present regional system (RTA).

Mayors, always short of revenue, spend any revenue infusion quickly and often to keep patronage going. One-time infusions of money make for bad policy decisions. The money gets spent fast and usually not wisely.

Wouldn’t it have been better if Mayor Jackson insisted on a deal that kept revenue coming to the city year after year?

Why didn’t he offer to lease the property to the County? Of course, that might have cost the County Commissioner’s choice to run the new development some money.

There’s not much thinking that goes on at City Hall. It’s typical of administrations to take a quick revenue fix. That’s what the Jackson Administration did. He’ll grab the money and run. But it won’t go very far.

“I think the mayor was a tough bargainer,” Tim Hagan told Erick Trickey of Cleveland Magazine. “He did have something of value to the project: that is Public Hall.”

Only Public Hall had value? That’s laughable.

Hagan, of course, had reason to pat Jackson on the back. Hagan got what he wanted.

Hagan has been steering this disaster from the beginning. He forced the one-quarter percent increase in County sales taxes without public input or vote. (You can see past postings here that go into how stinking this deal really is and who profits from it.)

“Today, the public makes an investment in the future of this city, county and the region,” happy Hagan said at the City Hall announcement with Jackson. Of course, the region isn’t paying a penny in this some $1 billion (with interest) deal.

The PD reported: “Jackson said the transaction is a big step toward a grand regional project to capitalize on Cleveland’s global medical prominence. Once again, regional project paid for by Cuyahoga County taxpayers alone. What else would he say? He made the deal.

The $20 million has some big holes in it for the city. As the letter of agreement by the county to the city notes the city will lose property taxes and parking meter revenue. No cost figures are given for these losses. It’s not convenient to be too open.

One big cost to the city may be its school system. It has to make the schools whole, supposedly.

The city is responsible to make the Cleveland schools whole on property taxes. In other words, the city would be responsible alone – the County has no responsibility - to make up the property tax revenue lost by the city’s schools.

This signals Hagan’s intention of providing a tax haven for MMPI, a private business.

The school system actually would lose the most revenue as it gets some 60 percent of the property taxes on private land. The County and City also lose revenue. The deal says, “The city would be responsible for making up any property tax shortfall, if any, to the City of Cleveland School District as a result of the purchase of the property from private land owners on St. Clair Avenue.”

It gets worse.

“The City agrees to support the County as it seeks tax abatement for the entire Convention Center complex before ANY PUBLIC BODY or regulatory authority, including the GENERAL ASSEMBLY of the State of Ohio (my emphasis added).

What that suggests to me is that Tim Hagan and Mayor Jackson will go to the state legislature to not only have the project tax abated but TAX EXEMPTED. It will NEVER EVER pay property taxes in that case.

Hagan and former Mayor Michael White did the exact same thing for then Jacobs Field and Gund Arena. They flew down to Columbus in a private corporate jet and lobbied successfully for a full tax exemption. Now any sport facility constructed in the state by a government entity pays no taxes. This scheme has cost the Cleveland schools tens of millions of dollars in property taxes since.

So it isn’t abatement. It’s exemption. They never pay a penny of property taxes on the buildings EVER.

This means not only the convention center but the medical mart, a private business of MMPI (Merchandise Mart Properties, Inc.), will not pay property taxes on its business operations. Thank you, generous Tim Hagan, the man who has given away more tax revenue than any politician in Cuyahoga County’s history.

Hagan, known as Tax’n Tim, is also king of tax give-aways.

I think another strange part of the agreement states, “The County urges the City to apply $2.5 million of the purchase price to the restoration of Perk Park in downtown Cleveland.” The park was developed in the early 1970s by Ralph Perk. It sits behind the Ohio Savings Building, built by the Carney family. The irony, of course, Hagan married into the Carney family, which became his political birthright in Cuyahoga County.

The deal also calls for the $20 million to provide for the city’s need to relocate employees now house in the Convention Center. They include the Dept. of Parks, Recreation and Properties, the Division of Parking Facilities, City Cable operations, its Photo Lab and the Dept. of Consumer Affairs.

How much will that cost to relocate these departments?

No price tag is put on the cost to move and house of these significant city resources that now reside in the city’s facility. They must move. The move will cost and the new digs will cost this year, next and so on.

It does say that the “cost of relocating these employees and their equipment in significant.” What it doesn’t do is give a price, which will be ongoing. The city, of course, assumes this burden.

The agreement also calls for the County or MMPI to hire “at least” 10 of the city’s full-time Convention Center employees. However, the city has 27 full-time employees so that suggests some of that $20 million might be going to pay the wages somewhere of up to 17 full-time city employees. Again this could be an ongoing cost, not just a one-year cost.

No mention, of course, about paying these employees who now enjoy city pay scales and benefits.

The city also has a list of some 100 part-time employees at the Convention Center. Depending upon the size of the event, the city employs 20 to 30 extra people at events. No mention of what happens to them.

There is no mention of paying the city for events that are already scheduled at the Convention Center. The center has 43 schedule events for 2010, some as small at 10 but others in the 3,000 to 4,000 attendee range.

All in all, that $20 million now looks skimpy for 882,270 square feet of space (443,040 square feet at Public Auditorium and 451,130 at the current convention center, including the grand ballroom).

Anyone want to buy a bridge? See Tim Hagan.

More Cutbacks in Plain Dealer Editorial Staff

It looks as though the Plain Dealer will suffer more editorial cutbacks soon as management looks for ways to cut costs.

The talk is as many as 22 more people will be let go.

The task is to cut 12 percent from the editorial budget, I’m told, with a May 15 deadline to allow for notice for action by June 1.

Pay cuts and furloughs are mentioned as possible alternatives but the likelihood is that more staff will be cut. Management and the Newspaper Guild are negotiating.

The Plain Dealer, as most newspapers, is under economic siege with loss of advertising and circulation as readers turn away from newspapers to the internet.

I reported recently that the paper as of March 31 had lost 11.7 percent of daily and 8.15 percent of Sunday circulation in the previous six months. Even worse, since September of 2007 to the end of March the PD lost 42,565 daily customers and 52,443 Sunday customers.

Recently, at the paper there were cuts in management pay and 10-day furloughs. The cuts were 8 percent of the first $50,000 in salary.

In January, the paper announced it would rent office and space in its editorial building at 1801 Superior and parking space at its property.

Back in December of last year, 27 editorial people were dropped, some by buyouts and some by layoffs. The dismissal caused anger among editorial people as those who were dismissed had to wait at home for a call from Editor Susan Goldberg. Most staff wore black to work to show their disapproval.

Plain Dealer Wants $5 Million in Savings From Three Unions

The cutbacks at the Plain Dealer will include Teamsters and Pressmen in addition to editorial staff.

The total the PD management wants to attain: $5 million a year in savings from the three unions.

I’m told that the editorial people would consider taking cutbacks to make up the 12 percent management wants to save if management would promise no layoffs for two years. No deal, said management.

Here, by the way, is the pay schedule of editorial employees can be found here.

Hagan Legacy Will Mirror Bush Legacy: Dismally Depressed & Costly

Tim Hagan will leave Cuyahoga County just as George Bush left the country – broke, broken and deep in the hole. They both arrogantly made decisions without much thought or concern for the public.

Hagan has put Cuyahoga County into position to explode with debt.

The Commission not only faces a $1 billion cost on the Medical Mart and Convention Center but now Hagan talks of moving its entire operations out of its presently owned administration building.

The cost would be enormous just to move.

What seems to be the reason for moving the entire Cuyahoga County operation? Hint: A new convention center hotel. Our next must!

Besides, the PD quotes County Administrator Jim McCafferty, “Nobody’s going to want this building here.” Just thought of that, guys?

Do you think anyone is going to want the restaurant and parking garage in the buildings south of the administration building? These are buildings that will have to be bought if the project goes – whether the County likes it or not.

But this starts the drum beat for a new hotel. The PD is playing along, as one would expect. Conventional journalism simply can’t cover these events with honesty.

As I have maintained all along, the County – and likely the City of Cleveland – will have to subsidize a money-losing hotel and a parking facility. No private interest is going to take the risk of building a new hotel.

The same screamers who yelled, “We must have a new convention center” will undoubtedly screech, “We need a big new hotel.”

Why? The argument is familiar. We need it for the jobs it will bring to Cleveland, they insist. Don’t know if anyone else noted but Cleveland ranked third in the nation for worst cities for jobs. Forbes annually ranks the “Worst Big Cities for Jobs.”

You do remember the 28,000 jobs promised by Gateway, don’t you?

Can anyone find them?

The Plain Dealer on Saturday floated the hotel idea on its front page. The PD reported that plans could include the County Administration building in the Med Mart deal. It raised the possibility that the site be used for a new hotel. How clever.

How cheaply would Hagan sell the County building to his Kennedy friends at MMPI (Merchandise Mart Properties, Inc.)? He’s already given them access to the $400 or $500 million that will be raised by the quarter percent sales tax he pushed through the Commission. No public input, of course. The County will have to pay the interest on those sums raised to do the project.

Then, it’s “Adios” Hagan. The problem, I guess, will be Peter Lawson Jones’. He deserves it because he’s played along to get along.

In order to provide the site, of course, the County would have to move from its administration building at the corner of Lakeside Ave. and Ontario. The site would then become part of the expanding site for the Medical Mart and new Convention Center. The Med Mall site could extend from St. Clair on the south to Lakeside on the north, Ontario on the west to East 6th Street on the east.

Hagan already had the County buy a new site for a headquarter shift, you’ll remember. Then abandoned it for financial reasons. Cost too much.

Cuyahoga County purchased a block of buildings at E. 9th & Euclid. The complex includes the historic former Cleveland Trust bank Rotunda at E. 9th Street & Euclid and behind it the Breuer office building and parking structures extending to Prospect & Huron roads.

Ostensibly, County officials made the purchase as the future site for its headquarters from Cleveland’s powerful developer Dick Jacobs, former owner of the Cleveland Indians. Thanks, Dick said, but honor me, too. So they generously even promised Dick an everlasting plaque to sit on whatever is build there. It will read: “Mr. Jacobs has consistently and selflessly devoted his insight, skills and resources to the development and preservation of Downtown Cleveland and Cuyahoga County. This complex, which includes the historic Rotunda, symbolizes the legacy that Mr. Jacobs has established through his leadership in development and owning many of this County’s major commercial, retail, and recreational facilities.” It’s in the contract. Honestly.

Never so many lies in so little a space.

The purchase price was $22 million. It took a long-abandoned block off Dick’s hands. Now the cost has risen to $35 million as costs continue for the County.

The County still owns the complex though there have been agreements that K & D developers will buy the corner properties for a hotel and other development. The wait will be long. Learn more on this little scandal here.

There is about as much chance of that happening anytime soon as there as there would be in Hagan hanging around to see the County sink into debt and decline as a result of this blowhard’s decisions.

He’s won't be here when it all comes tumbling down. That’s the kind of guy he is.

Many of us will be here to pay the costs, however.

From Cool Cleveland contributor Roldo Bartimole roldoATroadrunner.com
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