Show Us the Money: Can David Anderson & City Hall Account for $128 Million of Our Money?

[Brian Essi]

Brian Essi Oct 3 at 12:52 PM

To David Anderson
CC Summers, Mike Sam O'Leary Cindy Marx Ryan Nowlin Tom Bullock O'Malley, Daniel John Litten Kevin Butler

Dear Councilman Anderson,

In the most recent issue of the Lakewood Observer, you wrote: “...the Lakewood Hospital Association’s net assets were valued at $128 million. The negotiated deal accounts for all of the $128 million which does not include the additional $49 million Cleveland Clinic investment described above.”

Can you kindly let me know where your got the $128 million figure?

Can you also kindly provide me with a break-down and explanation of how the all of the $128 million is accounted for in the negotiated deal?

If you have any documents that provide support your answers, I would appreciate you providing those documents at the time of or after your answers.

Thank you for your prompt cooperation.

Sincerely,

Brian J. Essi
216 346 3434

[Marguerite Harkness]

Of course he can't, and won't.

Remember when he said at City Council, 12/21/15, (something close to a direct quote): "This isn't my money. I have a higher level of responsibility with city money than with my own money."

So in that case, let me offer Dave:

I'll pay you $10,000 for your rental house on Franklin. I'll pay you $2,000 at a time, starting October 2018 and every 2 years thereafter. Then I will demolish the house and invest in a brand new garage on that site. That will count as a $20,000 brand new investment on the property-formerly-known-as-Dave's.

OK? Good. Go ahead and sign the deed over to me. I'll be waiting for it ...

P.S. Almost forgot: Turn your $80,000 IRA over to me, too.

And . . . thanks!

Marguerite

[Stan Austin]

Kinda wraps it up in easy to understand dollar amounts and buyer seller relationships.

[T Peppard]

Of course he can't, and won't.

Remember when he said at City Council, 12/21/15, (something close to a direct quote): "This isn't my money. I have a higher level of responsibility with city money than with my own money."

So in that case, let me offer Dave:

I'll pay you $10,000 for your rental house on Franklin. I'll pay you $2,000 at a time, starting October 2018 and every 2 years thereafter. Then I will demolish the house and invest in a brand new garage on that site. That will count as a $20,000 brand new investment on the property-formerly-known-as-Dave's.

OK? Good. Go ahead and sign the deed over to me. I'll be waiting for it ...

P.S. Almost forgot: Turn your $80,000 IRA over to me, too.

And . . . thanks!

Marguerite

I remember Councilman Anderson's statements that fateful evening. I also remember urging him and the other members of city council to defer to you with your accounting expertise. I was grateful for your analogy because it put the deal in clear terms which blatantly shows how easily we turned over our assets. I still can't understand how they could carry on without heed to your warranted concerns. Was it incompetence, greed, fear or a little of everything?

[Lori Allen _]

Until they release all documents and requested records, anything said by these people should be taken with a grain of salt, in my opinion.

[Brian Essi]

I appreciate having the LO print my written article in the latest edition. I submitted the table below along with that article but it did not get printed. I probably made it too difficult to format for print - my apologies to the LO editor(s) and I can't get it to format correctly below. However, I felt it was an important component of the article and wanted to make it available for all as well as in response a Brian Essi email request I first read yesterday evening after returning home from Council.

The end of September 2015 total net assets for the Lakewood Hospital Association indicated $126.5M. This number comes from the Sept. 2015 LHA financial statements, which were long ago made public and provided directly to Mr. Essi. I would be happy to try to scan these 9/2015 statements and provide these on the Deck. We (Council) worked from the thought that this number was at $128M by December due to anticipated appraisals.

Disposition of Lakewood Hospital Association assets -

(in millions) Total Lakewood Hospital Association assets (bricks, mortar, equipment and licenses)
$128.0 Total LHA assets

20.0 Value of hospital site (land still controlled by the City and will be sold in the future for redevelopment)
24.2 New Lakewood Foundation
33.0 Lakewood Hospital Foundation
8.2 850 Columbia Road facility - (appraised for $6.8 million on June 15, 2015 by Charles M. Ritley
Associates LLC)
7.0 Demolition/rehab funds to the city
10.0 Operating losses
3.0 Demolition costs of office building and parking garage at Detroit and Belle – site of the new Family
Health Center, 24/7 Emergency Room and parking garage.
2.5 Investment in new parking facility
20.1 LHA portion of transition costs including insurance, pension obligations, malpractice
insurance, tenant relocation and miscellaneous transition costs

(in millions) Clinic $49 Million Investment

$34.0 Clinic’s cost of new Family Health Care Center and Emergency Room
8.0 Clinic’s additional contribution to new Lakewood Foundation in addition to the $24.2M listed above
7.0 Clinic’s absorption of transition costs not covered by the $20.1 above

(in millions) Other funds to the City of Lakewood

$1.5 Approximated value of homes on Belle and St. Charles being sold. These were owned by the City but
managed by the Lakewood Hospital Association and will rightfully return to private ownership.

Again, because I submitted the table with the article, it was my intention to have it included along with the article which was published. I will do my best to respond to any additional questions on this matter.

David W. Anderson
Member of Council, Ward 1
216-789-6463
Davidwanderson@lakewoodoh.net

Dear Councilman Anderson,

Thank you for your responses.

While I prepare a full response to your analysis, I have a few questions:

1. How did you arrive at the “$20.0 Value of Hospital Site”? Is there anything to substantiate that value by way of an appraisal? Mr. Butler has not provided that to me if it exists.

2. What is the $1.5M difference between the $128 and $126.5 numbers you use? You mentioned “anticipated appraisals” –can you share those “anticipated appraisals” with me?

3. Transition Costs. Can you provide any detail for the breakdown of what you claim is “$20.1 LHA portion of transition costs including insurance, pensions obligations, malpractice insurance, tenant relocation and miscellaneous costs”? This is a lot of public money to be explained with such a few vague terms.

4. Clinic’s Absorption. Its seems to me that the “7.0 Demolition/rebab funds to the city” and the “7.0 Clinic’s absorption of transition costs not covered by 20.1 above” are related and may be the same money. Do you have anything to back up the “7.0 Clinic’s absorption” figure?

5. Transition Costs. What is the difference between the term “transition costs” you use and the “wind down” costs in the Master Agreement?

6. Pension Obligations. The 2015 E & Y LHA Financial Statements in footnote 13 describes the pension obligations of LHA and clearly states: “Included in the Hospital’s salaries, wages and benefits is retirement expense pertaining to the defined contributions plans of approximately $2.5 million …in 2015..” In other words, there is no balance sheet liability or other liability for pensions—that amount has been paid and is zero. Can you substantiate any other pension obligations that weren’t paid already? If so, why didn’t E &Y mention or footnote them in its audit that was not completed until May, 2016?

7. Insurance. The Master Agreement Section 9.12 requires LHA to pay a $2.5M premium (to CCF’s for-profit offshore insurance company in the Cayman Islands) to protect CCF employees, executives and CCF Trustees, but Mr. Butler has heretofore refused to produce any evidence by way of public records that such policy even exists or that the premium has even been paid. That $2.5M premium paid to CCF was to cover all of LHA insurance needs. Do you have any evidence that of any other insurance expenses over the $2.5M that would be considered “transition costs”? If so, why didn’t E &Y mention or footnote these insurance expnses in its audit that was not completed until May, 2016?

8. Tenant Relocation Costs. I am told many relocated tenants that they received nothing to relocate and many tenants were CCF affiliates. What is the amount of tenant relocation expenses?

9. Operating Losses. Per the 12/31/15 audited financial statements EBIDA losses for the year were $8.1M and per the 9/30/15 statement they were $ 4.5M through 9/30/15. So the $4.5M was already taken out of the net assets as of 9/30/15. 8.1 minus 4.5 =$3.6. It is clear there could be only $3.6 M of losses in the 4th quarter of 2015. As we know, the hospital shut down quickly by February 4, 2016 and many employees were let go or reassigned at Christmas---the January, 2016 losses could likely not have exceeded $1.2M. So it appears the maximum total losses from 9/30/15 through the hospital closing would be about $4.8M. How did you arrive at the “10.0 Operating Loss” and what period does that cover? Do you have anything to substantiate that amount.

Thank You.

Brian

[Brian Essi]

I appreciate having the LO print my written article in the latest edition. I submitted the table below along with that article but it did not get printed. I probably made it too difficult to format for print - my apologies to the LO editor(s) and I can't get it to format correctly below. However, I felt it was an important component of the article and wanted to make it available for all as well as in response a Brian Essi email request I first read yesterday evening after returning home from Council.

The end of September 2015 total net assets for the Lakewood Hospital Association indicated $126.5M. This number comes from the Sept. 2015 LHA financial statements, which were long ago made public and provided directly to Mr. Essi. I would be happy to try to scan these 9/2015 statements and provide these on the Deck. We (Council) worked from the thought that this number was at $128M by December due to anticipated appraisals.

Disposition of Lakewood Hospital Association assets -

(in millions) Total Lakewood Hospital Association assets (bricks, mortar, equipment and licenses)
$128.0 Total LHA assets

20.0 Value of hospital site (land still controlled by the City and will be sold in the future for redevelopment)
24.2 New Lakewood Foundation
33.0 Lakewood Hospital Foundation
8.2 850 Columbia Road facility - (appraised for $6.8 million on June 15, 2015 by Charles M. Ritley
Associates LLC)
7.0 Demolition/rehab funds to the city
10.0 Operating losses
3.0 Demolition costs of office building and parking garage at Detroit and Belle – site of the new Family
Health Center, 24/7 Emergency Room and parking garage.
2.5 Investment in new parking facility
20.1 LHA portion of transition costs including insurance, pension obligations, malpractice
insurance, tenant relocation and miscellaneous transition costs

(in millions) Clinic $49 Million Investment

$34.0 Clinic’s cost of new Family Health Care Center and Emergency Room
8.0 Clinic’s additional contribution to new Lakewood Foundation in addition to the $24.2M listed above
7.0 Clinic’s absorption of transition costs not covered by the $20.1 above

(in millions) Other funds to the City of Lakewood

$1.5 Approximated value of homes on Belle and St. Charles being sold. These were owned by the City but
managed by the Lakewood Hospital Association and will rightfully return to private ownership.

Again, because I submitted the table with the article, it was my intention to have it included along with the article which was published. I will do my best to respond to any additional questions on this matter.

David W. Anderson
Member of Council, Ward 1
216-789-6463
Davidwanderson@lakewoodoh.net

Dear Councilman Anderson,

Thank you for your responses.

While I prepare a full response to your analysis, I have a few questions:

1. How did you arrive at the “$20.0 Value of Hospital Site”? Is there anything to substantiate that value by way of an appraisal? Mr. Butler has not provided that to me if it exists.

2. What is the $1.5M difference between the $128 and $126.5 numbers you use? You mentioned “anticipated appraisals” –can you share those “anticipated appraisals” with me?

3. Transition Costs. Can you provide any detail for the breakdown of what you claim is “$20.1 LHA portion of transition costs including insurance, pensions obligations, malpractice insurance, tenant relocation and miscellaneous costs”? This is a lot of public money to be explained with such a few vague terms.

4. Clinic’s Absorption. Its seems to me that the “7.0 Demolition/rebab funds to the city” and the “7.0 Clinic’s absorption of transition costs not covered by 20.1 above” are related and may be the same money. Do you have anything to back up the “7.0 Clinic’s absorption” figure?

5. Transition Costs. What is the difference between the term “transition costs” you use and the “wind down” costs in the Master Agreement?

6. Pension Obligations. The 2015 E & Y LHA Financial Statements in footnote 13 describes the pension obligations of LHA and clearly states: “Included in the Hospital’s salaries, wages and benefits is retirement expense pertaining to the defined contributions plans of approximately $2.5 million …in 2015..” In other words, there is no balance sheet liability or other liability for pensions—that amount has been paid and is zero. Can you substantiate any other pension obligations that weren’t paid already? If so, why didn’t E &Y mention or footnote them in its audit that was not completed until May, 2016?

7. Insurance. The Master Agreement Section 9.12 requires LHA to pay a $2.5M premium (to CCF’s for-profit offshore insurance company in the Cayman Islands) to protect CCF employees, executives and CCF Trustees, but Mr. Butler has heretofore refused to produce any evidence by way of public records that such policy even exists or that the premium has even been paid. That $2.5M premium paid to CCF was to cover all of LHA insurance needs. Do you have any evidence that of any other insurance expenses over the $2.5M that would be considered “transition costs”? If so, why didn’t E &Y mention or footnote these insurance expnses in its audit that was not completed until May, 2016?

8. Tenant Relocation Costs. I am told many relocated tenants that they received nothing to relocate and many tenants were CCF affiliates. What is the amount of tenant relocation expenses?

9. Operating Losses. Per the 12/31/15 audited financial statements EBIDA losses for the year were $8.1M and per the 9/30/15 statement they were $ 4.5M through 9/30/15. So the $4.5M was already taken out of the net assets as of 9/30/15. 8.1 minus 4.5 =$3.6. It is clear there could be only $3.6 M of losses in the 4th quarter of 2015. As we know, the hospital shut down quickly by February 4, 2016 and many employees were let go or reassigned at Christmas---the January, 2016 losses could likely not have exceeded $1.2M. So it appears the maximum total losses from 9/30/15 through the hospital closing would be about $4.8M. How did you arrive at the “10.0 Operating Loss” and what period does that cover? Do you have anything to substantiate that amount.

Thank You.

Brian

24 hours and Anderson has not answered.

Where is Build Lakewood's Watchdog Patrick Wadden when we need him?

[james fitzgibbons]

I appreciate having the LO print my written article in the latest edition. I submitted the table below along with that article but it did not get printed. I probably made it too difficult to format for print - my apologies to the LO editor(s) and I can't get it to format correctly below. However, I felt it was an important component of the article and wanted to make it available for all as well as in response a Brian Essi email request I first read yesterday evening after returning home from Council.

The end of September 2015 total net assets for the Lakewood Hospital Association indicated $126.5M. This number comes from the Sept. 2015 LHA financial statements, which were long ago made public and provided directly to Mr. Essi. I would be happy to try to scan these 9/2015 statements and provide these on the Deck. We (Council) worked from the thought that this number was at $128M by December due to anticipated appraisals.

Disposition of Lakewood Hospital Association assets -

(in millions) Total Lakewood Hospital Association assets (bricks, mortar, equipment and licenses)
$128.0 Total LHA assets

20.0 Value of hospital site (land still controlled by the City and will be sold in the future for redevelopment)
24.2 New Lakewood Foundation
33.0 Lakewood Hospital Foundation
8.2 850 Columbia Road facility - (appraised for $6.8 million on June 15, 2015 by Charles M. Ritley
Associates LLC)
7.0 Demolition/rehab funds to the city
10.0 Operating losses
3.0 Demolition costs of office building and parking garage at Detroit and Belle – site of the new Family
Health Center, 24/7 Emergency Room and parking garage.
2.5 Investment in new parking facility
20.1 LHA portion of transition costs including insurance, pension obligations, malpractice
insurance, tenant relocation and miscellaneous transition costs

(in millions) Clinic $49 Million Investment

$34.0 Clinic’s cost of new Family Health Care Center and Emergency Room
8.0 Clinic’s additional contribution to new Lakewood Foundation in addition to the $24.2M listed above
7.0 Clinic’s absorption of transition costs not covered by the $20.1 above

(in millions) Other funds to the City of Lakewood

$1.5 Approximated value of homes on Belle and St. Charles being sold. These were owned by the City but
managed by the Lakewood Hospital Association and will rightfully return to private ownership.

Again, because I submitted the table with the article, it was my intention to have it included along with the article which was published. I will do my best to respond to any additional questions on this matter.

David W. Anderson
Member of Council, Ward 1
216-789-6463
Davidwanderson@lakewoodoh.net

Dear Councilman Anderson,

Thank you for your responses.

While I prepare a full response to your analysis, I have a few questions:

1. How did you arrive at the “$20.0 Value of Hospital Site”? Is there anything to substantiate that value by way of an appraisal? Mr. Butler has not provided that to me if it exists.

2. What is the $1.5M difference between the $128 and $126.5 numbers you use? You mentioned “anticipated appraisals” –can you share those “anticipated appraisals” with me?

3. Transition Costs. Can you provide any detail for the breakdown of what you claim is “$20.1 LHA portion of transition costs including insurance, pensions obligations, malpractice insurance, tenant relocation and miscellaneous costs”? This is a lot of public money to be explained with such a few vague terms.

4. Clinic’s Absorption. Its seems to me that the “7.0 Demolition/rebab funds to the city” and the “7.0 Clinic’s absorption of transition costs not covered by 20.1 above” are related and may be the same money. Do you have anything to back up the “7.0 Clinic’s absorption” figure?

5. Transition Costs. What is the difference between the term “transition costs” you use and the “wind down” costs in the Master Agreement?

6. Pension Obligations. The 2015 E & Y LHA Financial Statements in footnote 13 describes the pension obligations of LHA and clearly states: “Included in the Hospital’s salaries, wages and benefits is retirement expense pertaining to the defined contributions plans of approximately $2.5 million …in 2015..” In other words, there is no balance sheet liability or other liability for pensions—that amount has been paid and is zero. Can you substantiate any other pension obligations that weren’t paid already? If so, why didn’t E &Y mention or footnote them in its audit that was not completed until May, 2016?

7. Insurance. The Master Agreement Section 9.12 requires LHA to pay a $2.5M premium (to CCF’s for-profit offshore insurance company in the Cayman Islands) to protect CCF employees, executives and CCF Trustees, but Mr. Butler has heretofore refused to produce any evidence by way of public records that such policy even exists or that the premium has even been paid. That $2.5M premium paid to CCF was to cover all of LHA insurance needs. Do you have any evidence that of any other insurance expenses over the $2.5M that would be considered “transition costs”? If so, why didn’t E &Y mention or footnote these insurance expnses in its audit that was not completed until May, 2016?

8. Tenant Relocation Costs. I am told many relocated tenants that they received nothing to relocate and many tenants were CCF affiliates. What is the amount of tenant relocation expenses?

9. Operating Losses. Per the 12/31/15 audited financial statements EBIDA losses for the year were $8.1M and per the 9/30/15 statement they were $ 4.5M through 9/30/15. So the $4.5M was already taken out of the net assets as of 9/30/15. 8.1 minus 4.5 =$3.6. It is clear there could be only $3.6 M of losses in the 4th quarter of 2015. As we know, the hospital shut down quickly by February 4, 2016 and many employees were let go or reassigned at Christmas---the January, 2016 losses could likely not have exceeded $1.2M. So it appears the maximum total losses from 9/30/15 through the hospital closing would be about $4.8M. How did you arrive at the “10.0 Operating Loss” and what period does that cover? Do you have anything to substantiate that amount.

Thank You.

Brian

24 hours and Anderson has not answered.

Where is Build Lakewood's Watchdog Patrick Wadden when we need him?

Are you kidding he is eating a biscuit!

[Patrick Wadden]

Build Lakewood gave me the night off. I am watching the Indians game. You?

[Brian Essi]

2015 State Auditor’s Report Reveals City Received Only $11.3 Million from “Sale of Lakewood Hospital to the Cleveland Clinic”.


Attached are (1) the City of Lakewood Comprehensive Annual Financial Report for 2014 (CAFR), https://ohioauditor.gov/auditsearch/Rep ... yahoga.pdf (2) a recently disclosed State Auditor’s/Independent Auditor’s work-paper and (3) a September 29, 2016 email from Jenn Pae and the independent auditor’s answering selected questions I posed to Jenn Pae.

Per the CAFR:  "The City-owned Lakewood Hospital" (CAFR page 47) and the Master Agreement was a “sale of Lakewood Hospital to Cleveland Clinic” (CAFR pages 42 and 44). Those are the City of Lakewood’s and the State Auditor’s words, not mine. So there is no denying that the city-owned hospital was “sold” to CCF. Yet Summers testified in January, 2016 “we weren’t selling this hospital” Summer TR page 155; line 14.

Here is what the 2015 CAFR (and the attached accountant’s work paper) shows the city received from the “sale of Lakewood Hospital” to CCF:
1. $ 6,644,731 sale proceeds Columbia Road property (Per CAFR).
2. $1,400,00 promissory note from CCF for sale of Columbia Road (Per CAFR)
3. $1,576,000 for sale of Detroit/Belle land sold to CCF (Per CAFR).
4. $ 971,600 for return of 7 residential properties (per CAFR).
7. $ 700,000 for return of control of health centre 1450 Belle (per CAFR).

Total Received by the City per the CAFR: $11,292,331.

The CAFR reports the entire $11.3 million for the “sale” of the hospital as “Total Revenues” to the “Lakewood Hospital Fund” even though the city of Lakewood held legal title to these parcels of real estate comprising that revenue since before the 1986 Lease (except Columbia Road). In this regard, the treatment of the surrender of the properties to the city as a “sale” of the hospital and then recording them as “revenues” to a hospital fund is most peculiar.

The Reported Value of the Curtis Block. The CAFR also mentions “Curtis Block” (corner of Marlowe Avenue and Detroit Avenue) transferred February 22, 2016” (CAFR page 47) However, there is no value reported on the CAFR for this “transfer.” It is probably negligible in the bigger picture of the “deal.”

Reported Value of Hospital Site. So far, the City and Finance Director Pae have not produced records nor answered questions concerning how the value of the former hospital site (the soon to be gutted and empty shell formerly known as Lakewood Hospital) is being reported on the CAFR. It is believed, based upon the September 29, 2016 Pae email that the amount on Lakewood’s books for this property is ZERO, but clarification by Pae is pending. Mr. Anderson claims, without any support that this 5.7 property is somehow worth $20 million. However, this single purpose building and the 5.7 acres it sits on are subject to a non-compete that make the building worthless for intended use and the land is subject to surface parking lot rights of the Cleveland Clinic. Given that the value of the unencumbered land on the west side of Belle sold for less that $900K per acre appraised as if AFTER demolition, it is hard to imagine the encumbered and still standing Hospital Site could fetch $900K—that might put the 5.7 acres at $5M, but that’s a stretch

Have LHA/CCF already Breached the Master Agreement? Not mentioned in the CAFR is that under Section 6.2 of the Master Agreement the city was to receive $500K of the $7 million on February 22, 2016. The independent auditor was not given that information and Ms. Pae has so far not revealed whether LHA honored that contractual term.

So while we wait for Councilman Anderson, Director Pae and Mr. Butler to decide whether they will share public records with the public, and answer vital questions about their heretofore secret government activities, we can make the following statement:

From what Mr. Anderson claims as $128 million dollars of “net assets”, so far the city has received only $11.3 million. That’s about 9 cents on the dollar so far.

Jenn Pae Response September 29 2016.pdf

(121.54 KiB) Downloaded 114 times

[m buckley]

I appreciate having the LO print my written article in the latest edition. I submitted the table below along with that article but it did not get printed. I probably made it too difficult to format for print - my apologies to the LO editor(s) and I can't get it to format correctly below. However, I felt it was an important component of the article and wanted to make it available for all as well as in response a Brian Essi email request I first read yesterday evening after returning home from Council.

The end of September 2015 total net assets for the Lakewood Hospital Association indicated $126.5M. This number comes from the Sept. 2015 LHA financial statements, which were long ago made public and provided directly to Mr. Essi. I would be happy to try to scan these 9/2015 statements and provide these on the Deck. We (Council) worked from the thought that this number was at $128M by December due to anticipated appraisals.

Disposition of Lakewood Hospital Association assets -

(in millions) Total Lakewood Hospital Association assets (bricks, mortar, equipment and licenses)
$128.0 Total LHA assets

20.0 Value of hospital site (land still controlled by the City and will be sold in the future for redevelopment)
24.2 New Lakewood Foundation
33.0 Lakewood Hospital Foundation
8.2 850 Columbia Road facility - (appraised for $6.8 million on June 15, 2015 by Charles M. Ritley
Associates LLC)
7.0 Demolition/rehab funds to the city
10.0 Operating losses
3.0 Demolition costs of office building and parking garage at Detroit and Belle – site of the new Family
Health Center, 24/7 Emergency Room and parking garage.
2.5 Investment in new parking facility
20.1 LHA portion of transition costs including insurance, pension obligations, malpractice
insurance, tenant relocation and miscellaneous transition costs

(in millions) Clinic $49 Million Investment

$34.0 Clinic’s cost of new Family Health Care Center and Emergency Room
8.0 Clinic’s additional contribution to new Lakewood Foundation in addition to the $24.2M listed above
7.0 Clinic’s absorption of transition costs not covered by the $20.1 above

(in millions) Other funds to the City of Lakewood

$1.5 Approximated value of homes on Belle and St. Charles being sold. These were owned by the City but
managed by the Lakewood Hospital Association and will rightfully return to private ownership.

Again, because I submitted the table with the article, it was my intention to have it included along with the article which was published. I will do my best to respond to any additional questions on this matter.

David W. Anderson
Member of Council, Ward 1
216-789-6463
Davidwanderson@lakewoodoh.net

Dear Councilman Anderson,

Thank you for your responses.

While I prepare a full response to your analysis, I have a few questions:

1. How did you arrive at the “$20.0 Value of Hospital Site”? Is there anything to substantiate that value by way of an appraisal? Mr. Butler has not provided that to me if it exists.

2. What is the $1.5M difference between the $128 and $126.5 numbers you use? You mentioned “anticipated appraisals” –can you share those “anticipated appraisals” with me?

3. Transition Costs. Can you provide any detail for the breakdown of what you claim is “$20.1 LHA portion of transition costs including insurance, pensions obligations, malpractice insurance, tenant relocation and miscellaneous costs”? This is a lot of public money to be explained with such a few vague terms.

4. Clinic’s Absorption. Its seems to me that the “7.0 Demolition/rebab funds to the city” and the “7.0 Clinic’s absorption of transition costs not covered by 20.1 above” are related and may be the same money. Do you have anything to back up the “7.0 Clinic’s absorption” figure?

5. Transition Costs. What is the difference between the term “transition costs” you use and the “wind down” costs in the Master Agreement?

6. Pension Obligations. The 2015 E & Y LHA Financial Statements in footnote 13 describes the pension obligations of LHA and clearly states: “Included in the Hospital’s salaries, wages and benefits is retirement expense pertaining to the defined contributions plans of approximately $2.5 million …in 2015..” In other words, there is no balance sheet liability or other liability for pensions—that amount has been paid and is zero. Can you substantiate any other pension obligations that weren’t paid already? If so, why didn’t E &Y mention or footnote them in its audit that was not completed until May, 2016?

7. Insurance. The Master Agreement Section 9.12 requires LHA to pay a $2.5M premium (to CCF’s for-profit offshore insurance company in the Cayman Islands) to protect CCF employees, executives and CCF Trustees, but Mr. Butler has heretofore refused to produce any evidence by way of public records that such policy even exists or that the premium has even been paid. That $2.5M premium paid to CCF was to cover all of LHA insurance needs. Do you have any evidence that of any other insurance expenses over the $2.5M that would be considered “transition costs”? If so, why didn’t E &Y mention or footnote these insurance expnses in its audit that was not completed until May, 2016?

8. Tenant Relocation Costs. I am told many relocated tenants that they received nothing to relocate and many tenants were CCF affiliates. What is the amount of tenant relocation expenses?

9. Operating Losses. Per the 12/31/15 audited financial statements EBIDA losses for the year were $8.1M and per the 9/30/15 statement they were $ 4.5M through 9/30/15. So the $4.5M was already taken out of the net assets as of 9/30/15. 8.1 minus 4.5 =$3.6. It is clear there could be only $3.6 M of losses in the 4th quarter of 2015. As we know, the hospital shut down quickly by February 4, 2016 and many employees were let go or reassigned at Christmas---the January, 2016 losses could likely not have exceeded $1.2M. So it appears the maximum total losses from 9/30/15 through the hospital closing would be about $4.8M. How did you arrive at the “10.0 Operating Loss” and what period does that cover? Do you have anything to substantiate that amount.

Thank You.

Brian

Oh, Mr. Anderson.
You throw numbers against the wall like so much excrement. When asked directly by Mr. Essi to enumerate on what you sling, suddenly you are nowhere to be found. I picture you cloistered in that backroom holding Mr. O'Leary's hand, chanting " Greater Good" hoping against hope that the dreaded follow up questions will just go away.

[Brian Essi]

Still no clear answers after a full week.

The State Audit shows that the Clinic paid only $9.6 M in the the "sale" of the hospital.

[todd vainisi]

Oh, Mr. Anderson.

Mr/Mrs Buckley, why are you not required to reveal your identity to the rest of us (and the world)?

[m buckley]

Mr./Mrs. Vainisi,

Mark Buckley.

What's with Wadden's obsession over C.Magers and what sex he or she might be.
Is he looking for a date?

[Patrick Wadden]

Thanks Mark. No dates needed here bro. Just want to know who everbody is. Pretty simple.