Civic Accountability -- Honesty in Local Government IV

[Mark Kindt]

The Taxpayer Subsidy to the Selected Developer

The city administration has identified its preferred commercial developer for the redevelopment of the former hospital property.

Relying upon recent media reports, here’s what is known:

1. The mayor told the media (Crain's) that the City is proposing to provide the former hospital site to the commercial developer for free or $1. This real estate is carried on the City’s books at $3,700,000. It could be worth more.

2. The planning director told the media (PD) that the City is proposing to provide the commercial developer with the benefit of site demolition and site preparation. This has a reported value of $7,000,000 to $10,000,000.

The proposed taxypayer subsidy to the preferred commercial developer could be between $11,000,000 to $14,000,000.

[Bridget Conant]

The proposed taxypayer subsidy to the preferred commercial developer could be between $11,000,000 to $14,000,000.

Not a bad investment on the part of Carnegie's owner - think he contributed $500 to Summers' campaign, but he may have made other contributions.

[Stan Austin]

What??????????????? This is f******** reverse market economics!!!!!!!

[Mark Kindt]

Folks, I don't read minds, I just read public documents.

Large sums of public funds have been on the move and most of that movement is not reflected in our public fund accounting.

That's the problem with privatization. It all goes dark.

If you review the City's annual reports and budgets, there is no evidence that the $32,200,000 destined for the New Foundation will ever be officially reported by the City (despite a sworn affidavit to the contrary).

As citizens and taxpayers, we don't even know on whose books this amount is accounted for.

The Master Agreement liquidated major public assets, but some of those assets still sit on the books of somebody else (pending their future contractual distribution.)

So, the $32,200,000 is "hiding". Well, where? And, obviously, why?

I am not suggesting that this is illegal, but it's certainly the screwy outcome of privatization and the strange way that the City did its deal.

But, this is how public funds "disappear".

Now, try to find it. CCF and LHA will deny that their records are subject to Ohio sunshine law. Ask the City and you will be stonewalled and forced to litigate for literally years(!)

Unfortunately, negative inferences are easily drawn. Public trust is eroded.

[Mark Kindt]

You know, it creates other credibility problems as well.

When, in a few years, we may be asked to vote for a tax increase, the thought will arise "Well, why'd the City give all that money away."

From public documents and media reports, we can identify between about $43 million to $47 million headed-out the door in public subsidies to private entities. Yikes!

Double Yikes !!

[Jim O'Bryan]

Folks, I don't read minds, I just read public documents.

Large sums of public funds have been on the move and most of that movement is not reflected in our public fund accounting.

That's the problem with privatization. It all goes dark.

If you review the City's annual reports and budgets, there is no evidence that the $32,200,000 destined for the New Foundation will ever be officially reported by the City (despite a sworn affidavit to the contrary).

As citizens and taxpayers, we don't even know on whose books this amount is accounted for.

The Master Agreement liquidated major public assets, but some of those assets still sit on the books of somebody else (pending their future contractual distribution.)

So, the $32,200,000 is "hiding". Well, where? And, obviously, why?

I am not suggesting that this is illegal, but it's certainly the screwy outcome of privatization and the strange way that the City did its deal.

But, this is how public funds "disappear".

Now, try to find it. CCF and LHA will deny that their records are subject to Ohio sunshine law. Ask the City and you will be stonewalled and forced to litigate for literally years(!)

Unfortunately, negative inferences are easily drawn. Public trust is eroded.

AND

You know, it creates other credibility problems as well.

When, in a few years, we may be asked to vote for a tax increase, the thought will arise "Well, why'd the City give all that money away."

From public documents and media reports, we can identify between about $43 million to $47 million headed-out the door in public subsidies to private entities. Yikes!

Double Yikes !!

Mr. Kindt

I brought both post together here for a simple question, from your years of expertise and what you know about this debacle.

So if the Mayor and Law Director work overtime for 7+ years to liquidate Lakewood's largest and best asset, and ALL OF THE MONEY ENDS UP IN TWO PRIVATE FUNDS CONTROLLED BY THE MAYOR'S FRIENDS AND SUPPORTERS, how is that not illegal?

I only go back and remember that Chris Christie moved 24 orange cones on the George Washington Bridge to get a Federal Investigation and see people go to jail. I am sure had he sold the bridge and given the money to friends and supporters the outcome would have been legal worse.

How does this not merit at least an investigation?

.

[Mark Kindt]

So if the Mayor and Law Director work overtime for 7+ years to liquidate Lakewood's largest and best asset, and ALL OF THE MONEY ENDS UP IN TWO PRIVATE FUNDS CONTROLLED BY THE MAYOR'S FRIENDS AND SUPPORTERS, how is that not illegal?

How does this not merit at least an investigation?

Mr. O'Bryan, I simply do not have an answer to your question. It is a question better posed to each of the government agencies that have declined public requests to review the transaction.

I can only recommend reform of our municipal government through electoral means and citizen advocacy.

[Note that I have edited Mr. O'Bryan's post for purposes of brevity in response.]

[Mark Kindt]

An Epic Taxpayer Bailout

We will never ever really know what actually happened or how it was done, but the public documents that are finally available seem to suggest that the hospital transaction was actually a taxpayer bailout of LHA and CCF.

Because of the wonky accounting treatment, we do not know how much LHA or CCF received in wind-down costs value. The wind-down costs value is likely in the range of tens of millions of dollars -- all exclusively from the liquidation of public assets.

Again, this is a direct (though not readily apparent) taxpayer subsidy to private parties.

LHA and CCF were also relieved of contractual lease obligations and payment obligations associated with the hospital lease as well as any risk of loss or liability from continued future operations.

Some documents reviewed on the Deck, suggest that the estimated value of the risk of loss or liability from continued future operations would have been in the hundreds of millions of dollars. (The LHA/CCF contractual obligations to meet these losses have been described elsewhere and I do not need to repeat that discussion here.)

A valued publicly-owned hospital was closed, but the actual value of what was lost to the public has never been reported in our public fund accounting in any truly meaningful or intelligible way.

We just need to be honest with ourselves about what was actually done. Public officials, in closing the hospital, chose to convey most of the value of that hospital to private entities, not the public treasury.

The hospital transaction was a hidden taxpayer bailout of epic proportions.

[Mark Kindt]

A FAIL of Staggering Proportions

I have studied the hospital transaction for almost three years now. I have reviewed hundreds of pages of documents and talked with dozens of citizens. I have written formal complaints to government agencies, including the Federal Trade Commission, the United States Department of Justice, and the Office of the Attorney General of Ohio. I have written about the hospital closure in both the Lakewood Observer and the Observation Deck.

I have found no standard whether it be based in law, finance, healthcare or even economic development that can justify the actions and the decisions that the city administration took in entering into the Master Agreement and closing the hospital.

If you have counter-arguments that are evidence-based on why I am incorrect, I encourage you to come forward with them and engage me.

We now know from public documents that even long-term insiders and even the City’s own consultant knew that they were making a huge mistake. And, then they went ahead and made it anyway.

My writing on these topics is now coming to a close. I appreciate your interest and patience, but I know if I write further, it will just become more repetitious than it has already become.

I will leave you with one final conclusion.

The hospital transaction was staggering in its sheer incompetence and mismanagement from the city administration side. This was a public policy disaster of epic proportions for our city.

It also resulted in what can only be described as abuses in terms of misrepresentations made, conflicts-of-interests ignored, fiduciary duties abrogated, citizens harassed and laws recklessly disregarded.

[Jim O'Bryan]

A FAIL of Staggering Proportions



I will leave you with one final conclusion.

The hospital transaction was staggering in its sheer incompetence and mismanagement from the city administration side. This was a public policy disaster of epic proportions for our city.

It also resulted in what can only be described as abuses in terms of misrepresentations made, conflicts-of-interests ignored, fiduciary duties abrogated, citizens harassed and laws recklessly disregarded.

Mr. Kindt

To allow them to ride off into the sunset, without serious community oversight, is nearly as bad as their actions.

I always remember the words on Martin Luther King Jr. "In the End, we will remember not the words of our enemies, but the silence of our friends." Which does not describe you, far from it. But does explain so many people I know that grew sicker and sicker of City Hall's actions, against residents, businesses, and people trying to understand the truth. They knew the facts and at anytime could have stepped forward with information important pieces of information and insight but chose to remain silent on the sidelines.

One reason the City and "civic leaders" got as far as they have in their dirty deeds was that good people stayed silent on the sidelines thinking, not these guys, not in my city, I'll wait and maybe they will not need my voice, my information my piece of the puzzle.

You have dedicated hundreds of hours of your private and professional time, for which many of us are forever thankful. But I look back to the days when you thought, these elected officials could never be as bad as Jim is indicating. Today you are incredulous with just how out of control they are.

I would encourage you to stay engaged, as we tell everyone always on a level of participation that you feel comfortable with.

Your legal expertise, common sense and great sense of history bring so much to any public discussion. I believe much of your easy to read and understand expertise led to the mandate that rose up at the polls this last election. You should be proud, and thanked by every resident.

No matter happens in the future, I thank you for all you have done for Observers and the community.

.

[Mark Kindt]

And, for those of you who doubt some of my conclusions, you might read this advocacy brief from journalist Brian Bardwell.

I do not know who he is. I have had no communication with him.

His separate, independent analysis agrees with much that I have written here on the Deck.

[Mark Kindt]

CATEGORY: Are They Nuts?

What don't they get about the Ohio Sunshine laws?

I look forward to reading the City of Lakewood's legal brief in Scott v. Lakewood to see how they try and explain conducting a closed quasi-judicial hearing on Charlie's breed.

Keep in mind that the City is conducting this closed hearing at the same time they are facing litigation for other open meetings violations.

In addition to the Bardwell Motion, I have also attached a copy of the open meetings argument presented by Ms. Scott's legal counsel.

[Mark Kindt]

Destroyed and/or Missing Public Documents

I have attached two pages from the City of Lakewood brief recently filed in the Essi public records request case.

Keep in mind that this is the City's own description of these records. The Ex Officio (public) board members of the Lakewood Hospital Association shredded copies of their LHA documents or they otherwise went missing.

You be the judge:

[/attachment]

City of Lakewood Brief in Essius Action--Highlighted Version page 10.jpg (610.86 KiB) Viewed 3188 times

City of Lakewood Brief in Essius Action--Highlighted Version page 11.jpg (607.21 KiB) Viewed 3188 times

[Bridget Conant]

Let’s get this straight.

In order to avoid producing documents, all the city has to do is DESTROY the documents?

How clever.

Is that not, in fact, SPOILATION, a very serious legal misdeed?

[Mark Kindt]

Before I cover the point that Ms. Conant has raised, I would also like to do a refresh on another key city document.

Across these four pages of public documents, we can see that the ex officio (public) board members of LHA are:

1. Reviewing with City legal counsel whether their LHA votes could be reconsidered or changed;

2. The shredding of LHA documents; and,

3. The fact that most of the LHA documents in the hands of the mayor and City legal counsel are now missing.