The Vision Thing

[Mark Kindt]

Let's update our argument list:

Argument No. 1. There is a strong qualitative argument that the former hospital site be redeveloped for purposes that are broadly public, civic, beneficial and innovative with high on-site employment levels.

Argument No. 2. The quantitative data provided by the federal government does not support the proposed construction of new apartments at the former hospital site.

Argument No. 3. The quantitative data provided by the City's own consultant is even less supportive of the proposed construction of new apartments at the former hospital site.

Argument No. 4. The market study prepared for the city administration does not provide qualitative or quantitative support for the use of public subsidies for redevelopment of the hospital site.

Argument No. 5. Due to the proposed use of substantial public subsidies for the redevelopment of the hospital site, the proposed project will not effectively replace public revenues lost by the closure of the hospital.

[Stan Austin]

Is it possible to turn this on its head and put the site out to public auction and see if the market feels there is profitability? If nothing else, the response would be a marker as to the City's forfeiture of an asset.

[Mark Kindt]

Let me start with the obvious observation that if the City donates the former hospital site for a redevelopment project that doesn't generate all that much in tax revenue, it will no longer have that site available for development projects that will generate larger tax revenues.

With its current proposed project, the city administration ignores one key item of data in its own market study.

Posted in this thread is page 87 of the City's market study. Using job growth data from the State of Ohio, the market study concludes that there will be 500 new jobs in Lakewood by 2025 that relate to health care, social services, science, technology and other professions.

To address issues identified by both Mr. Baker and Mr. Liston, let me describe a redevelopment project that 1.) keeps the former hospital site as public property; 2.) generates significant employee income tax and lease revenues; and 3.) serves a valuable and beneficial public use.

The New Westside Veterans Administration Health Clinic

"Get me Senator Brown. Hello, Sherrod, I see a major opportunity for a partnership between Lakewood and the federal government. I need your help. I have both an extra hospital and $10 million in seed money to bring a major federal facility to Lakewood. I see this as a win-win for everybody. When can we arrange a meeting with the Veterans Administration?."

City of Lakewood leases the real property to the VA and gains the employee income tax revenues of VA employees, let's say 500 professional and semi-professional jobs. All within the key metric identified in the City's market study.

(VA lawyers tell city legal counsel that they will be happy to indemnify the City from any breach of contract claims under the Master Agreement related to the covenant not to compete.)

I offer this as an example of what could have been explored during the past five years and would be a reasonable, but superior outcome than the proposed mixed-use redevelopment project.

[Mark Kindt]

Tomorrow we will review some possible negative "blow-back" effects from the misuse of public subsidies in the rental market that we have been discussing.

[Mark Kindt]

LAKEWOOD LIFE
A Report from City Hall
Winter 2018
page 2

Downtown Development Is A Once-In-A-Generation Opportunity

"The hope for the downtown development between Belle and Marlowe is that it will create a sense of place in Downtown Lakewood, while honoring the city's heritage through things like the renovation of the Curtis Block building" (Underline by this writer).

O.K. Who wants to spend $15,000,000 of public assets and public funds to have a "sense of place"?

The real cost of this "sense of place" is $15M PLUS the entire economic and social benefit and value of a viable hospital that was under long-term lease and that other parties were seeking to operate on a long-term basis well into the future.

This "sense of place" comes at the cost of the loss of 1,662 jobs.

This "sense of place" comes at the cost of the loss of millions of dollars in charity care.

This "sense of place" comes at the loss of tens of millions of dollars transferred (or to be transferred) to non-public private entities.

This is the most expense "sense of place" experience ever.

Mr. Mayor please stop insulting "the vast intellectual capital of our citizenry".

When we offered our thinking, we were roundly insulted, abused, and harassed. The finest doctors, nurses, accountants, citizens, and, yes, even lawyers were trashed by council-members and public employees.

[Mark Kindt]

Is There A Market Failure That Would Justify Multi-million Dollar Public Subsidies?

Is there a market failure that would justify the proposed multi-million dollar public subsidies for the One Lakewood Place?

No.

Both McKinley Place and Lakewood Center North were developed without multi-million dollar public subsidies.

Each represents new capacity in the townhouse and apartment markets that is still coming on-line.

As we will shortly see, the City's market study also identifies a variety of "off-line" rental units that could become available.

Between the new capacity at Lakewood Center North and the "off-line" rental units, there is no particular need for the apartment units at One Lakewood Place.

More importantly, we know that there is no market failure here, because it was the decision of the city administration to take the optimal use of the site -- a hospital -- off-line.

[Jim O'Bryan]

LAKEWOOD LIFE
A Report from City Hall
Winter 2018
page 2

Downtown Development Is A Once-In-A-Generation Opportunity

"The hope for the downtown development between Belle and Marlowe is that it will create a sense of place in Downtown Lakewood, while honoring the city's heritage through things like the renovation of the Curtis Block building" (Underline by this writer).

O.K. Who wants to spend $15,000,000 of public assets and public funds to have a "sense of place"?

The real cost of this "sense of place" is $15M PLUS the entire economic and social benefit and value of a viable hospital that was under long-term lease and that other parties were seeking to operate on a long-term basis well into the future.

This "sense of place" comes at the cost of the loss of 1,662 jobs.

This "sense of place" comes at the cost of the loss of millions of dollars in charity care.
http://lakewoodobserver.com/forum/index.php
This "sense of place" comes at the loss of tens of millions of dollars transferred (or to be transferred) to non-public private entities.

This is the most expense "sense of place" experience ever.

Mark

I hate to keep beating the same drum, but you keep questioning why so once again I will answer why.

The Mayor(see second part of this) and his sycophant enablers, who are all inline to benefit financially and in other ways from this debacle, promised the community nearly a decade ago, that way-finding, their plan for "DowntowN" would bring growth and financial benefits. Of course they were wrong and lying then, and continue to both lie and cover up their lack of vision, and even more problematic their complete lack of accomplishments. They simply cannot deliver, now the only question is were they idiots then and just fooled into thinking their plans were good, or were they evil and corrupt and were just doing it for the paycheck, the parties, the jobs and the "prestige"?

At every inch along the way they went against the intellectual capital of this community because what the people that actually studied this and knew were saying was, "Respect your older housing stock, dedicate yourselves to education and intelligence, and bank on what we are already. Do not try to reinvent the wheel when you do not need to, and change simply for change sake is not progress, sometimes it is worse." Of course they were no money, no parties, no titles, and now way to skim for respecting our housing stick at the time. There was no money in building schools or libraries. To get some of the capital, and some of the funding we would need something, something like no one else ever had something BIG, no REALLY BIG, and they got together, the brain trust Mayor Summers comes out of and invented "DowntowN!" And they awarded themselves for the new lobby on the hospital, something they had noting to do with. All of the development between Arthur and Bunts 80% of it was planned before "DowntowN," and then "Wellness" of which we could watch they through LIVEWELL Lakewood selling hot dogs in a tent in front of Drug Mart! They and they alone would reinvent biking, it was not a nation thing, it was developed or more espertly developed by them. They and they alone would invent "sharrows!" the ones people had been talking about for years were not like ours, theirs, yes theirs were special! And of course get national chains to move in and redevelop "DowntowN" like the 5 Guys National headquarters, errr regional headquarters, errrrrrr local headquarters which was of course a local training area employing 5 people, and staff.

Mark, they had to liquidate the hospital and take the land and all of the money just so they could proves themselves successful, no matter how much it cost the city, their egos, and their bullshit was on the line, yet again. I would point out that nearly everything this group has come up with ends up in dismal failure, empty and left behind as they chase after the next shiny object that could make them the hit of every party, something to behold ant the club and some faux Bullshit thing, they can take credit for, though they are merely co-opting someone else's idea, and trying to make it theirs." This is their history since before the West End debacle. 10+ groups, all with different names, all trying to change Lakewood the way they envision it, all using government funds, or grants, and everyone of them ill suited for a community one can only wonder why they moved here, as all they want to do is change it into something it is not.

Mr. Mayor please stop insulting "the vast intellectual capital of our citizenry".

When we offered our thinking, we were roundly insulted, abused, and harassed. The finest doctors, nurses, accountants, citizens, and, yes, even lawyers were trashed by council-members and public employees.

If you have ZERO intellectual capital, and at least the Mayor admits it. The only thing you can do is marginalize, attack, abuse those with it. I have often written of their sick high school mentality, "the Jocks making fun of the smart kids" and look at the City, look at the Schools, and I am willing to bet with our new Superintendent it's 110% on sports what is left over on curriculum and learning.

The City of Lakewood once known for intelligence, free thinking, open discussion and the arts, is now a mixed up mess, just like a mediocre football player or wrestler would leave colored clay when given a chance to make something. A muddied unusable mixture and brown color. Is it any wonder our lead players in this debacle are a mediocre high football player and a mediocre high school wrestler and their cheerleaders? Now desperately hoping to benefit from the mess they are making, while the city yet once again, bears the cost of their folly.

.
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[Mark Kindt]

Thank you Mr. O'Bryan for your background narratives.

I do not know any of these people in their official capacity. I have met a couple council-members. I just look at public documents when they become available and try to offer a common sense response. I do not have any clients related to these issues, nor do I seek any. Much that I have seen in the documents just staggers the imagination of one with my experience and background.

I harbor no illusions about what I write here. Like that ingenious gentleman of La Mancha, I have the leisure and commitment to tilt at certain types of ill-fated windmills.

However, I do remain seriously interested in just how much of the public treasury has been (or will be) wasted by our local elected representatives.

So far, that appears to be a bundle!

[Stan Austin]

Mark--- I've been here longer than Jim. Jim is spot on. Stan Austin

[Mark Kindt]

Before we move on to another document to review, we have now have enough information to pump-up the list of arguments:

The proposed redevelopment project for the former Lakewood Hospital is the wrong redevelopment project for the following reasons:

Reason No. 1. None of the mixed-use commercial/residential proposals reviewed by the City were financially viable without multi-million dollar public subsidies from the City of Lakewood.

Reason No. 2. Housing data provided by the federal government does not support the proposed construction of new apartment units at the former hospital site.

Reason No. 3. The housing data provided by the City's own consultant is even less supportive of the proposed construction of new apartments at the former hospital site.

Reason No. 4. The market study prepared for the city administration does not provide any support for the use of multi-million dollar public subsidies for the redevelopment of the former hospital site.

Reason No. 5. The proposed redevelopment project will not fully replace public revenues that were lost by the decision to close the hospital.

Reason No. 6. There is no evidence of market failure that would independently justify the use of multi-million dollar subsidies for the redevelopment of the former hospital site.

Reason No. 7. There is a strong argument that the former hospital site be redeveloped for purposes that are broadly public, civic, beneficial and innovative with high on-site employment levels.

Reason No. 8. There is public employment data (in the market study) that suggests that any redevelopment project should attempt to capture future healthcare, social service and science/technology related jobs.

Reason No. 9. Projects with high levels of employment are more likely than the proposed project to generate employee income tax revenues and, therefore, will recoup the value of public subsidies faster.

[Mark Kindt]

A few more thoughts on the City's market study used to justify mixed-use commercial/residential redevelopment of the hospital site:

One Lakewood Place has considerable surface appeal as a concept, but it is a very expensive way to fill the "empty hole" created by the decision process in the city administration during 2013 and 2014.

When you review the market study there is a sort of a "build-it-and-they-will-come" mentality at work. Let's keep in mind that that mentality is rooted in a novel and a film of that novel.

The market study basically says that, despite lots of excess capacity and a slow decline in population, if you redevelop the former hospital site, then the development will pick-up some slice of the market over a protracted period of time, say a decade. I still do not understand why Brooklyn and Linndale were added to Lakewood to set the "Lakewood sub-market." I think it probably inflates the analysis.

There is 5,000 sq. ft. of new retail space just blocks away (Detroit/Manor Park) that has been empty since it was completed (aside from a pizza place).

Lakewood Center North will have enough capacity to cover demand for new apartments for the next 5 to 7 years.

Fine new townhouses are under construction at McKinley Place.

So what happens if a city like Lakewood decides to use public assets and public funds to build-out unneeded excess capacity in the apartment market?

First, it sends a strong message that it is using public policy goals to pick winners (a developer) at the expense of losers (taxpayers and others who already own rental units).

[Stan Austin]

And, a new higher end retail development coming on line at W.117 and Clifton.

[Mark Kindt]

And, a new higher end retail development coming on line at W.117 and Clifton.

Thank you, Mr. Austin. Excellent observation.

The City's planning department knows that the City's redevelopment needs are being fully met by current private sector investment and that these investment incurred only modest public subsidies--not the multi-million dollar subsidies proposed for One Lakewood Place.

In fact, in the past 6 years, Lakewood has witnessed approximately $212,000,000 invested on renovation and new construction projects. (see, page 2, Lakewood Life, Winter 2018).

Clearly, there is strong evidence that the economic development and growth needs of the City are already being met.

I have seen no evidence, public documents or otherwise, that would support multi-million dollar subsidies for One Lakewood Place.

[Mark Kindt]

Let's Review Another Page from the City's Market Study

This slide tells us that there is a lot of rental capacity that is "off-line" for one reason or another.

The Market Study also informs us that the vacancy rates were the highest for apartment units built after 2000. (Presumably, because of rental cost.) (see, p. 52, Market Study).

[Mark Kindt]

Obviously, if new apartments units are built in the City of Lakewood (like One Lakewood Place), they will attract tenants. I think that is a given fact. Newness does count in consumer choice.

My point is that the actual economic data seems to suggest that the demand for these units is weak and can be met by existing new construction and other capacity.

Why as a matter of public policy should our City invest millions of dollars in One Lakewood Place to build excess apartment capacity at taxpayer expense?

Are there potential negative effects? Probably.

One negative effect is the "Peter-to-pay-Paul" effect.

Some new tenants at One Lakewood Place will move there from other Lakewood apartments. Normally, this is not a problem and it is how markets generally work. The problem comes with the magnitude of the public subsidies proposed for this new development.

To put this bluntly, all owners of existing apartment buildings in Lakewood (or other rental units) now get to compete against the City in the housing market.

Why? Because the City, as a matter of public policy, decided to build additional apartment units partially paid for with public assets and public funds.

Owners of existing rental units are likely to lose tenants to the new subsidized rental units. One set of taxpayers (apartment owners) are disadvantaged by public subsidies provided to another taxpayer (developer).