The Vision Thing

[Mark Kindt]

Please correct me if I am wrong.

The City of Lakewood's entire budget for 2018 is about $129,000,000.

My estimated magnitude of the proposed public subsidies for One Lakewood Place (based on public statements or public documents) is in the conservative range of between $12M to $15M.

You can see that the value of these public subsidies (in land and site preparation costs) could be 10% (or higher) of the current annual budget.

I emphasize this to make the following point.

Unlike the closed process in 2013 and 2014 that produced the Letter of Intent to liquidate the hospital, here we have the opportunity to observe this decision-making process, understand it, and comment upon it intelligently with our local elected leaders.

We can insist upon better transparency with respect to the size and use of the proposed subsidies.

[Mark Kindt]

Many of you may have read the version of this Associated Press article that was published in Sunday's Plain Dealer:

http://www.goerie.com/business/20180311 ... ollar-town

This confirms an argument that I made a few days ago about the importance of certain classes of employment (healthcare, social service, professional, scientific and technical).

The City's own market study, using government data, confirms the importance of this future employment.

Evidently, in Lakewood, we like to shoot ourselves in the foot ahead of other cities.

Our city administration with the support of its "Build Lakewood" cronies decided to make sure that we eliminated the majority of our city's healthcare jobs in 2015/2016.

A city administration sensitive to the long-term needs of its citizens and sensitive to its own future finances and revenues would not have ignored the offer from Metro Health Systems to operate Lakewood Hospital.

An invaluable, long-standing community and public asset was (and is still being) liquidated in a manner that transferred (or will transfer) ten of millions of dollars to a variety of third-party organizations.

We now live with the consequences and the current planning.

The current issue of "Lakewood Life" reports that the city has a reserve of $11,000,000.

Correct me if I am wrong, but my estimate of the proposed (as quoted in the media) public subsides for One Lakewood Place is $12,000,000 on the low end.

[Mark Kindt]

To be abundantly clear about this, I am not suggesting that the stated reserve amount will be transferred for the development of One Lakewood Place.

I am merely illustrating the comparative magnitude of the current reserve against the proposed public subsidy.

You can see that the proposed subsidy is not insignificant.

It is equivalent to about 10% of the city's 2018 budget.

It is equivalent to about 100% of the city's 2017 reserve amount.

[Mark Kindt]

In news this week:

It is reported that the population loss from Cuyahoga County continues with a loss of over 4,000 people and is reportedly the only urban county losing population.

Next

Source: Crain's Cleveland Business, March 26th issue.

"Retail decline in region is 'a permanent shift'" by Jay Miller

"The decline in store traffic is not a trend anymore. It's a shift, a permanent shift", said Elad Granot, dean of the Dauch College of Business and Economics at Ashland University.

"According to the Ohio Department of Jobs and Family Services, the retail trade in the seven-county Cleveland metropolitan area lost 8,758 retail jobs, 5.9% of total jobs in retailing, in the decade between 2006 and 2016. During the same time period, the number of retail establishments dropped 6.5%, a net loss [...] of 601 establishments."

"Over the decade, the core county lost 5,927 jobs, or 8.6% of its retail jobs, and 464, or 10% of it retail establishments. And the decline is continuing, according to preliminary jobs numbers for 2017."

"[...] the region continued to lose retail jobs between January 2017 and January 2018 according to the state data."

"'It is clear that Cleveland has a supply issue in regard to retail real estate,' Isner wrote. '(W)ithout the population growth that other metro areas have enjoyed, extra retail will weaken what remains.'"

[End quotes from Crain's article]

We can see from published reports and government data that tenant demand for occupancy across all sectors (apartment, retail, and office space) is likely to be weak for One Lakewood Place.

Why should the citizens of Lakewood invest $15,000,000 in project that has no positive indicators for viability?

If the folks from Build Lakewood have alternative government data, they should produce it to the public for review. --They don't and they can't.

[Bridget Conant]

There have been numerous studies by various agencies - County, regionwide, and academic- warning that the county is “over-retailed.” I have posted some here in the past but it’s easy to find the research using Google.

This is not new. It has been documented and disseminated for at least the last decade.

A focus on retail is a failing vision.

[Bridget Conant]

What were they thinking in Cleveland?

Real estate developers built more than 21 million square feet of new store space in the Northeast Ohio metropolitan area from 2000 through the first three months of this year, increasing its retail footprint by 21 percent.

But while the new stores were moving in, the shoppers were moving out. The metro area’s population declined by more than 90,000 over a similar period, and it became a stomping ground for students of the dying American mall.

https://www.google.com/amp/s/www.bloomb ... or-a-start

[Mark Kindt]

More from Ms. Conant's article link:

"In 2000, the Cuyahoga County Planning Commission published a report noting that the Northeast Ohio market was already saturated, and that new development about to come online threatened to push vacancies up and rents down. After the report was published, the commission got pushback from real estate developers, Kevin Leeson, one of the authors, recalled: "We heard a lot of 'We don't have too much retail. We have too much obsolete retail.'"

More than 12 percent of the metro's retail real estate sat vacant in the second quarter of 2017, according to data compiled by CBRE Group, the highest rate in more than 10 years.

The area will add another 4 million square feet of retail space by 2021, according to CoStar."

Lakewood leads the way!

[Stan Austin]

I recall although I'm unable to provide attribution that back in the debate for the West End proposal that it was estimated that in this region we were over retailed in terms of square footage by a factor of two.

[Mark Kindt]

Thank you, Mr. Austin. Luckily, through effective citizen efforts, that project never materialized.

This brings us back to one of Mr. Eadeh's points -- the failure of the city administration to do an economic impact study.

At the end of 2014, Mr. Summer's and other civic leaders planned the closing of Lakewood Hospital and also a press release that claimed that the closure would generate $120,000,000 in economic development value.

Among the many things that we now know, we can state with confidence several points:

1. The economic development figure of $120M was "bogus". It was never anything more than a public relations swag.

2. There was no study that analyzed the future use of the former hospital site or its future economic development benefits. The city administration waited for three years to do that (2017).

3. Yet, in published city documents, statements were repeatedly made to the effect that the City had a "once-in-50-year" opportunity.

4. However, the city didn't even have an appraisal of the value of the former hospital site.

Now, of course, we are presented with One Lakewood Place and a price-tag for public subsidies in the approximate amount of $12,000,000 to $15,000,000 for a redevelopment project that is unsupported or, at best, weakly supported by the available data.

This is, of course, occurring in an environment where other cities in Northeast Ohio are actually building new hospitals. Our city is prohibited by its Master Agreement from doing so.

[Jim O'Bryan]

Thank you, Mr. Austin. Luckily, through effective citizen efforts, that project never materialized.

This brings us back to one of Mr. Eadeh's points -- the failure of the city administration to do an economic impact study.

At the end of 2014, Mr. Summer's and other civic leaders planned the closing of Lakewood Hospital and also a press release that claimed that the closure would generate $120,000,000 in economic development value.

Among the many things that we now know, we can state with confidence several points:

1. The economic development figure of $120M was "bogus". It was never anything more than a public relations swag.

2. There was no study that analyzed the future use of the former hospital site or its future economic development benefits. The city administration waited for three years to do that (2017).

3. Yet, in published city documents, statements were repeatedly made to the effect that the City had a "once-in-50-year" opportunity.

4. However, the city didn't even have an appraisal of the value of the former hospital site.

Now, of course, we are presented with One Lakewood Place and a price-tag for public subsidies in the approximate amount of $12,000,000 to $15,000,000 for a redevelopment project that is unsupported or, at best, weakly supported by the available data.

This is, of course, occurring in an environment where other cities in Northeast Ohio are actually building new hospitals. Our city is prohibited by its Master Agreement from doing so.

Mr. Kindt

As always thank you for your thoughtful and in-depth look at how many different ways City Hall screwed up this once in a 50 year opportunity. Which is to be expected when we look at their success rate.

However I take great exception with one of your points, and I personally belive you tend to be too soft on your judgements of the scam artists.

1. The economic development figure of $120M was "bogus". It was never anything more than a public relations swag.

Mark this was not public relations swag, it was an outright lie and they were told repeatedly it was an outright lie and they should never use it. They were told by advisors, accountants and people in the know that were afraid what would happen if the residents ever found out it was a lie. It was used multiple times and still is by the Finance Director which is a crime. It was used repeatedly by the Mayor, the Active Living Task Force, Build Lakewood and others. ALL KNEW IT WAS A LIE EVERY TIME THE USED IT.

Of course non of this would have ever come to light without the dedication of Brian Essi and his lawyers. It was only then when we finally got a glimpse of a small portion of the documents Brian Essi continues to fight for 3 years later in court that we found out, it was a lie and they all knew it was a lie.

Some of this stuff is gray and we may never know, but please stop sugar coating their lies and misdeeds.

Thank you again for posting, you posts are fascinating.

.

[Mark Kindt]

In the post above, Mr. O'Bryan stated: "Some of this stuff is gray and we may never know, but please stop sugar coating their lies and misdeeds." [emphasis added]

I stand by everything that I have written here since 2016.

I have carefully and thoughtfully addressed a variety of misrepresentations made by the city administration related to the closure of the hospital in a continuing series of post in this forum. (I have also done so with documents that were available to me at the time I posted.)

Sir, on numerous occasions, I have previously addressed the misrepresentations associated with the "bogus" $120,000,000 claims of economic value in an unmistakedly direct and pointed style.

There is little value in calling-out politicians as liars without explaining to readers why such misrepresentations actually matter. I have tried to do that intelligently and diligently.

I appreciate that your firm makes this forum available to the public for the free expression of opinion. I appreciate your right to express your own opinions on your firm's forum.

I doubt that any readers of this forum who serve in our local municipal government would construe my writings about their conduct as "sugar coating".

[Stan Austin]

Any description of Mr. Kindt's comments as "sugar coating" should actually be rephrased as spot on, non emotional, views so as to steer conversations to using conventional logic and facts.

[Jim O'Bryan]

Mr. Kindt

I am sorry you took offense to my comment.

I merely meant to underline that public officials were repeatedly warned $120,000,000 was not a real number and one that should never be used.

However it was used again and again even after more warnings.

When a person uses a fact they know is wrong, to me that rises above just misinformation. When they are repeatedly warned and use it in election brochures, news releases,
on city websites, and is used repeatedly by the Finance Director, it takes on eve greater significance.

Well at least in my view.

Your reports have been factual without emotion just facts and legal opinions, for that we should all be thankful.

.

[Mark Kindt]

Mr. Kindt

I am sorry you took offense to my comment.

I merely meant to underline that public officials were repeatedly warned $120,000,000 was not a real number and one that should never be used.

However it was used again and again even after more warnings.

When a person uses a fact they know is wrong, to me that rises above just misinformation. When they are repeatedly warned and use it in election brochures, news releases,
on city websites, and is used repeatedly by the Finance Director, it takes on eve greater significance.

Well at least in my view.

Your reports have been factual without emotion just facts and legal opinions, for that we should all be thankful.

.

Yes, and in 77 posts commencing in December 2016, I presented the case that this was in violation of the federal securities law.

[Mark Kindt]

Redevelopment of former Lakewood Hospital site excluded from State recommendation

Please read the article in Crain's this week.

http://www.crainscleveland.com/article/ ... -officials

Mayor Summers is quoted to the effect that Lakewood will not benefit from new federal "opportunity zones" created by the new tax law.

Had Lakewood been selected for this State recommendation to the U.S. Treasury Department, then it is possible that, if selected as an opportunity zone, the developer of the former hospital site would then have been eligible for certain significant federal tax benefits on its (future) completed project.

Mr. Fitzgerald is also quoted in the article.

This would have provided an additional taxpayer subsidy for the recommended developer by reducing or eliminating capital gains taxation of the value of the real estate asset when sold at a future date.