It's Official: City To Donate $6 million To Carnegie Development

[Bill Call]

Will anyone stand up against this debacle?

The City is also on the hook for $5 million in demolition and site development costs.

It is safe to assume that Carnegie development will be making a substantial profit. My guess is that Carnegie will be investing $0 of its own money.

So..

If the City is providing the cash and land shouldn't the City own the profit?

[Bridget Conant]

Ask development “consultant” for Carnegie, former mayor and no drivers license Ed Fitzgerald. He orchestrated it.

[pj bennett]

Not being sure if I should post this link re: Downtown Development on this thread or start another, I'll just post it here.

http://www.onelakewood.com/wp-content/u ... -16-18.pdf

It is on the agenda for this coming Monday night's Committee Of The Whole meeting.

[Mark Kindt]

I know I sound like a broken record on this.

They have had three years to have an actual independent appraisal done on this real estate. As far as I can tell, that has not been done.

Months ago the City did complete a 400 page Phase I environmental study on the former hospital site.

Once again, the City of Lakewood proposes to give-away major public assets to third parties without an independent review to establish the fair market value of those public assets.

[Mark Kindt]

Here is why the City of Lakewood needs an independent appraisal to establish the fair market value of the former Lakewood Hospital site.

In this public document (Summer's deposition Exhibit H), we see that the hospital buildings and land are listed at $20,000,000.

Council-member Anderson has also used this value in a published article.

[Mark Kindt]

Is the value of the hospital site $5-6 million or is it $20,000,000? Only an independent appraisal can establish the truth.

[Bill Call]

Thanks for the documentation Mr. Kindt.

One of the advantages Mayor Summers and Build Lakewood had was that they lied without embarrassment:

The Hospital is not closing.
The Hospital will continue with fewer beds.
Voting for Issue 64 will force the hospital to close.
There were no other offers.
The Hospital is losing money.

Another advantage was that the Mayor and his supporters shamelessly misled the public about the nature of the City's interest in the Hospital, the City's rights under the operating agreement and the ownership of the assets.

FACT: All of the assets of the Hospital were City assets.

On September 30, 2015 those NET assets totaled about $126 million. If you sold a business with nearly $100 million in cash and investments do you get anything if the buyer lets you keep the cash and investments? But, as we will see, the City doesn't get to keep ANYTHING.

Let’s take a critical look at the City "Setting the Record Straight".

1. $33 million in the Lakewood Hospital Foundation. The document rightly states that the Foundation is separate from Lakewood Hospital. However, the document fails to mention that the City of Lakewood has a beneficial interest in the (NOW NEARLY $40 million) in the Lakewood Hospital Foundation. The cash and investments have been transferred to the Three Arches Foundation. https://www.threearchesfoundation.org/

The Three Arches Foundation has been repurposed to a regional Foundation. While their web site states that the Foundation will serve “Lakewood” it also mentions surrounding communities. A few years ago Councilman Sean Juris told me that the new Foundation would be “regional”

The Three Arches Foundation received Lakewood’s beneficial interest but is not controlled by the City, is not influenced by the City, the people of Lakewood have no control over where and how the Foundation spends the money. The Board is self-appointed and self-selected. The people of Lakewood have no more rights to its assets than the City of Parma and no more say in its operations than the City of Sandusky.

I judge that the $33 million is gone. Balance: $93 million

2. $24 million in cash to the new wellness foundation. This is a very clever sleight of hand on the part of the City. The $24 million is City money. Why transfer City money to an independent foundation? The City has no control over the Board and no influence on its operations. If you had $24 million in your IRA and a third party transferred it to a foundation outside your control would you still have $24 million?

I judge the $24 million gone. Balance: $69 million

3. $29 million in wind down costs and transition costs. There are no wind down costs. The Cleveland Clinic’s recent financial statements reported a multi-million dollar GAIN on the closure of Lakewood Hospital. The Master Agreement obligated the City to pay for all costs including so called Administrative Service Costs. Those costs are whatever the Clinic says they are. There is no mechanism to audit those costs and no limits on those costs.

In past years Lakewood Hospital was charged about 12% of the Clinics administrative costs even though Lakewood Hospital’s revenues were less than 2% of Clinic unrestricted revenue.

(Ken Haber famously said that it’s none of his business what the Cleveland Clinic charges for administrative services. Is that the guy you would pick to run your business?)

So the City pays the Clinic $29 million and counts that as money paid to the City? Nice trick.

I judge the $29 million gone. Balance: $40 million

4. $20 million in cash to the City by 2018. Really? The foot note states that the City could receive as much as $24 million by 2018. It is 2018, where is the $24 million?

I suppose they are counting the $8 million the City will get for the Columbia Road property. Keep in mind that the property was valued at $13 million and contained a business that was worth millions more.

Also keep in mind that the Master agreement transferred all of the cash and investments of Lakewood Hospital to the Cleveland Clinic. If I give you $70 and you give me $10 in exchange for my $100 car what did you pay for the car?

I judged the $20 million gone. No just gone but a complete illusion. Balance: $20 million

5. $20 million in book value of City owned Hospital building and land.

What is the value of a demolished building?
What is the value of land that you intend to give away?

I judge the $20 million gone. Balance $0

Anyone elected official who supported this fiasco should be thanked for their service and sent back to the private sector.