A Curious Drug Mart Transaction

[Bill Call]

The Drug Mart Plaza across from the Lakewood Library has recently been in the news regarding a potential development project. One idea was to develop Kaufman Park and construct a new park on the site of the current strip mall.

According to the County site the Drug Mart Plaza, (PP # 312-14-107) was recently sold for $5.7 million. The curious thing to me is that the property is appraised at $2.1 million. Does anyone have any thoughts on:

1. Are the new owners the same as the old owners?

2. Why the sale now during discussions about the use of the property as part of a redevelopment project?

3. Does the purchase make economic sense? The property taxes on the new value would be $188,600 per year. Property tax allocation for the sub shop would be about $2,000 per MONTH. Plus loan amortization, plus insurance, plus utilities, plus repairs and maintenance. How much profit is there in a sandwich?

4. Was the property undervalued? If so why? If so are other commercial properties in Lakewood similarly undervalued for tax purposes? Is it time for a parcel by parcel reevaluation of Lakewood's commercial property?

5. If the property was not undervalued why would the investors pay a $3.5 million dollar premium?

6. Loan amortization would be about $45,000 per month on the new purchase price, with taxes and insurance $65,000 per month. How much rent can Dots afford?

I have other questions but my favorite is:

7. If the rental value of the Drug Mart Plaza is $800,000 per year why is the rental value of Lakewood Hospital only $1 million a year?

[Jim O'Bryan]

2. Why the sale now during discussions about the use of the property as part of a redevelopment project?

I have other questions but my favorite is:

7. If the rental value of the Drug Mart Plaza is $800,000 per year why is the rental value of Lakewood Hospital only $1 million a year?

Bill

Let me take a shot at these two.

2. Possibly. This is one of the problems you and I have spoken of in the past, and was discussed openly on this board. The effect of leaked information to a place like this.

I think many of us knew of Aldi's arrival well before proeprty was even purchased. It was part of that development that caused me to post the question.

You mention Aldi's or a developer is looking to purchase property, and the prices triple or more. Allow the developer and real estate people to buy homes, and it gives everyone a realistic return on inverstments. This allows the market to work and leads to no need for eminent domain.

Since the WestEnd debacle, I have seen at least 20 plans for Lakewood streets. Only 5 have broken ground.

7. Could it be because the Hospital gives more back to the community than Drug Mart? Last time I checked the Hospital pumped another $6 million plus back into the health and welfare of the community. Not sure what Drug Mart does in the vein.


FWIW


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[Bill Call]

7. Could it be because the Hospital gives more back to the community than Drug Mart? Last time I checked the Hospital pumped another $6 million plus back into the health and welfare of the community. Not sure what Drug Mart does in the vein..

Do you have a breakdown on the $6 million?

If you mean unreimbursed health care is that $6 million for Lakewood residents or for all patients that the Clinic transfers to Lakewood when the Clinic finds out that they have no insurance?

And is the $6 million computed in the same way your typical insurance bill is computed:

Resident of Cleveland uses Lakewood Hospital

Amount charged: $15,000

Discount: 8,000

Allowed amount 7,000

Amount due $7,000.

In this case does the Clinic say it provided $15,000 in service and was only paid $7,000? If the bill is never paid do they say they lost $15,000?

And if the care is given to non Lakewood residents why should the City give the Clinic a discount on rent?

And is the "free" care provided the same "free" care provided by the Clinic in all of its other hospitals? And if so why should Lakewood have to pay for the privaledge to get what other communities get for free?

Just asking.

[Jim O'Bryan]

Bill

This information actually came from charitable donations to groups in the city. I gleened this three years ago when you wanted a full accounting. Remember?

I went in and Jack gladly opened his books for your article, but you were not there.

FWIW



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[Lynn Farris]

Won't the city go back on the property owners and collect on property tax, before the poperty was transferred at the new value? I know they can sue to say the poperty was undervalued - they did it to us when we bought our building.

[Bill Call]

I went in and Jack gladly opened his books for your article, but you were not there.

Sorry I missed it.

If the Clinic is donating $6 million a year to local charities that is very generous of them. However...

Is the $6 million in lieu of rent and if so who decides what charities get the $6 million?

Is council aware of the City's generosity?

Why would the City choose to have the Clinic donate to local charities rather than collect $7 million dollars a year in rent?

I think there is a basis for a compromise:

The Clinic stops donating the $6 million dollars a year to local charities and increases its rental payments to the City to $7 million a year.

As to the new value of the Drug Mart Plaza: I think its time the City reevaluate the taxes paid by commercial buildings in Lakewood. Are they all under valued by 270%?

Wow!!! $7 million a year in rent, 270% more in commercial property taxes...it seems the City is sitting on a gold mine!!!!

[Jim O'Bryan]

Sorry I missed it.

If the Clinic is donating $6 million a year to local charities that is very generous of them. However...

Wow!!! $7 million a year in rent, 270% more in commercial property taxes...it seems the City is sitting on a gold mine!!!!

Bill

If we are to believe the Bill Call rhetoric, then we are better off letting the hospital pick the charities. Right? I mean you are always telling me how the city miss uses funds. Now which do I believe.

You tell me we cannot trust the city with a police levy, that is locked with current spending. But an additional $7 million is OK?

Which is it?

If I was mayor, you would be my finance director. No one can create more smoke and mirror things with numbers better than you.

I mean that as a compliment.


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