The Observation Deck

Nearly two months after asking simple accounting questions, and still Jenn Pae and City Hall will not tell me what dollar amount is reported on the city books for the former hospital site.

In other words Ms. Pae won't tell me the valued booked on the CAFR for the largely "empty building" Ms. Pae so feared the city taking possession of in 2026, we now have to deal with in 2018.

Why do they make things so difficult?

Hmmm

Here is the relevant email chain:

From: Brian Essi
To: "Butler, Kevin" <Kevin.Butler@lakewoodoh.net>; "Pae, Jennifer" <Jennifer.Pae@lakewoodoh.net>
Cc: Sujata Sulzer <ssulzer@jgzcpa.com>; Sarah Betzel <sbetzel@jgzcpa.com>; "Petrus, Jeannine" <Jeannine.Petrus@lakewoodoh.net>; "Schuster, Keith" <Keith.Schuster@lakewoodoh.net>; Daniel O'Malley <daniel.omalley@lakewoodoh.net>; Sam O'Leary <sam.oleary@lakewoodoh.net>; Cynthia Marx <cindy.marx@lakewoodoh.net>; David Anderson <david.anderson@lakewoodoh.net>; Tom Bullock <tom.bullock@lakewoodoh.net>; Ryan Nowlin <ryan.nowlin@lakewoodoh.net>; John Litten <john.litten@lakewoodoh.net>
Sent: Wednesday, November 16, 2016 8:10 AM
Subject: Re: Third Attempt At Questions Concerning Auditor's Report

Dear Director Pae,

I am following up on my emails of September 28, 2016 and October 5, 2016 concerning a question that you never answered.

Namely, (9.1) Regarding my question number 9 below, what was the dollar amount, if any, included in the amounts reported on the Auditor’s Report for 12/31/15 for the “existing Lakewood Hospital site and all other property currently leased to LHA” and referred to on page 88 of the Auditor’s Report?

Can you kindly provide a detailed schedule of "all other property leased to LHA"?

I thank you in advance for your prompt attention to this matter.

Brian J. Essi
Cell 216-346-3434





From: "Butler, Kevin" <Kevin.Butler@lakewoodoh.net>
To: 'Brian Essi' ; "Pae, Jennifer" <Jennifer.Pae@lakewoodoh.net>
Cc: Sujata Sulzer ; Sarah Betzel; "Petrus, Jeannine" <Jeannine.Petrus@lakewoodoh.net>; "Schuster, Keith" <Keith.Schuster@lakewoodoh.net>
Sent: Friday, October 7, 2016 9:27 AM
Subject: RE: Follow Up Questions Concerning Auditor's Report

Mr. Essi:

Jenn is away today and can best answer (or seek answers to) any questions regarding the audit, but I know in response to your first question that on February 19, 2016, $500,000 of the total $7,000,000.00 owed was paid to the City for demolition and/or rehabilitation of the current Lakewood Hospital site. The remaining $6,500,000 will be paid when the FHC opens.

Kevin M. Butler, Director of Law
City of Lakewood | Law Department
(216) 529-6034
kevin.butler@lakewoodoh.net

From: Brian Essi
Sent: Wednesday, October 05, 2016 8:34 PM
To: Pae, Jennifer
Cc: Sujata Sulzer; Sarah Betzel; Butler, Kevin; Petrus, Jeannine; Schuster, Keith
Subject: Re: Follow Up Questions Concerning Auditor's Report

Dear Director Pae,

Thank you for your responses and Ms. Betzel’s responses below.

(2.1) Regarding my question number 2 below, did the city receive the $500K Section 6.2 payment yet? If so when was that received?

(9.1) Regarding my question number 9 below, what was the dollar amount, if any, included in the amounts reported on the Auditor’s Report for 12/31/15 for the “existing Lakewood Hospital site and all other property currently leased to LHA” and referred to on page 88 of the Auditor’s Report?

I thank you in advance for your prompt attention to this matter.

Sincerely,

Brian J. Essi






On Sep 29, 2016, at 10:12 AM, Pae, Jennifer <Jennifer.Pae@lakewoodoh.net> wrote:

Mr. Essi –

The following and attached are the city’s auditor’s response to your questions.


Jennifer Pae
Director of Finance
City of Lakewood
(216) 529-6092
http://www.onelakewood.com



From: Sarah Betzel [mailto:sbetzel@jgzcpa.com]
Sent: Wednesday, September 28, 2016 1:37 PM
To: Pae, Jennifer
Cc: 'Sujata Sulzer'; Schuster, Keith
Subject: RE: Questions Concerning Auditor's Report

Hi Jenn,

See all my answers below in red. I believe I answered them all.

I have also attached an excel file I made when preparing the CAFR that summarizes the activity.

Let me know if you need any further information.

Thank you,
Sarah

[Redacted portions]

9. What was the dollar amount included in the amounts reported on the Auditor’s Report for 12/31/14 none and 12/31/15 for the “existing Lakewood Hospital site and all other property currently leased to LHA” and referred to on page 88 of the Auditor’s Report?

Ms. Betzel's answer: City prepared note. I think it would include the above or 2016 activity?

Could you kindly direct your answers to me via email bjessi@sbcglobal.net or call me at 216 346-3434 with any questions you may have.
Thank you for your prompt attention to this matter.

Sincerely,

Brian J. Essi
Lakewood Resident



<Residential houses on Belle and St. Charles.xlsx><Summary.xlsx>

Alas!

Mr. Butler has responded.

It appears that an asset leased to the Clinic at over $1M per year is recorded as having no value on the City's books.

Hmmm.

From: "Butler, Kevin" <Kevin.Butler@lakewoodoh.net>
To: 'Brian Essi ; "Pae, Jennifer" <Jennifer.Pae@lakewoodoh.net>
Cc: Sujata Sulzer>; Sarah Betzel >; "Petrus, Jeannine" <Jeannine.Petrus@lakewoodoh.net>; "Schuster, Keith" <Keith.Schuster@lakewoodoh.net>; "O'Malley, Daniel" <Daniel.OMalley@lakewoodoh.net>; "O'Leary, Sam" <Sam.OLeary@lakewoodoh.net>; "Marx, Cynthia" <cindy.marx@lakewoodoh.net>; "Anderson, David" <David.Anderson@lakewoodoh.net>; "Bullock, Tom" <Tom.Bullock@lakewoodoh.net>; "Nowlin, Ryan" <Ryan.Nowlin@lakewoodoh.net>; "Litten, John" <John.Litten@lakewoodoh.net>
Sent: Wednesday, November 16, 2016 11:02 AM
Subject: RE: Third Attempt At Questions Concerning Auditor's Report


Mr. Essi:

In response to your first question, there is no dollar amount.

In response to your second question, there is no document responsive to that request, but the property formerly and currently leased to LHA may be found in the 1996 lease agreement (here) and the 2015 master agreement (here).

This concludes our responses to your questions.

Best wishes,

Kevin M. Butler, Director of Law
City of Lakewood | Law Department
(216) 529-6034
kevin.butler@lakewoodoh.net

Brian

As someone with an extensive business and accounting background, what does this mean? Has there been some "creative accounting?"

I'm trying to understand how the hospital, an asset bringing value and money into the city, could have no value?

Bridget Conant wrote:Brian

As someone with an extensive business and accounting background, what does this mean? Has there been some "creative accounting?"

I'm trying to understand how the hospital, an asset bringing value and money into the city, could have no value?

Ms. Conant,

Good questions.

It appears that this "accounting" may have started in 1986---It also appears the "value" of the hospital real estate was booked on LHA's books even though the title to the real estate remained in the City's name.

I will be circling back on this soon after consulting with my gurus.

I can tell you that in the private sector, this type of accounting would be more than unusual.