The Gift of Build-Lakewood

[Mark Kindt]

The Gift of Build-Lakewood

The gift of Build-Lakewood from its organizers and supporters to the residents of Lakewood is something like this:

A. Demolish a beloved, invaluable, and award-winning community hospital.

B. End the delivery of approximately $7,000,000 in annual charity care service to low-income families.

C. Ensure that approximately $25,000,000 in taxpayer-owned assets are donated to a developer, all for $1.00.

Build-Lakewood has succeeded in its objectives!

Wow! What a gift!

Here is a shortened version of former council-member Ed Graham's article from this week's Lakewood Observer:

Observer_Vol_14_Issue_16 12.jpg (131.53 KiB) Viewed 4861 times

[cameron karslake]

Yeah...Build Lakewood's gift...one that keeps on taking your wealth...and gives it away to people who don't need it...for nothing!

Privatization at it's most damaging.

Corruption at it's most damaging.

All at the expense of the public's peace of mind.

Thanks guys!

[Mark Kindt]

The Gift Is Even Better!

Lakewood taxpayers needed the help of Build-Lakewood like we needed a hole-in-our-head. And, an enormous hole is what we got.

One Lakewood Place is reported to be an investment of $72,000,000.

On the date the contract is signed and the property is transferred, the developer for just one dollar gains $32,000,000 in public subsidies.

On top of the $25,000,000 described above, we can add $7,000,000 for the value of the site demolition, site remediation, and site preparation costs borne by the taxpayers.

And, there are plans for other subsidies to the occupants of the development. Wow!

My guess is that between the efforts of Build-Lakewood and the city administration, the selected developer is on the way to being granted a public subsidy on the order of 50% of the value of the project.

This "once-in-a-generation" opportunity is an absolute boondoggle for the residents of Lakewood who have to foot the bill.

(Not to mention, losing their hospital)

Again, thank you Build-Lakewood!

[Stan Austin]

These chuckle heads must have taken the "New Math" class that I took in 8th grade. Couldn't add or subtract after that!

[Mark Kindt]

What Does The City Say?

When interviewed about One Lakewood Place, our Planning Director was quoted as follows:

"Sylvester says the annual estimated combined real estate and income taxes is $1.5 million a year." (For quote, see, Destination Lakewood 2018, p. 7.)

So the City is essentially telling us that it will take 21 years to earn back the $32,000,000 in public subsidies provided for the development.

Even this might be a stretch of the imagination....or some classic public relations puffing.

[Stan Austin]

puffing is a polite word, lying is much more definitive

[Mark Kindt]

Public Relations Puffing Or A Vast Overstatement of Revenues

The estimated combined revenue in year 2026 is not $1,500,000 per year, but only $433,947.

Now let's look at the actual city spreadsheet that reflects these future property tax and income tax revenues:

City Spreadsheet April 2018 (2).jpg (1.01 MiB) Viewed 4750 times

PDF copy attached.

[Dan Alaimo]

It's interesting to see people who were either supportive of Build Lakewood or pretty aggressively neutral - i.e. they wanted nothing to do with the pro hospital movement - but they are now complaining about the higher taxes on the horizon.

[Mark Kindt]

No Matter Whose Numbers You Use, There Is No Revenue Benefit For Decades

The Lakewood taxpayers just always take it on the nose on One Lakewood Place.

Using the city number of $12,000,000, it takes 27 years to recover the public subsidies to the developer.

($5M in real estate, plus $7M in site preparations equals $12M divided by $434,000 in revenues)

Using the Graham/Kindt number of $32,000,000 it takes 73 years to recover the public subsidies to the developer.

($25M in real estate, plus $7M in site preparations equals $32M divided by $434,000 in revenues)

Even if we grant the Planning Director's unsupported estimate of $1.5M in combined revenues each year, it still takes 21 years to recover the original public subsidies.

($32M divided by $1.5M in revenues.)

If you have different documents or different numbers, I'd like to review them.

This analysis excludes any consideration of any additional proposed public subsidies to occupants of One Lakewood Place or other public subsidies that might be included in the final definitive transactional documents between the City and its selected developer.

[Mark Kindt]

Hammering Home The Tough Questions

Who in their right mind would reject a $100,000,000 offer from a nationally-recognized hospital system to upgrade and operate Lakewood Hospital, thus maintaining strong lease and income tax revenues to the City of Lakewood, in order to give away $32,000,000 in public assets to a developer for $1.00?

...And a giveaway that doesn't recoup the value of those public assets for decades?

What am I missing?

For all of you Build-Lakewood supporters now reading your new property tax evaluations, anybody really, really believe that the "as is" appraisal value of Lakewood Hospital is "$1.00"?

I think not.

This is now what we have to live with.

Invaluable and needed healthcare and emergency-preparedness civic infrastructure permanently dismantled and donated for nothing for a development that no one needs; all at unbelievable taxpayer cost.

Again, thank you Build-Lakewood for your vision of our future needs.

Everyone else gets to foot the bill.

[Bridget Conant]

But...

They’ll have SHOPPING!

Maybe a Mikasa store, or Ann Taylor? Just imagine!

[Dan Alaimo]

So will call for a formal, official investigaton of this travesty? I'm in no mood to wait for 2020.

[Brian Essi]

Hammering Home The Tough Questions

Who in their right mind would reject a $100,000,000 offer from a nationally-recognized hospital system to upgrade and operate Lakewood Hospital, thus maintaining strong lease and income tax revenues to the City of Lakewood, in order to give away $32,000,000 in public assets to a developer for $1.00?

...And a giveaway that doesn't recoup the value of those public assets for decades?

What am I missing?

Mr. Kindt,

I know you haven't forgotten nor are you missing the following facts, but I thought I would remind other newer readers here and amnesiac Build Lakewood folks that Summers & O'Leary--i.e. Build Lakewood's elected leaders---all with Build Lakewood's culpability:

1. Gave Away $178M of public assets for $9.6M per the State Auditor in Lakewood's CAFR.
http://lakewoodobserver.com/forum/viewt ... or#p171326

2. Let the Clinic off the hook for $278M of liabilities---liabilities Standard & Poors said the Clinic guaranteed for and which an internal Clinic document estimated at $278M.

http://lakewoodobserver.com/forum/viewt ... 34#p160434

3. The Build Lakewood plan has resulted in higher death rates, i.e. Summers, O'Leary and Build Lakewood leaders do in fact have the "blood of these victims on their hands" and folks have "suffered serious personal consequences."

http://lakewoodobserver.com/forum/viewt ... 62#p162262

These are just a few things Build Lakewood folks might have forgotten and bear repeating.

[Mark Kindt]

My point here is a pretty simple one

Without having to re-argue about the hospital and its loss, my arguments are simple and straightforward:

1. The public policy advocacy of Build-Lakewood and its supporters will result in the provision of multi-million dollar public subsidies to the selected developer.

2. Future tax revenues from the development will not repay the cost of these public subsidies for decades.

3. The public policy advocacy of Build-Lakewood and its supporters helped achieve significant transfers of public wealth to private parties.

4. These significant wealth transfers to private parties came at the expense of long-standing community benefits and actual long-standing public assets.

5. The public policy advocacy of Build-Lakewood and its supporters helped achieve the termination of valuable long-term lease and tax revenue streams.

If you have alternative arguments that can be supported with actual public (or private) documents, I urge you to post them here and commence a dialogue.

I am also prepared to meet with anyone to discuss alternative arguments, but only arguments that can be substantiated with actual documents.

[Mark Kindt]

So What Does It Mean?

The public policy advocacy of Build-Lakewood was successful. We now live in the version of Lakewood that they fought for. What does that mean for the residents going forward?

In 2015 and 2016, two versions of the future of Lakewood were offered to the electorate for primacy.

In one version, the Save Lakewood Hospital group advocated for a Lakewood keeping its then-existing acute care hospital in place and all that came with it.

In the other version, the Build-Lakewood group advocated the closure of the then-existing acute care hospital and economic development of the former hospital site.

The version advocated by Build-Lakewood is the version of Lakewood that we all now reside in.

So what does it mean?

1. A significant reduction in high-skilled professional and semi-professional employment in the economically-desired healthcare field.

2. A significant net reduction in employee income tax revenues to be received by the city from that employment.

3. A significant reduction in the levels of charity care than was previously provided to low income families within the city.

4. A significant net reduction in the gross domestic product of the economy of the city; slightly offset by future residential and commercial activity.

5. A significant increase in residential rental units and commercial lease units; but all subsidized at significant city expense.

6. A significant reduction in long-term lease revenues to the city; only partially offset by modest future property tax revenues.

7. The diffusion of hospital-dedicated charitable funds for other non-hospital purposes on a likely non-local basis.

This is the new Lakewood. Other local cities are welcoming new hospitals into their communities (Avon, Beachwood, Cleveland Heights, Parma).

In Lakewood, we've chosen a different path.