Questioning The Redevelopment of the Former Hospital Site

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Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Tue Jul 10, 2018 1:57 pm

Mark Kindt wrote:In "Civic Accountability -- Honesty in Local Government I", I presented the case that the city administration was making material financial misrepresentations to the holders of its municipal bonds in violation of federal securities law.

While the city administration clearly feels that it can make any misrepresentation it wants to its citizens, their council-members, and our local courts, it just can't be this cavalier with its bond-holders, the bond market, or the Securities and Exchange Commission without risk.

The recent 2018 appraisal of the former hospital site was all about this kind of "creative" accounting. Yes, somehow the appraiser "missed" the fact that there was an actual building sitting on the real estate that they were appraising. Why? Because the owner of the building (our city) instructed them to ignore it.

An official appraisal was propounded at the specific request of council-members that excluded the value of the actual hospital building! So, we now have an appraisal that is shorted on a building value that is likely in the multi-million dollar range.


Yes, this is a building that the city owns, but try to find that building on the city's books.

My final point is that the city administration is representing that they are participating in an investment. Another misrepresentation to the bond market, perhaps?

(For those public relations professionals or lawyers that might come across this, please take the time to read the U.S. SEC Statement known as the "SEC Harrisburg Release". It is easily found online.)


I want to highlight the recent 2018 appraisal of the former hospital site.

Why?

Because this is the second "bogus" appraisal that has been identified.

Several accountants and lawyers have previously written about the "as instructed" real estate appraisal for the building at 850 Columbia Road that "shorted" that appraisal of that building's actual market value as a commercial property.

As we review decisions, actions and documents related to the liquidation, demolition and redevelopment of Lakewood Hospital, we can identify consistent patterns of behavior that should raise doubts in the mind of every citizen.

We are witnessing the effective execution of a long-range planning effort that has diverted and will divert millions-upon-millions in municipal wealth into the hands of private parties, both non-profit and for-profit.

And, it's not over yet. We are witnessing in real time, the consequences of a massive exercise in privatization. --All led by our current city administration and those council-members who support it.


Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Wed Jul 11, 2018 10:02 am

The Lakewood Hospital Building Is Invisible

Here is the appraisal document that proves the point that I made in the post above. You be the judge. Full document is attached.

Ritley Lakewood Hospital Appraisal Letter 05072018_Page_1.jpg
Ritley Lakewood Hospital Appraisal Letter 05072018_Page_1.jpg (322.53 KiB) Viewed 3765 times
Attachments
Ritley Lakewood Hospital Appraisal Letter 05072018.pdf
(89.73 KiB) Downloaded 162 times


Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Wed Jul 11, 2018 11:33 am

The Summers Deposition Exhibit H

Now, let's compare the land and building value listed on this exhibit (from a court deposition) against the May 7th appraisal.

Remarkably millions of dollars seem to be missing from the appraisal related to the value of the hospital building. You see my point.

Summers Deposition Exhibit H -- Highlighted.jpg
Summers Deposition Exhibit H -- Highlighted.jpg (516.42 KiB) Viewed 3739 times
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Summers Deposition Exhibit H -- Highlighted.pdf
(417.64 KiB) Downloaded 154 times


Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Wed Jul 11, 2018 11:56 am

On some days the former Lakewood Hospital is worth $20,000,000 and on other days it is worth $1.

Who's being made a fool here? --The citizens, our city council, or the holders of our municipal bonds. In my opinion, all three.


Stan Austin
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Stan Austin » Wed Jul 11, 2018 12:24 pm

And, you're only referring to the unadorned worth of the building, absent its former economic value as a former premier hospital and the economic addition that that function brought.


Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Wed Jul 11, 2018 1:53 pm

Exactly, I am not reviewing the value of a hospital as a going-concern, only the value of a vacant hospital building on 5.7 acres of land. Those who have recently been inside the building, tell me that it is in tip-top shape.

(If any reader has a copy of the actual "book value" as described in Summers Deposition Exhibit H, please post the supporting documentation.)


Stan Austin
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Stan Austin » Wed Jul 11, 2018 2:40 pm

general question-- does the Finance Director have any involvement in "disappearing" assets? Is it a general question or is it person specific and would that extend to other civic officers with a fiduciary responsibility such as the law director?


Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Wed Jul 11, 2018 4:10 pm

Mr. Austin, I will not presume to attempt to answer your question.

I mostly review public documents and attempt to understand the plain meaning that those documents convey consistent with my almost 40-year span as a lawyer who had a significant career in public service and now works on highly-sophisticated legal matters.

My critique of the city administration is non-partisan. I do not have a client related to the issues that I write upon. Nor am I seeking one.

Based upon the public documents that I have reviewed, I believe that members of the city administration routinely take risks as public officials that increase the future litigation risks to the city as well as their own personal legal risks.

I have previously written at length about these issues under the rubric of "Honesty in Local Government". Mr. Essi has done the same in print with his "Bad Government" series and his Deck series "Laid Bare". His good work continues as he continues litigation with the City on access to public documents.

The City of Lakewood needs significant municipal reform.

We are witnessing a major long-term disinvestment program that has fundamentally weakened Lakewood as a municipality, a community, and an economy.

Let's stop pretending that giving away our hospital for $1.00 to a developer is an "investment".

No, it's a public policy disaster. It represents the worst of what privatization has to offer.


Bill Call
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Bill Call » Thu Jul 12, 2018 8:18 am

Dan OMalley wrote:
Jared Denman wrote:Makes you wonder whether a TIF zone is being created for One Lakewood Place.


There is not.


"The Hospital is not closing", Mayor Summers.

There were millions of dollars in the cash and investment accounts. Who knows where it went? Who cares? How many secret subsidies have already been agreed to?

Will you ask the Attorney General to investigate this deal?

Will ask for a proper accounting?

Will you ask that all public records be released?


Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Thu Jul 12, 2018 1:44 pm

Comments on the May 7, 2018 vote of city council on development of the former hospital site

The May 7th appraisal did not provide any fair market value for the hospital building; even worse, the entire property, both building and land was given a nonsensical "as is" value of $1.00.

(Keep in mind, that this was the nonsense value being used by the mayor months before the appraisal was conducted.)

We can now reasonably conclude that the five council members that voted in favor of negotiations with the city's developer did so without having any independently quantified values for the amount of actual public subsidies (municipal assets and future incentives) that were going to be offered to the developer. All they had was an artificial "as instructed" appraisal whose values had been dictated by the city administration itself.

Additionally, the members of city council that voted in favor of the ordinance (Anderson, Bullock, Litten, O'Leary, O'Malley) all voted despite the existence of a temporary restraining order ("TRO") from the appellate court protecting the status of the Lakewood Hospital building and site.

While the TRO did not prohibit them from voting, incredibly enough, not one of them had the good sense to defer to a court-order that directly protected the assets that they were voting upon and consigning to demolition.

Compliments must go to newly-elected council-members Rader and George for having the basic common sense and public integrity to vote against the ordinance.


Stan Austin
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Stan Austin » Thu Jul 12, 2018 1:54 pm

Mark Kindt said
Compliments must go to newly-elected council-members Rader and George for having the basic common sense and public integrity to vote against the ordinance.

here, here


Bill Call
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Bill Call » Fri Jul 13, 2018 12:50 pm

Stan Austin wrote:Mark Kindt said
Compliments must go to newly-elected council-members Rader and George for having the basic common sense and public integrity to vote against the ordinance.

here, here


I am not impressed. The two votes made no difference and Rader and George knew their votes made no difference.

What would make a difference is for Rader and George to demand that the City release all of the public regards.

What would make a difference is for Rader and George to ask the Attorney General to investigate the Hospital deal.

I am surprised that the Mayor and his supporters have not asked for a report from the Attorney General, after all, they have nothing to hide.


Peter Grossetti
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Peter Grossetti » Fri Jul 13, 2018 5:51 pm

Bill Call wrote:
Stan Austin wrote:Mark Kindt said
Compliments must go to newly-elected council-members Rader and George for having the basic common sense and public integrity to vote against the ordinance.

here, here


I am not impressed. The two votes made no difference and Rader and George knew their votes made no difference.

What would make a difference is for Rader and George to demand that the City release all of the public regards.

What would make a difference is for Rader and George to ask the Attorney General to investigate the Hospital deal.

I am surprised that the Mayor and his supporters have not asked for a report from the Attorney General, after all, they have nothing to hide.


Here, here, Mr. Call.

While I’m glad history will show that Ms. George and Mr. Rader voted as they did ... these were “politically easy/safe” votes to make. The “politically hard/courageous” actions (a call for COMPLETE transparency and a request for an AG investigation) seems to be very unlikely. In today’s social media vernacular.... SMDH!


"So, let's make the most of this beautiful day.
Since we're together we might as well say:
Would you be mine? Could you be mine?
Won't you be my neighbor?"

~ Fred (Mr. Rogers) Rogers
Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Sat Jul 14, 2018 9:18 am

I draw a clear distinction between the newly-elected council members who voted "no" and the council members that voted "yes" to demolish the hospital.

Let us not ignore the first evidence of independence that we have seen in city council in recent years. Council-members Rader and George need our support, not our ridicule.

On a somewhat separate point:

If the redevelopment of the former Lakewood Hospital site into One Lakewood Place is so good, then why did the city administration feel compelled to propound a "bogus" appraisal to the newest members of council on the date of the vote?

Where I come from, we call that sandbagging.


Mark Kindt
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Re: Questioning The Redevelopment of the Former Hospital Site

Postby Mark Kindt » Sun Jul 15, 2018 10:28 am

Mark Kindt wrote:
Mark Kindt wrote:
How much more do the citizens of Lakewood have to pump into the black hole that used to be an invaluable and profitable community hospital?



The simple answer is a lot:

1. The value of one empty hospital building shortly to be demolished ($10,000,000 to $20,000,000);

2. The estimated $7,000,000 value of building demolition, site remediation, and site preparation to benefit the selected developer;

3. The estimated $5,200,000 value of the former hospital real estate being donated to the selected developer;

4. The estimated $1,518,281 in annual net lost revenue (see chart at top of page) (difference between hospital revenues to the city and development-related revenues to the city);

5. The unknown estimated value of future incentives provided by the City of Lakewood to occupants of One Lakewood Place;

6. The unknown estimated value of increased public safety costs associated with changes to the City's emergency preparedness infrastructure;

Future tax revenues from One Lakewood Place can never compensate the City of Lakewood for this scale of public subsidization.

There is no investment here. It is a dead loss under any scenario. Only with the most delusional kinds of "creative" accounting can you achieve a net positive revenue position for the City.

In fact, it seems highly likely that the only way that the City of Lakewood will be able to sustain this public subsidization will be though an increase in taxation.

I am happy to look at other numbers, but they must be grounded in actual public documents, not hyperbole.


We can now update the scale of the estimate of the public subsidies that are being donated to the city administration's selected developer for it mixed/use development on the former hospital site.

Keep in mind, that I have posted the actual Mayor's fantasy "as is" appraisal documents above that appraise it at $1.00.

1. The value of one empty hospital building shortly to be demolished: $10,000,000 to $20,000,000.

2. The value of the former hospital lot (5.7 acres): $14,250,000.

3. The value of the hospital demolition, site remediation, and site preparation: $7,000,000.

We can reasonably conclude that the range of the likely public subsidies to be granted to the selected developer for the former hospital property range between a low of $31,000,000 to a high of $41,000,000.

The average of these two figures is $36,000,000.

My first argument is that the City of Lakewood is proposing to secretly subsidize nearly 50% of the estimated cost of One Lakewood Place.

My second argument is that the City of Lakewood is concealing the scale of the proposed subsidies to the detriment of its bondholders and the municipal bond market in general.

I would be pleased to review any documents that dispute this analysis from any source.

(Note: In point No. 2, I am now relying upon the current estimates of the value of other vacant land in Lakewood proposed for redevelopment.)



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