Measuring The Damage

[Mark Kindt]

City Has Documented Community Loss In Healthcare

Earlier in 2018, the City of Lakewood retained a team of five healthcare data analytics firms under a $50,000 contract to prepare a study on the current needs of Lakewood for healthcare services.

That team generated a report last May that contained nine (9) recommendations.

To my knowledge, this report is still not available to the general public.

Other possibly relevant documents have been 'blacked-out" and still remain the subject of litigation.

In my analysis in this essay, I have relied upon available public documents. In those few cases where I have had to infer an estimate (like the amount of future Three Arches Foundation grants), I have done so based upon a reasoned understanding of the underlying investment amounts or other amounts.

With respect to the City's own documents, I have a serious concern that the city administration has generated materially false documents, such as Exhibit A, for litigation purposes. Exhibit A was false on its face.

[Stan Austin]

Mr. Kindt speaks in legal terms. I pose a lay persons term--- "digging your own grave"?

[cmager]

Other than the for hire demolition crew-- who will dare show up for the first swing of the ball, first knockdown of the dozer blade? Politically speaking is this a photo op or a photo dodge?

Photoshop Summers, Butler, Pae, and CCF, LHA, LHF, and Three Arches members onto a photo of the swinging wrecking ball.

[Mark Kindt]

The City Took A Complete Bath III

I wanted to post one final summary chart that clearly illustrates just how much the City actually lost on the closure of its hospital.

I have excluded from this chart the value of Lakewood Hospital as a going-concern.

I have also excluded costs that are associated with increased costs for EMS services post hospital closure.

[Mark Kindt]

Some Notes

In addition to what I have described above, some other real estate came back to the city; the Curtis Block, the Community Health Center, and 10 homes. I do not have asset value numbers for these parcels, so I have not reported on them. They are all likely to be either wash transactions or of such minor value that they could not outweigh the losses the other reported figures establish.

Attached is a PDF that includes all of the significant spreadsheets that I created in my review.

[Mark Kindt]

Other Losses; Other Gains

There are other losses and gains that could be quantified. I just don't have the numbers to do so. Here are some examples:

City of Lakewood: Increased costs for the delivery of EMS services every year post hospital closure (loss)

Community: Increased need for the delivery of healthcare services as described in the confidential Lakewood healthcare data study (2018) (loss); and,

Private Parties: Unknown value of hospital equipment and fixtures, such as hospital beds and bed licenses (gain).

While I think that critics can quibble with the way I have formulated my tables, the magnitudes of loss or gain can't really change all that much.

Regardless of the mode of analysis (legal, economic, public policy, financial), the closure of Lakewood Hospital is a failure across-the-board of truly epic scale.

[Mark Kindt]

Some Conclusions

Lakewood is probably unique in Ohio history as the only city to choose to demolish an award-winning community hospital when it had a major proposal to maintain continuity in hospital operations from a highly-qualified health care system.

The city administration and the local civic leadership implemented the closure of our largest employer for staggering job losses and refused to negotiate with an esteemed local public health care system that would have saved 1,000 jobs. (900 direct; 100 indirect)

In December of 2015, the city administration and city council made the radical decision to force the closure of Lakewood Hospital and relocate more than 1,600 jobs out of Lakewood.

Thus, ending a more than 100 year civic and heritage commitment to hospital care for our community.

[Stan Austin]

Additional conclusions: Mr. Kindt, an interested citizen, has on his own done the necessary fiduciary analysis that all along should have been the requisite of our elected officials and the "professionals" employed by the City who should have done their job.
For a buck-- a developer gets the property.
Mr. Kindt--how much were you paid for your invaluable work?
Stan Austin

[Mark Kindt]

Mr. Austin, I have done this out of a sense of duty. I would not have done this at all, but for the fact that I simply could not believe what was actually happening. (and has since happened).

I was honored to serve in a variety of public positions--some low, some high-- in both state and federal government for a number of years early in my career and not just as a lawyer. (1970-1990).

Neither I nor my peers had any difficulty in complying with the then long-standing rules of government ethics.

And, we were able to complete our assigned duties without lying to the public or misleading the courts.

My experience with elected and appointed officials in Lakewood is significantly at odds with this.

As a city, we need to return to ethical norms including commitment to openness, honesty, accountability, and transparency.

When everything is inside ball, the public will always lose. This particular essay is an attempt to quantify exactly that.

[Dan Alaimo]

The City Took A Complete Bath II

Lakewood is probably unique in Ohio history as the only city to choose to demolish an award-winning community hospital when it had a major proposal to maintain continuity in hospital operations from a highly-qualified health care system.

Our city fathers accepted demolition payments totaling $7,000,000 to do so. Those funds will be spent, at no cost to the developer, to benefit the developer by demolition, remediation and preparation of the Lakewood Hospital site.

If the City carefully manages the use of those funds, it might have a net "gain" on these costs.

However, never forget that this "gain" is illusory, since it comes from the liquidation and demolition of major public assets in return for relatively nominal amounts.

Crediting the City with this potential "gain" does not take the liquidation of the hospital out of the red. The range of loss is still substantial.

Range of Loss: $16,720,467 to $43,020,467

Mark,
I wonder if you would be willing to do something like this?
Provide an ongoing scorecard of your various bottom-line findings, like the one in red above. Perhaps this could be at the bottom of each post or in a separate one that could be pinned to the top of this board. This would provide important perspective on the scope of these losses to new visitors to the deck, infrequent visitors to the deck, and council members who might wish it would all go away. You might want to add links to the corroborating explanatory material, but in this case shorter is better.

[Mark Kindt]

Mr. Alaimo, I appreciate your suggestion, but I do not have access to all the information that I really need, nor do I have endless hours in which to pursue this topic.

Let me give you an example of the problem:

How much is the former Lakewood Hospital worth? The public documents provide four answers--all different.

1. $1.00 -- The City of Lakewood appraisal (2018) "as is" valuation.

2. $5,200,000 -- The City of Lakewood appraisal (2018) "as vacant land" valuation.

3. $20,000,000 -- The valuation from Exhibit H (Summers Deposition); consistently used by other officials in 2015-2016.

4. $24,499,500 -- The County Auditor valuation (2015).

So we can see that just the land and the building have a potential value range between $1.00 and $25,000,000.

[Mark Kindt]

Magnitude, Not Exactitude

In "The Road Not Taken", I illustrated the point that even in liquidation Lakewood Hospital had nearly $200,000,000 in financial value. This value was more than sufficient to upgrade and re-purpose Lakewood Hospital for the next 20 years. The LHA negotiating committee had a proposal to do just that from a highly-capable local health care system (Metro.) That proposal was neglected to pursue the closure and demolition of Lakewood Hospital. (Our actual current fact state.) There was a viable alternative to maintain Lakewood Hospital as a going-concern and retain significant employment in well-compensated healthcare-related jobs.

In "Measuring the Damage", I illustrated that the proposal that was pursued by the negotiating committee and adopted by city council had the least value to both the community and to the City itself, but maximized the value to the private party participants or beneficiaries of the Master Agreement transaction.

Neither presentation is an exercise in pure exactitude. However, given the documents available, the figures can be quantified and evaluated for their scale of magnitude.

I am happy to review other documents, other calculations, or even other models, but the taxpayers and the larger community served by Lakewood Hospital took a complete bath on this anyway you cut it.

[Richard Baker]

Let's not become upset over a suicidal Democrat's administration economic strategy for the city by killing the golden goose. The one time payout of a $2,500,000 is looking good to the graduates of the Lakewood school system, discounting the $900,000 a year in payroll taxes they lost since 2012. Perhaps their replacement employment plan to fill all vacant store fronts with bored spouses temporary retail stores, more bars and restaurants, can continue subsidizing more of them and converting office spaces to condos. Perhaps allowing grotesque high density developments with inadequate parking and no green space in a second attempt to destroy the west side neighborhoods? What is making these proprieties hot besides the lack of taste and tax abatement? Is it being closer to Fairview Hospital emergency medical care?

What you haven't thought of is that the Democrats eliminated the City of Lakewood, population 55,000 being listed on a birth certificate. Now all the new proud parents that reside in Lakewood will be privileged to have their babies place of birth listed as Cleveland, OH.

[Jim O'Bryan]

Mark

Sorry it took me some time to get to this valuable discussion, end of the year finds me running around like a mad man getting eveything and everyone ready for 2019.

Is there a way we can figure out...

1) Actual Loses (Value of building and fixtures, land, taxes, etc)?
2) Theoretical losses (loses to the area businesses, and potential income through 2026)?
3) Actual financial benefits?

The reason I ask is I run across many people in my travels, that still belive a lot of the bullshit offered up by Lakewood City Hall, BuildLakewood, and their minions of sheepeople. "We were promised $120 million in new development" "This was a great deal for Lakewood." "Mayor Summers made the best deal he could." (might be true )

I appreciate all of thousands of hours lawyers have put into this but as we move into the era of "one lakewood place" it would be nice to present a summation to our jury of readers and residents.

.

[Mark Kindt]

Mark

Sorry it took me some time to get to this valuable discussion, end of the year finds me running around like a mad man getting eveything and everyone ready for 2019.

Is there a way we can figure out...

1) Actual Loses (Value of building and fixtures, land, taxes, etc)?
2) Theoretical losses (loses to the area businesses, and potential income through 2026)?
3) Actual financial benefits?

The reason I ask is I run across many people in my travels, that still belive a lot of the bullshit offered up by Lakewood City Hall, BuildLakewood, and their minions of sheepeople. "We were promised $120 million in new development" "This was a great deal for Lakewood." "Mayor Summers made the best deal he could." (might be true )

I appreciate all of thousands of hours lawyers have put into this but as we move into the era of "one lakewood place" it would be nice to present a summation to our jury of readers and residents.

.

With respect to No. 1: I think this is possible to some limited extent as I have already demonstrated thoroughly above. I do not have any basis to quantify or even estimate the dollar value of equipment and fixtures, other than the one number that I reported. That number is, in my opinion, unrealistically low.

With respect to No. 2: Again, I do not have any basis to quantify or estimate these losses that I can ground in public documents. Though I did write this up previously in June 2016 on a "guesstimated" basis (June LO).

With respect to No. 3: Jim, the Master Agreement transactions and hospital give-away were/are a net loss for the City of Lakewood. There were no actual financial benefits to the City itself, greater than what it already owned or was contractually entitled to under the earlier agreements.

I'd love to summarize all of this on a quantitative basis, but to do so fairly would only make it more confusing to readers and would require a massive commitment of time.

I am not going to generate an analysis that is not intellectually-sound and quantitatively defensible.