City Council And Mayor Summers Need To Act Like A Responsible Landlord
Here is where we are on the hospital situation:
1. The Cleveland Clinic (CCF) is in breach of the Definitive Agreement (DA) and has committed tortious acts that have caused damage to Lakewood’s assets.
2. Lakewood Hospital Association (LHA) is in breach of the Lease.
3. LHA trustees, including the 3 City’s ex-officio trustees (Summers, Madigan and Bullock) have breached their fiduciary duties by failing to adhere to the charitable mission of LHA and failing to competently oversee CCF.
4. CCF and LHA want out of their obligations under the Lease and DA.
5. Under the circumstances, the City as the Landlord has both the right and the duty to seek alternative tenants to operate a hospital and/or buyers for its buildings and equipment.
6. Mayor Summers and City Council have failed to:
a. Demand that services taken away by CCF be restored and that LHA and CCF comply with all relevant agreements.
b. Conduct any proper or public bidding of its assets, i.e. they have made no effort whatsoever to maximize the value of the assets or advertise the hospital for lease.
7. No rational Landlord would let the “volunteer” trustees of the defaulting tenant and the defaulting CCF control the search for the new tenant and/or the liquidation of the City’s assets. To make matters worse, the defaulting volunteer trustees are led by Tom Gable who is also a CCF trustee—this makes no sense!
8. Instead of fulfilling their legal duties, City leaders chose to negotiate exclusively with LHA and CCF—the parties who caused the perceived crisis.
9. Sources say that the City leaders are close to a deal that is roughly equivalent to the original LOI reached back in January, 2015---a “deal” worth far less than $50 million.
In exchange for this "deal," Lakewood will be asked to surrender:
1. Public money and property valued by LHA’s expert at $120 million.
2. The largest employer in Lakewood--$990,000 in annual income taxes.
3. $7 million per year in charity care for our underserved.
4. Over $ 1 million in rent.
5. $5 million in annual capital improvements to the Hospital through 2026--$55 million.
6. Valuable legal rights against CCF that could be worth more than $100 million at settlement.
7. Economic Activity surrounding hospital estimated at over $250 million annually.
Additional results of the "deal" will be as follows:
1. Lakewood businesses will close,
2. jobs will be lost,
3. homes and business properties will be foreclosed,
4. property values will drop,
5. tax revenues will go down,
6. the elderly will suffer,
7. crime will rise,
8. the underserved will be even more underserved,
9. taxes will rise, and
10. schools will suffer.
To make matters worse:
1. CCF will be the sole provider of healthcare in Lakewood---they have already shown their lack of respect for Lakewood and the health of its citizens.
2. The people who have caused this calamity and pressed for this "deal” will be in control of a majority of the "benefits" flowing from the “deal.” The City gets virtually nothing for its $120 million in assets and the loss of its largest employer.
What Should City Leaders Do?
Set Clear Goals:
1. Maximize Value of Assets.
2. Maximize Prospective Jobs, Tax Base and Economic Impact in repurposing or selling the assets.
3. Provide best possible healthcare for citizens, including the underserved in relation to assets.
The Simplest Solution is also the least Risky and provides the Highest Return:
1. Pursue and Explore Third Party Options—Council Led RFP for hospital, surgical center and/or FHC/ER. Immediately entertain SDP Columbia offer and engage on their vision for acute care hospital outpatient surgery center.
2. Pursue Claims Against LHA and CCF. For Breaches Consider contingency lawyers.
Any Council member who votes for such a corrupt and rotten “deal” will be breaching their duties and exposing themselves and the City to serious legal liabilities.