Ed FitzGerald is mad. He wants to unload the Ameritrust Tower, Cuyahoga County’s $45 million albatross and skyline ghost. He knows he’ll have to sell the empty high-rise for less than the county put into it. Taxpayers are likely to lose more than $20 million.
So the county executive wants to sue The Staubach Co., the real estate consultant that recommended the Ameritrust complex as the best site for a new county headquarters in 2005 and got paid $3 million.
Is FitzGerald grandstanding, like Mayor Frank Jackson did with his lawsuit against subprime lenders? Or does he have a case?
FitzGerald told me he wants to know whether “a contract violation or fraud” occurred. When his law director finishes his investigation, we may know more about whether anything improper happened when lawyer Anthony O. Calabrese III — now a defendant in the county corruption investigation — negotiated the county contract on Staubach’s behalf. We may also find out why the county paid Staubach (now owned by Jones Lang LaSalle) so much money for the job.
But if FitzGerald tries to argue that Staubach’s advice was so bad, it shares responsibility for the Ameritrust debacle, I think he’ll have a hard time. That’s because the county didn’t make the deal Staubach recommended.
I unearthed Staubach’s final recommendation to the county while working on “Tower Play,” my 2008 story on the Ameritrust Tower affair. Staubach recommended the Ameritrust complex, but it didn’t advise the county to buy the site. It negotiated a lease deal that would’ve obligated the owner, The Jacobs Group, to build a new, second tower next door.
“We believe the Jacobs proposal … is the best overall offer,” Staubach wrote to the county commissioners on March 31, 2005. “The existing tower’s high-rise identity and historic rotunda are unmatched by the other submittals.”
Staubach recommended that the county lease the Ameritrust Tower, the Cleveland Trust rotunda, an attached parking garage and a second tower Jacobs had agreed to build for about $120 million to $125 million. The report says Staubach’s negotiations with Jacobs had gotten the company to add the garage and the new tower to the deal, “neither of which were previously offered.”
The second tower seems to have been an echo of Marcel Breuer’s original plan to build two Ameritrust towers. “The overall structure will effectively accommodate all targeted County functions,” Staubach wrote -- perhaps implying that the existing tower, standing alone, would not.
But Jimmy Dimora, Tim Hagan, and Peter Lawson Jones accepted part of Staubach’s advice and disregarded the rest. They bought the Ameritrust Tower directly from The Jacobs Group for $21.6 million in September 2005, without Staubach as a negotiator.
And Dimora and Hagan didn’t buy the tower to move into it. They bought it to tear it down — a path Staubach had warned against.
“We do not believe a totally new construction alternative would be fiscally responsible at this point in time,” its report added.
Two years later, that line in Staubach’s report was proven right. The commissioners halted the project in fall 2007 after realizing they couldn’t afford it. (You can read my full account of the project in my “Tower Play” story.)
FitzGerald’s administration could still argue that Staubach never should’ve recommended the Ameritrust site at all. In a previous phase of the search, Staubach had named its top four sites, including the Ameritrust complex, but noted drawbacks to each. The Ameritrust Tower’s flaws included its small floor plate — one of the reasons the tower isn't desirable office space today.
But if FitzGerald sues, the former Staubach could argue the county’s real losses came when Dimora, Hagan and Jones bought the tower instead of taking the lease deal. In the end, Staubach could deploy an argument most everyone in town accepts -- that Dimora, Hagan, and Jones are ultimately responsible for the taxpayers’ loss on the Ameritrust Tower.
(photo from clevelandskyscrapers.com)