Wednesday, April 8, 2009

County & MMPI: The new deal

Cuyahoga County released its draft agreement with MMPI today for the Medical Mart and convention center. It looks like the county commissioners plan to approve it next Thursday.

Click here to download the 61-page agreement.

Most of it fleshes out the terms in their 4-page agreement from last spring:

-MMPI will spend $20 million to develop the project. The county will pay the rest, sending MMPI $45-$46 million a year at first -- that'll rise a bit as the deal goes on, to a maximum of about $47.8 million.

-The county will own the site but lease it to MMPI until 2027. MMPI can then negotiate to manage the center and mart until 2067.

-MMPI gets all the revenues from the center and mart, but has to pay for all expenses and repairs using the money it gets from the county. In other words, MMPI might make money on the project, or might lose money. This is the part of the deal that caps how much the county will have to pay.

-The county gets to sell the naming rights to the project.

-If MMPI can't lease 10 Med Mart showrooms and book 5 trade shows or conferences within a year, the county can back out.

New terms that weren't in last year's agreement:

-MMPI gets a $12 million "construction manager/developer fee" to build the project.

-The penalties the county can assess on MMPI every 5 years if the center and mart perform badly are spelled out. The county may be able to cancel the deal in some cases, or it could cut the payments to MMPI to as low as $36 milion a year.

-There's a complicated plan to deal with construction cost overruns, with a reserve set aside to deal with them (out of the money the county gives MMPI) and MMPI paying the rest if the reserve gets tapped out.

-If any taxes on the site aren't abated, the county will have to pay them.

Update, Wed. night: More new provisions:

-If MMPI spent more than $1.5 million in "pre-development agreement costs," the county will reimburse the company for any spending above $1.5 million. (I'm guessing this is because it was a lot harder to figure out the deal and the site location than MMPI thought it'd be.)

-MMPI agrees to let the county book 30 days of events for the public per year, if scheduling them doesn't interfere with other bookings.

-MMPI and the county will write rules for the general contractor to "to promote... diversity, local inclusion and regional employment." (I'm guessing they will be similar to the county's or city's diversity goals for contractors, but maybe not as strict.)

-The county won't have to pay for any incentive payments (rent discounts or signing bonuses, I presume) that MMPI gives tenants to locate there. (Correction: Earlier, in this post, I wrote the county would reimburse MMPI for "tenant lease-up" costs. Not so.)

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