Monday, May 21, 2012

A new county HQ: Will FitzGerald and council do better than the old regime?

Ed FitzGerald is itching to move out of the county administration building, the drab ’50s offices at Lakeside and Ontario. He’s about to start hunting for a new county headquarters site. The county council wants in on the decision.

That means the executive and council will have to succeed where their predecessors -- Jimmy Dimora, Tim Hagan, and Peter Lawson Jones -- failed. They’ll have to choose a new headquarters location wisely, negotiate a good deal, and save money while doing it.

They’ll have to be tough, shrewd negotiators, even when they sit across the table from downtown real estate interests, some of whom like to fund politicians’ campaigns. And without giving away their negotiating positions, they’ll have to be open enough about their decisions to show the taxpayers that the move makes sense.

That’s all going to be a lot harder than investigating their predecessors’ failures, as FitzGerald is doing. It’s easy to find fault with the last administration, harder to do better next time.

FitzGerald and his real estate consultant say the government could save $56 million over 10 years by moving out of the administration building and some of its other offices around town. He wants to choose a new headquarters location this year and move by 2014.

The administration building “isn’t a modern work space,” FitzGerald told me earlier this year. He thinks the site could become a hotel or parking structure for the Medical Mart and convention center.

The county basically faces three choices if it moves: Lease space in an existing building, buy a building and move in, or buy land and build a new headquarters. FitzGerald sounds like he’s leaning toward a lease.

“Under the previous administration, there were elected officials philosophically opposed to leasing,” FitzGerald told me. (He means Hagan, who told me in my 2008 Ameritrust Tower story that he didn’t want the county to be “subservient” to a landlord.)

“I don’t have that point of view,” FitzGerald said. “I’m totally open to leasing.”

The county is looking for 300,000 square feet of office space — which narrows its options.

The leading contender for a new county HQ seems to be the former Huntington Building at East 9th and Euclid.  Built in the 1920s for the Union Commerce Bank, the place almost looks like a government headquarters already, with Roman columns on the façade and a soaring lobby with beautiful murals. Other contenders are the old May Co. building and Eaton Center, once Eaton moves to Beachwood.

But FitzGerald and the county council need to answer a lot of questions before they commit to a new headquarters. After all, the old government failed at precisely the same task, spending $45 million on the Ameritrust Tower, the albatross skyscraper and superhero-battle stage that the new government is getting ready to sell at a loss.

So far, the FitzGerald Administration hasn’t even proven that the county needs to move.  It’s only asserted it.

Allegro Realty Advisors, FitzGerald’s consultant, says the county should sell 22 buildings, including the administration building and the Ameritrust Tower, and upgrade 15 buildings, including the Justice Center. Allegro estimates its strategy would save the county $56 million over 10 years and $84 million over 20 years.

But Allegro’s assumptions about the cost of leases, maintenance and renovations aren’t available to the public. The county has only given out an 18-page PowerPoint presentation and an eight-page list of county properties, with very little financial information.

I asked for the Allegro report’s two appendices and got a phone call from FitzGerald instead. He asserts that the appendices aren’t a public record.

“It’s trade secret information,” he claimed. Releasing the property evaluation would be “giving away our negotiating position with the private sector when negotiating prices,” he argued.

This is a very fishy interpretation of Ohio’s public records law. But it’s true that as taxpayers, we don’t want our government negotiating with all its cards on the table.

“Before we engage in the actual property transaction, we’ll have a very public conversation about why it makes economic sense,” FitzGerald told me.

We’ll need to see a lot more detail. The Ameritrust Tower debacle proved that rosy financial assumptions and a lack of attention to mundane occupancy costs like repairs, maintenance, and utilities can make a bad real-estate deal look good.

Thankfully, the county council has formed a special committee to look at the real estate transactions. Council president C. Ellen Connally says it’ll look at the short-term and long-term benefits of moving.  That’s key, because the question isn’t just whether the county can make some one-time money in a sale.  It’s also, will it be cheaper to operate the government after the move?

FitzGerald says yes, but he isn’t showing us the numbers to prove it.  Allegro’s estimated savings don’t distinguish between one-time cash and long-term savings.

The press and the public will need to make sure the new government doesn’t blunder into some awful sequel to the Ameritrust affair. Three pages in a PowerPoint isn’t enough proof.


Paul said...

To answer the question in the title, can they possibly do worse?

Roldo Bartimole said...

Keep on this Erick.

It's the biggests unsolved corruption issue in the county.

It really stinks.