Monday, July 23, 2012

FitzGerald era vs. Dimora era: 9 ways the new county HQ hunt is different

Ed FitzGerald's administration is ready to deal. Cuyahoga County put 13 properties up for sale today and asked landlords to offer proposals for a new county headquarters.

FitzGerald wants to get out of the current administration building and unload the Ameritrust complex, the white elephant we ended up with when Jimmy Dimora and Co. bumbled their way through their own headquarters hunt almost nine years ago.

To the layman (me), the new RFPs read like they were written by pros -- smart guys experienced in commercial downtown real estate. (That'd be CBRE, the county's consultants.) They left me feeling nostalgic for the era when our county ran a little more fast and loose.

So I dug up the RFP from the wildly improvised 2003-2005 headquarters search, and I'm posting it for download here, in case you'd like to compare the old and new ways of doing business in Cuyahoga County. Here are some of the big differences I noticed.

1. Old way: Be transparent at the start and secretive at the end. New way: Vice-versa. The 2003 search started out promising, with all the developers' proposals released to the public right away. The mistakes came at the end, in summer 2005, when Tim Hagan and Jimmy Dimora rejected a lease deal and directly negotiated an as-is purchase of the Ameritrust complex from Dick Jacobs, asbestos and all.

Today, when a once-burned public is paying more attention, we won't have much info to go on at first. "Your proposal will be kept confidential during the negotiating process," the RFP promises, but "ultimately this information will become public when a transaction is submitted by the Cuyahoga County Executive Branch to Cuyahoga County Council for its approval."

This is an improvement over what we heard last week, that the public wouldn't get to see the proposals until a contract was signed.  But it means we'll only have a short window of opportunity to see the details of the administration's plans and debate the other options before the county commits.

2. Old search: For 600,000 to 700,000 square feet.  New search: for about 225,000.  FitzGerald wants a much smaller county headquarters than Dimora and company did.  One reason is that Dimora liked building big, while FitzGerald is cultivating a reputation for shrinking government. He's laid off plenty of people.

But that's not the main reason for the smaller HQ.  The county is seeking to relocate fewer offices this time.  Many agencies, such as the Board of Elections, will stay put.  The idea is to get out of the current county building fast, in hopes a developer will buy the site and add a hotel to the convention center.

3. Lease old, not build new.  The old government looked at leases in existing downtown buildings, then switched gears at Tim Hagan's urging and bought the Ameritrust complex. Hagan wanted the government to own and control its own home.  He and Dimora wanted to tear the Ameritrust Tower down and build something new themselves.

FitzGerald's RFP allows for the options of buying a building or having a developer build a new office for the county.  But leasing an existing building is clearly the favored option.  Building owners are repeatedly required to explain what they'd do as landlords.  Under "New Building Option," the county insists that developers would need to line up lenders in advance and have the building built by March 2014.  Not easy.

4. Old way: Just keep it under $7 million a year.  New way: Break down the costs and cut us some breaks.  The 2003 request asked developers to "detail all and total costs," which "should be similar to current County occupancy costs" of $7 million a year. But the commissioners -- especially Dimora, who wasn't very good at math -- took their eye off the details when they bought the Ameritrust Tower as is, not realizing the move would no longer pay for itself.

FitzGerald's RFP gets into detail: it leaves a space on the form for a rent discount, asks about utility costs, insists the landlord offer janitors and maintenance, and even asks the landlord to pick up the county's costs of moving, "including packing cartons."

5. Broker's fee set in advance.  The county is still smarting from the $3 million paid to its real estate broker, the former Staubach Co., after the Ameritrust purchase.  This time the developer is asked to "outline the standard procuring broker fee offered by Landlord."

6. Package deals encouraged.  FitzGerald clearly doesn't want developers to pick over the 13 county buildings up for sale, bid on some and leave us stuck with the rest.  He'd rather the county's future landlord also take our surplus buildings off our hands.

"Any aggressive offers by Landlord to acquire property shall be a consideration of the [headquarters] transaction, and taken into account during the evaluation," it says. (The 2003 RFP included a line about proposed reuse or purchase of county buildings too, but it wasn't as forceful.)

7. Changing downtown.  Dimora, Hagan, and Peter Lawson Jones justified buying the Ameritrust complex by saying a county headquarters there would revitalize the East 9th and Euclid area.  This time the county will consider the effects on downtown of selling its properties.  Potential buyers have to tell the county what they'll do with the property, how much they plan to invest in it, and whether any renovations will be eco-friendly. (How they'll be held to that once they buy it isn't clear.)

8. Be good!  "Please confirm Landlord and its management company have completed Cuyahoga County ethics training and registered as such with the Cuyahoga County Agency of Inspector General," the new RFP reads.

9. Old way: Insist the deal pay for itself, then forget to do the math.  New way: Just make the best deal.  The 2003 RFP included the goal, "Complete this project with the use of existing resources only, with no additional financial burden on the taxpayers of Cuyahoga County."  Instead, the commissioners pulled the plug after sinking $45 million into the Ameritrust complex, when they realized their plan would permanently add to the cost of government.

The new RFP doesn't make any promises about the budget.  FitzGerald has said that consolidating into new offices will save the county money in the short and long terms.  But it'll be up to him, and us, to do the math before the deals are inked.

(photo from

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