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.

Dimora wants to move county offices for Med Mart

Scene writer Dan Harkins sat in on the county commissioners' testimony to Cleveland City Council on Monday, and he plucked out the biggest news from the friendly questioning and unanimous vote for the convention center site sale.

Jimmy Dimora wants to move the county offices to make room for the Medical Mart.

“The best way to go,” asserted Dimora, “is to locate the [new convention center] entranceway where the county administration building is and let the [landowner of adjoining property, who’s holding out for a better deal] negotiate with potential hotel developers in the future. And then we could actually take up one of your other empty buildings in town to locate our 1,500 or 1,600 employees and consolidate and hopefully save some money.”

I wrote about this possibility earlier this month, here and here. "Hopefully" save some money is right. On one hand, taxpayers shouldn't want the county to pay super-high prices for the land on St. Clair Avenue, the first-choice site for the Medical Mart and the convention center entrance. On the other hand, they also need to watch carefully to see whether the county's move would really save money.

The commissioners embarked on their ill-fated plan to move to the Ameritrust Tower site on the mistaken belief it would pay for itself. My June 2008 story, "Tower Play," showed it actually would've added millions of dollars a year to the cost of government.

This new move, if it happens, should be cheaper than the Ameritrust plan. By leasing new offices, the county might be able to break even on annual office expenses. (See this Plain Dealer story for how.) But it might end up paying more. I doubt the county would save money by moving. To do that, it would have to lease office space for 1,500 people for less than $5 million a year.

Also, if Dimora and Hagan are still on the commission when this move comes, I'll want to know if they're even willing to lease. If they still want to buy and own the county's new offices, as they did in 2005, that might cost more.

Also, the one-time cost of moving expenses would be in the millions. The county may be better off waiting to move until Cleveland sees whether the Medical Mart prospers.

County gives Jackson ultimatum: Sell convention center or else

Check out WKYC's report from Tuesday night about the city and county's intense negotiations about the convention center site (video above, video and text version here). Mayor Frank Jackson, quiet for most of the Medical Mart/convention center debate, is taking a tough stand in negotiations with the county. Jackson wants the county to pay $25 million for the current convention center and Public Hall.

The county commissioners say $17.5 million is their final offer. If they don't get it by Friday, they say they'll consider other sites. No, not Tower City -- several sites near University Circle. (I think this likely means the Cleveland Play House property on Carnegie.)

Jackson is also standing up for Positively Cleveland, insisting its budget not be slashed and diverted to the Medical Mart. (See my coverage of this issue here and here.) Tom Beres, WKYC's political reporter, asked Tim Hagan about it, and Hagan sounds ready to gut the convention and visitor's bureau. "Positively Cleveland is not as important to the future of this community as a new convention center with a Medical Mart," he tells Beres.

Positively Cleveland's Dennis Roche, making the case for his organization, warns Cleveland could end up like Colorado, which lost a third of its tourism after eliminating its tourism bureau. A representative of a Gateway hotel says cutting the bureau's budget would be "very stupid." The commissioners might also vote to raise the tax on hotel rooms from 4.5% to 6.5%.

On tonight's 7 p.m. broadcast, WKYC reported another idea has come up in negotiations: the city might keep Public Hall, and the new project could stretch west instead -- to the site of the county administration building.

This may just be a negotiating stance or ploy, or a serious way to cut the selling price. If the county or city are serious about the idea, it'd open up two huge issues:

-The county would move to a new headquarters -- reigniting the debate about where it should move and whether it can afford another big new project. See my June 2008 article "Tower Play," about the Ameritrust Tower, which showed that constructing a new county building would add millions of dollars a year to the cost of government.

-MMPI has said it can start booking trade shows into a renovated Public Hall within a year of starting the project. That, it has argued, is key to being "first to market" -- getting a Cleveland Medical Mart going before a possible competitor in New York City opens. Leaving Public Hall out of the project would eliminate that competitive advantage.

Update, Thu. a.m.: In today's Plain Dealer, Jones confirms the Cleveland Play House is an alternate site. The story says the county administration building could become part of the Mall site for the project if negotiations for the private property south of it fall through. (That fits what I've been hearing.)