Can FitzGerald keep county HQ proposals secret? Should he?

I saw the first signs a few months ago, but I never thought it'd be this bad.  Ed FitzGerald is asserting the right to lease a new Cuyahoga County headquarters, sell 13 public buildings, and maybe string together a mega-deal to do it all with one developer, without letting the public see the proposals until the contracts are signed.*

In other words, the county executive is launching a new headquarters search that's less transparent than the infamous Ameritrust deal.  And a four-year-old state law may allow him to do it.

I could barely believe this front-page Plain Dealer story today, "Details on county proposals won't be released to public."  But an email to me from county law director Majeed Makhlouf confirms it's true. Makhlouf quoted from a 2008 law that allows counties to use competitive sealed proposals instead of competitive sealed bidding to award contracts. The law says (bolds mine):

In order to ensure fair and impartial evaluation, proposals and any documents or other records related to a subsequent negotiation for a final contract that would otherwise be available for public inspection and copying under section 149.43 of the Revised Code shall not be available until after the award of the contract.

That law ought to anger anyone who cares about open government.

I knew secrecy was building around the county's big move earlier this year, when I asked for the appendix to a report about the county's real estate holdings and got a call from FitzGerald, who politely explained why he wasn't giving it to me.

His argument, that the report's details were a "trade secret," was fishy. He also said the appendix would give away property appraisals and hurt the county's bargaining position, a practical argument that made more sense. (See my earlier post here.)

But now, he and Makhlouf are asserting the right to tell us nothing about the bargaining positions of developers competing for a public contract -- "so officials could negotiate the best deal for selling property," as the PD paraphrases. In other words, to preserve the county's ability to play developers against each other by keeping them in the dark and bluffing!

I thought the whole point of creating a new government was to create more accountability and openness.

Think about the last search for a new county headquarters.  It was botched so badly, it cost the public tens of millions of dollars and helped bring down the old form of government.

My story about the Ameritrust affair ("Tower Play," June 2008) showed that the county commissioners bought the Ameritrust complex thinking their plan would save money, but it would actually have permanently added to the cost of government. That became clear if you dug deeply enough into the county's assumptions about the costs of leasing vs. building, the costs of financing, and the costs of maintaining, renovating, and operating offices. But if you just trusted the commissioners' assertions, you had no way of knowing they were wrong.

This time, we'll know even less about the county's plans to move. Because the administration chose to request "proposals" instead of "bids," it looks like almost all the important information will be kept secret, in closed executive sessions of the county council and in documents locked up until the contract ink is dry.*

"So I guess we're just supposed to trust the process?" Laura Johnston, the PD's county government reporter, tweeted in frustration yesterday. 

Today I talked to David Marburger, a top media lawyer in town and co-author of Access With Attitude: An Advocate's Guide to Freedom of Information in Ohio. He said the sealed proposals law may not be as black-and-white as Makhlouf says. He read the law and pointed to another section of it:

A county contracting authority shall not use competitive sealed proposals for contracts for construction, design, demolition, alteration, repair, or reconstruction of a building... 

What if the county chooses a developer's proposal to construct a brand-new headquarters building? Could it still keep the proposals secret? Or, say the county chooses to lease an existing downtown office building (as most people think it will). What if the lease calls for the landlord to alter, repair, or reconstruct the building before the county moves in? Can the proposals still be withheld?

Either way, Marburger calls the law bad policy.

"Officials are allowed to commit to a contract before the public can see what the options were and influence the outcome," he says. "That can't be in the public's interest. ... By then, it's too late to even raise questions."

*Update, 7/23: FitzGerald says the proposals will be released to the public one step before the contracts are signed, when the negotiated deals go to the county council for approval.  The county request for proposals says so too.

This is an improvement, though it leaves the public with a short window of opportunity to see and debate the options before the contracts are signed.  See item #1 in my new blog post.

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.