As the holidays approach with their annual onslaught of dieting advice, we'd like to offer a few humble tips on how to lighten an oft-overlooked load in your wallet.
We understand that in these bountiful times, you may feel burdened by harboring too much money. So take a cue from the Cuyahoga County commissioners and invest in a project guaranteed to lower your cash flow. As they showed with their new headquarters plan, downtown Cleveland holds an abundance of abandoned buildings in need of extravagant repairs. Pay way too much for your favorite, then follow these 10 easy steps to torching millions of unwanted dollars!
1. Build Something You Don't Need!
As one of the poorest cities in America, Cleveland is blessed with many pressing problems: failing schools, crowded jails, short-staffed police departments, and skyrocketing foreclosure rates, just to name a few.
Unfortunately, fixing these problems takes a lot of thought, which can really hurt your head.
So in late 2003, the commissioners just said, Screw it — let's spend all our money on the least pressing issue. Which, of course, would be new offices for the county.
There wasn't anything particularly wrong with the buildings they were occupying on Ontario and Lakeside, except that they weren't big enough to house all county services — from food stamps to car titles — under one roof.
At the time, Mayor Jane Campbell was hoping to renovate the nearby convention center. By abandoning current county headquarters, the commissioners would be making room for this new development. It could be just as lucrative as the Euclid Corridor project, where 9,000 jobs have been promised to show up any day.
Two years later, the commissioners were ready to make a move. Okay, so it wasn't the best time to make a major purchase — they were already planning to spend $120 million on a new juvenile-detention center. But that's why God invented municipal bonds. It's not real money. It's taxpayer money!
2. Money Is No Object
First, the commissioners made sure to follow Newton's Law of Governance: Hire really expensive consultants. For approximately $3 million, the Staubach Company and a slew of advisers would make the whole process look official while ultimately picking the same developer commissioners wanted anyway.
Weirdly enough, the only two real contenders just happened to be huge campaign contributors: Sam Miller and Dick Jacobs.
Miller wanted the county to move into his Higbee building — left largely empty since Dillard's flight in 2002 — as part of his 574th attempt to revive the Tower City mall.
Jacobs, meanwhile, was trying to unload the former Ameritrust bank site, a cluster of asbestos-filled buildings at East Ninth and Euclid that have been vacant since 1995. Since no private entrepreneur would be dumb enough to buy the complex, he naturally turned to the people who were — even producing a brochure in 2002 showing how the commissioners would love their new asbestos-filled digs.
Of course, neither developer's proposal was cheap. Both planned to rent their buildings to the county on long-term leases.
Miller's company, Forest City, wanted to renovate the Higbee building, let the Port Authority buy it, then lease it back to the county for about $6.6 million a year. The total price tag was $117 million.
The Jacobs Group presented several options for the Ameritrust complex, all of which included a 940-car garage. The first involved keeping the historic rotunda, renovating the 29-story tower, and razing then rebuilding an adjoining tower, all at a cost of about $113 million.
This was the option favored by the consultants and Commissioner Peter Lawson Jones.
"In absolute dollars, we do not believe that the Jacobs proposal will be the least expensive alternative," Rob Roe and Chris Livingston of Staubach wrote in 2005. "However, we do believe that the Jacobs proposal offers the most comprehensive fulfillment of the county's objectives."
Jones extolled the Ameritrust site's easy freeway and bus access, and the opportunity to breathe life into a dead section of Euclid Avenue. "That corner clearly provides the best opportunity," he says. "That is a vibrant area with a lot of potential."
His colleagues, Tim Hagan and Jimmy Dimora, liked the site too, only they preferred that the project be way more expensive: Citing the asbestos and cramped floor plan of the old Ameritrust tower, they wanted to raze pretty much everything and build anew.
The Jacobs Group estimated the price tag would rise to $195.3 million.
Of course, no one ever fully explained why Hagan and Dimora just had to spend $195.3 million on some vacant, asbestos-filled buildings that no one else wanted. Neither commissioner returned our calls. And when we asked to see all communication between the commissioners and the Jacobs Group since 2004, we were informed that all such e-mails had been accidentally erased.
3. Impulse Buying Is Fun!
Once the Ameritrust site was selected, things started to unravel quickly. According to Deputy County Administrator Lee Trotter, the original lease arrangement dissolved into a "technical nightmare," so they just decided to buy the Ameritrust complex instead.
That's when the commissioners adopted the Nicole Richie Approach to Shopping: Why waste time figuring out how much that cute handbag is worth, if Daddy's credit card's already on the counter?
So they just skipped that silly appraisal process.
"The county did not have any appraisals completed for this property," Jay Ross, the county's director of central services, wrote in an e-mail.
In a recent ruling for the 2000 tax year, the Ohio Board of Tax Appeals had valued it at $13.5 million. But that didn't include the neighboring parking garage. So the county rounded up to $21.8 million (always leave a tip!) and called it even. It went to a good cause, after all: multimillionaire Dick Jacobs.
4. There Is No Such Thing as Too Many Consultants
Now that they were embarking on a huge project, the commissioners decided they needed someone else to run the show.
Robert P. Madison International signed a $13.2 million contract for architectural design.
R.P. Carbone Construction and Gilbane Building, the construction management team, got $10 million.
More than $8 million more went to Stephen Sebesta and Associates and Precision Environmental to do the asbestos removal.
These companies were supposed to make sure the wrecking ball hit the right buildings. And while two years passed without anything actually being built, they kept drawing checks just the same.
After all, it's only tax money, people!
5. Hire the Guy Who's Under Indictment
About a year after the project began, Vincent Carbone, president of R.P. Carbone, was indicted for allegedly bribing Elyria businessman Larry Jones to get work on Lorain's Justice Center. He pleaded not guilty and has yet to stand trial.
In most cities, having an indicted guy overseeing your largest civic project would be considered bad publicity. But Jimmy Dimora never lets money stand in the way of friendship, especially when the money isn't his. When the news broke, Dimora mounted a defense that would make Romeo Crennel proud, telling The Plain Dealer that Carbone and his company had "impeccable reputations" and "the allegations shocked him."
Adds Jones: "We had approved the contract prior to the indictment. There's not much you can do there."
Actually, there is. The commissioners wiggle out of contracts all the time (see Step 8). But let's not quibble over details, people. We still have money to burn.
6. Hire Contractors Known for Screwing Black Workers, Then Act Surprised When They Screw Black Workers
As Carbone awaited trial, another contractor in Independence, Precision Environmental, was having troubles of its own.
All county projects require that a portion of the contracts go to minority-owned companies. They're not quotas — "small-business enterprise" is the preferred term — but the goal is the same: To create jobs for black workers.
And when you're building a headquarters you don't actually need, the whole job creation thing is a major selling point. That's how you get voters to believe they may get a paycheck out of it.
But in February, the county encountered what is known on the Sci Fi Channel as a peculiar phenomenon: The black contractor on the asbestos-removal job, Lawrence Harris Construction, had the same people on its payroll as Precision, the white contractor.
Alas, identical payrolls are generally a tip-off that the black company is simply getting paid to be a front, while the white company is doing all the work and taking in most of the money. This scam is practically a rule for winning a city or county project.
But the discovery allowed Adrian Maldonado, the county's director of procurement and diversity, to assume the role of Totally Outraged Official. He ordered Harris to hire a more "diversified" workforce, then claimed that the company cleaned up its act within a week.
"We're gonna send a message to every contractor," Maldonado declared. "We cannot have those kinds of games that were played elsewhere here."
Yet one had to wonder why Maldonado was surprised. The feds had already caught Precision doing the same thing at NASA Glenn in the late '90s, when it hired Choice Construction as a front. Fortunately, none of this stopped Precision from getting additional government work.
Just a few months after Maldonado's crackdown, the commissioners awarded Precision yet another contract — though its bid was nearly $1 million more than the competitor's.
After all, when your goal is to lose unwanted money, it's always wise to hire people who will take it in costly and creative new ways.
7. Is That Something Shiny Over There?
Two years into the project, the county had made very little progress toward actually building anything. By this fall, the asbestos removal wasn't finished, and the tower was still standing. Meanwhile, the price tag had ballooned to $223 million, according to The Plain Dealer.
And that's when our heroes got distracted by some bright, shiny objects.
Remember that new convention center the commissioners had wanted to build? There was just one problem: Voters thought this was a really dumb idea.
Then some guys from Chicago came calling with plans for a new medical mart, which would showcase products for the health-care industry. But they wouldn't build a mart without a convention center.
So, in July, Hagan and Dimora overrode Jones' protests and raised the county sales tax to pay for it.
Apparently, they were too busy celebrating to do some basic math. When they awoke from their hangover, they realized they didn't have enough money to build a $120 million juvenile detention center, a $223 million headquarters, and a $450 million convention center. Ooops, our bad!
Which led to a new school of thought: Would anyone really notice if we just blew off that whole headquarters idea?
8. You May Not Know This, but Vacant, Asbestos-Filled Buildings Are Now in High Demand!
At least that's the story the commissioners went with when they decided to announce, "Headquarters? What headquarters?"
This summer, developer John Ferchill submitted an application to the state for historic tax credits to convert the Ameritrust rotunda and an adjacent building into condos and stores — not something that's usually possible in the same place as county offices.
Will it just be food stamps today, ma'am, or can I interest you in our very tasteful selection of rocker-recliners and floor lighting?
Robert Madison, whose firm is part of the architectural-design team, also got early notice that the project was off. "We received a letter from the county that indicated the project would be suspended." He won't say exactly when this happened, but it was "some time ago."
Still, it's never too late to keep spending money on a project that's already dead. In early November, the county was still signing checks and making plans to demolish the tower.
Late last month, they finally announced they were selling the complex. As the media pounced, commissioners tried valiantly to paint Steps 1-7 as a visionary economic strategy. Hagan explained that it would be irresponsible not to allow private development on the Ameritrust site, especially when hundreds of thousands of tax dollars were at stake. "The taxpayers would benefit from somebody paying taxes on that corner," he said.
No one had the heart to remind him that, just a scant two years earlier, he was the guy who removed it from the tax rolls in the first place.
9. The Key to Looking Good: Keep Changing the Numbers
Deputy Administrator Trotter says the county has spent roughly $34 million so far, and will accept nothing less than $35 million in a sale.
"We're not going to give the site away without getting back what we've got in it — period," Hagan told The Plain Dealer.
Fortunately, it's impossible to know how much commissioners have already lost. Trotter isn't sure whether Staubach's fees are included in the $34 million figure. And the records provided to Scene were wonderfully incomplete.
Which leads us to another teachable moment: Always make sure your records are indecipherable. That makes it way harder to get indicted.
To complicate matters, the commissioners were counting on the state to pay for part of the asbestos removal. Now that the project is off, that check will surely be lost in the mail.
Meanwhile, no developer has actually agreed to fork over $35 million. The names being floated so far are Doug Price of the K&D Group and Lou Frangos, whose Frangos Group owns a lot of nearby property.
Jones says the K&D Group is willing to pay $35 million, but there's nothing in writing, and Price doesn't want to talk about it.
Frangos, meanwhile, says he would rather the county take over the Ameritrust complex. But if that falls through, a purchase is "something that I would explore . . . We certainly don't want it to sit there for another 19 years," he says.
Left unsaid is why anyone would pay $35 million for a building that cost just $22 million two years ago.
But accurate math was never the point of this exercise, was it?
10. Congratulate Yourself on a Job Well Done
Okay, so the commissioners wasted two years of work, countless hours of staff time, and millions of dollars. The asbestos isn't gone, and they might get stuck removing it before they can sell. On top of all that, they still don't have a new headquarters, and it's beginning to look suspiciously like the medical mart isn't coming after all.
But the key to abject failure is never letting it dampen your enthusiasm.
"The public is not gonna feel that we made a bad investment in giving away county dollars," Jones says.
"We're achieving our purpose," insists County Administrator Dennis Madden. "We don't even have to go up there, and economic development is happening."
At a meeting to approve putting the buildings up for sale, Hagan was outraged at the mere suggestion that commissioners just blew $34 million and counting.
"There's nothing more disturbing . . . than this speculation, especially with respect to our integrity," he said.
After all, there's a huge upside to all this: We're already paying extra taxes for the new convention center.
Subscribe now to get the latest news delivered right to your inbox.