HOW WE GOT SCREWED

County Commissioner Tim Hagan hasn’t been looking so good these
days. Colleagues have seen him smoking again. And you can’t miss the
extra baggage, the tired eyes. And that was before a recent trip to
MetroHealth on county business ended with him feeling woozy and being
admitted for stent surgery. Again. So no one would have questioned his
skipping the April 16 commissioners’ meeting, just six days later. But
Hagan wasn’t missing this vote for the world.

Three long years, hundreds of hours of private negotiations and
planning sessions, shmoozy dinners, trips to Chicago and clammy
handshakes all culminated in this moment: voting on a deal with
Chicago-based Merchandise Mart Properties Inc. to build and operate a
county-funded convention center and medical mart, this decade’s
can’t-miss taxpayer-funded project.

A few party poopers showed up and were given five minutes each to
whine.

“Is the financial structure of this project required solely to
circumvent Ohio law prohibiting use of sales tax to benefit a private
party, and is that legal?” asked Tom Kelly, an admitted “nobody.” “And
how can the county sign an agreement that guarantees more than $925
million in payments to a private company for a project that has no
specific design, no plan, no final site, no schedule, no budget, no
cost projections, no cost limitations and no guaranteed benefit to the
citizens?”

Thanks. Next. “Concerned citizen and taxpayer” Joe Miller pointed
out, “The taxpayers are paying for this half-billion project from our
sales-tax dollars, but we have a private company, MMPI, who are going
to receive this as a gift.” And something else: “I pay almost $3,000 in
property taxes for a little house on a little piece of land, and this
is going to be a half-billion-dollar project on land worth tens of
millions of dollars, and MMPI is not paying one penny in property
taxes.”

Attorney Fred Nance, the county’s lead negotiator, shot up to earn
his pay with scoffs and guffaws. Cleveland residents will get their
share of jobs, he assured. And secrecy? That’s just how these things
are done. “The notion that there was ever anything inappropriate about
the negotiations being conducted in secret is a canard,” he said.
Uh-huh: canard. “It is no different than any other deal in
America.”

Then he dropped the toothy smile. The county will give MMPI $40
million a year, but the company will return $36 million a year to make
the bond payments (this is how the deal circumvents the law barring the
use of sales-tax money for such a project). The center will cost about
$425 million to build (by current estimates); that amount will likely
double with the interest on bond payments. And MMPI will get a bundle:
more than $150 million to lay the place out, set it in stone and make
as much money as possible.

The agreement is heavy, full of MMPI obligations, noted Nance, whose
law firm stands to make millions servicing the bonds for this deal. He
wobbled his notebook as if this lent weight to his comments. “The
people we have to do this are the most successful mart operator in
America,” he continued. “We are marrying our community strength, our
preeminence in health care … with the best mart operator in the
country, and putting together a deal that gives them incentive to be
successful. But you know what? When they’re successful, we’re
successful.” And that was that. A half-dozen people clapped.

As commission president, Hagan got to speak last, and he took full
advantage of the attention. He mocked Cavs owner Dan Gilbert’s recent
comments — and The Plain Dealer, for quoting him —
about putting the brakes on this process and giving the project some
more thought. Hagan: Move here and run for my seat. He admonished
everyone who had dared to question his motives or methods, repeating
his well-rehearsed, if patronizing, “representative democracy”
speech.

“Everyone in this room understands what’s happened over the last 25
years,” he said. “There’s been a decline in this economy, 300,000
people have left the county. It’s been a difficult time. As elected
officials, we respect the right of individuals to question us, but the
bottom line is, this is a representative democracy.

“This has been a long struggle,” he said. “We’ve done what we think
is right for the community, and we will live with the consequences, as
I have had to live with the consequences of Gateway, and I voted on it
18 years ago. That’s politics in this society. That’s government. And
that’s democracy. It seems to me some people don’t understand how that
works, and how that works is, three people will now take a vote on
behalf of the people who elected them to make these decisions. Take the
roll …”

Yes. Yes. Yes.

A cameraman asked the clerk to slide over so he could get an
unobstructed view of the Three Wise Men, and Hagan joked that they just
wanted to catch a heart attack on film. “That’d be must-see TV,” joshed
Jones. Then Hagan turned things over to Dimora and disappeared, his job
done. The cameras left with him.

County treasurer Jim Rokakis, a leading voice on the local
foreclosure crisis, came forward for the next item on the agenda, the
establishment of a county land bank to deal with the thousands upon
thousands of foreclosed properties. The bank, which has the funds to
start only in the worst-wracked areas of Glenville and Slavic Village,
will kick off sometime in early May with $1 million in federal money
and the potential for $3 million more soon. It’s a start, noted Dimora.
He and Jones gave muted pledges of support.

The next morning, the development deal is top of the fold. Nothing
on the land bank at all.

2004: The “Tim vs. Tim” commissioners race sounded fun, but it was
nothing but dirty politics.

Then-county commissioner Tim McCormack maintained good cred with the
working class, boasting a tireless advocacy for the disadvantaged. But
that wasn’t good enough for downtown moneyed interests and local
AFL-CIO boss John Ryan, who wanted shovels flying for a new convention
center. That year, McCormack found himself with an unexpected
Democratic primary battle for his third term.

Tim Hagan had retired from the board in 1998 after 16 years,
commenting that he was “in the twilight of a mediocre career” and
“looking forward to going to the grocery store without someone asking
me for a job.” But after an unsuccessful 2002 gubernatorial bid and a
slew of plum consultancy assignments, Hagan was apparently recharged
enough to bring his savvy with the power elite back to county
government.

“The real organizer was [Dave] Daberko at National City — he
was the chief fundraiser against me,” says McCormack, who’s back to
lawyering now. Daberko headed up the Greater Cleveland Partnership at
the time. “He was the person who was in the chair and said, ‘Enough of
this.’ And he pulled the weapon, which was Hagan.”

While McCormack, as county auditor, had railed against the excesses
and grossly underestimated costs of Gateway, Hagan was making life easy
for the sports franchise owners, Dick Jacobs and the Gunds, lining up
the necessary tax dollars and arguing with all who urged caution and
frugality. Free office building and Terrace Club and Italian marble for
Jacobs. Free apartment inside the stadium and deluxe restaurant for the
Gunds. McCormack says that a lawyer who was involved admitted that
those shepherding Gateway knew it was only half-funded from the start.
He tried to raise the flag, but no one would listen.

McCormack kept railing when he became a commissioner in ’96. When
the board began to consider relocating headquarters to one of two
downtown sites — Sam Miller’s Tower City or Dick Jacob’s
Ameritrust building — McCormack thought some in the elite
community might try an end-around: Site-selection duties were being
handed to the Maxine Levin School of Urban Affairs, housed in a
building at CSU with Sam Miller’s name all over it.

“My specialty at that time was pissing people off,” says McCormack.
“So I told them I didn’t think it was a good idea for that school to be
making the recommendation, that it’s going to look horrible because of
the ties.”

McCormack decried the overruns at Browns Stadium too. But he never
spoke out against a convention center; just didn’t have it as high on
the list as others did. He bandied about a different idea to promote
pedestrian vibrancy downtown, to line the waterfront with hundreds of
new housing units. Still, he openly gushed to Free Times in
early 2004 about a riverfront location behind Tower City being his site
of choice for a new center and whole host of new developments. Perhaps
not coincidentally, Sam Miller threw his money behind McCormack. Almost
every other business leader backed Hagan, who won. Among those Hagan
backers is Jacobs, whose interests lie in and around Key Tower and its
Marriott, which cast a shadow over MMPI and Hagan’s favored site for
the new development.

Water under the bridge now? “Yeah,” says McCormack, “but that water
hasn’t moved very far.”

As soon as Hagan retook office, the ball was rolling again. In early
2005, new Cleveland Clinic CEO Toby Cosgrove called Mayor Jane Campbell
and staff to his grand office at the heart of the area’s medical gem.
Mike DeAloia, Campbell’s director of development for technology,
remembers a glass table that Cosgrove lined with models of new
buildings the clinic was gearing up to build, as well as others, like a
med mart/convention center, that Cosgrove hoped the taxpayers would
build for him.

Cosgrove said he’d just gotten off the phone with MMPI’s Chris
Kennedy, who’d pledged sincere interest in reinvigorating the push.
Though a 2005 Brookings Institution report would cite a glut of
underutilized convention centers nationwide, Cleveland’s original
concept surely would ease everyone’s minds about the risks.

Cosgrove had other motives besides the ascension of the clinic’s
profile. “He’s in the hotel biz,” says DeAloia. “He’s got to fill hotel
rooms too,” referring to the InterContinental Hotel on the clinic’s
campus.

Cosgrove hinted at a location at nearby University Circle, but
conceded that downtown would be fine too. Then Kennedy entered the room
with the first of numerous pitches he’d ply in the coming years. MMPI
would study the matter, said Kennedy, and get back with the
particulars.

About a month later, after a junket to Chicago to tour MMPI’s
Merchandise Mart buyers’ paradise and a few more planning sessions,
Cosgrove convened another meeting at City Hall to discuss the
financing. This time, Hagan was ready to come out from the shadows,
walking in with his old family friend, Kennedy. (Hagan counted Chris
Kennedy’s father, the late Bobby, among his most trusted mentors. He’s
even godfather to a Kennedy child.)

In February 2006, Crain’s Cleveland Business reported that it
was early talks between Kennedy and Hagan that got Cosgrove to
incorporate the Med Mart concept into the clinic’s master plan. But
during recent hearings, Kennedy claimed that Cosgrove parented the
concept alone. Cosgrove wouldn’t grant Scene an interview.

“They had this study that was two or three inches thick,” says
DeAloia of Kennedy’s business plan. “They didn’t just pull this out in
a month. Kennedy said he was willing to commit a billion dollars to the
project if he could get higher bed and rental-car taxes. Then the
[cost] of the project would be laid on the backs of those attending
events.”

Hagan didn’t say anything that day about the difficulty of pulling
that off, recalls DeAloia, but it wasn’t long before the town’s power
elite came out hard against that funding plan. (“The Greater Cleveland
Partnership hasn’t made a wise move in some time,” jabs DeAloia.)

MMPI would never be heard talking about ponying up a billion dollars
again, and talk soon shifted to MMPI checking overruns in exchange for
keeping all the profits. So a county sales tax hike it would be. And
Hagan would be the one to deliver it, regardless of voter backlash.
After Dimora was safely re-elected in 2006, he and Hagan put the
sales-tax plan in motion.

All other plans were cast aside. DeAloia had put together a proposal
for Campbell just before she turned the office over to Frank Jackson.
The city would give the current convention center site to MMPI in
return for as much as 5 percent of the profits, essentially making the
deal a potential windfall for the city and MMPI together. Jackson
scrapped it.

Once Hagan got involved, DeAloia says, “Jackson came out and said
then that it’s not the city’s deal. It’s the county’s deal. So it was
Hagan’s last hurrah: We build this and I’m going to leave. It’s true
that if not for Hagan, this thing probably wouldn’t have gotten done.”
Commissioner Jones, whose supposed wish for the voters to decide on the
new sales tax was overruled by Hagan and Dimora, admits that if it were
on the ballot, “I doubt it would have passed.”

David Freel, executive director of the Ohio Ethics Commission, says
Hagan’s role in this matter, given his relationship with Kennedy,
doesn’t quite rise to the level of illegal. Still, he says, “A lot of
public officials are very serious about how they apply the standards
and may find that a relationship they have with a vendor or someone
who’s going to get a lot of public money is such that they can’t put
their name on the line.”

Hagan, clearly, is not one of those public officials.

The deal was meticulously arranged to sidestep the law against using
sales-tax increases to fund convention centers. Score another one for
Hagan and Kennedy. And there was the jettisoning of competitive
bidding, something governments typically are required to perform when
spending large sums of public money. MMPI not only didn’t have to
compete for this deal, it will be allowed to choose its favorite
contractors without issuing requests for proposals. Nance says this was
worked out to save time.

“Transparent processes that allow for competitive selection of
contractors or suppliers are most often the best policy,” says Freel,
“but that’s why people have the ability to elect public officials and
hold them to a standard of ethical conduct.”

Hagan needn’t worry about that either. He’s not running again.

Jones admits that the lack of competitive bidding doesn’t look good.
“That’s a fair question,” he says. “A year-and-a-half ago, when
negotiations with MMPI were going slowly, when they had a little
reticence about moving forward, we tried to think of who else was out
there and came up with a few other companies we thought were
capable.”

Michael Hart, editor of Tradeshow Week, confirms that MMPI is
just one of several companies operating marts in cities like Atlanta,
Dallas and Las Vegas. He didn’t want to say whether he thought it best
to follow the law.

“That involves local politics,” says Hart. “Thank God when we write
about this stuff we don’t have to think about that kind of stuff.”

Jones, who overcame earlier doubts about the process to vote
enthusiastically for the deal in the end, tries to sum it up: “We knew
we needed the best in the business to maximize its success, but there’s
a premium to be paid.” And Hagan shouldn’t be faulted, says Jones, for
bringing a friend in to do business. “It’s true that in the business
world, strong relationships are what create opportunities. But
notwithstanding that relationship, we didn’t give away the candy store.
These negotiations weren’t fictitious. They were tough and hard.”

We’ll have to take his word for it.

One week before the development deal is signed, the regular
commissioners’ meeting is canceled. Tim Hagan takes the day to lecture
some students at Tri-C’s Parma campus on How Things Get Done. He comes
to the podium in the student center after deeply rubbing his eyes and
swigging down a half bottle of water.

He wants to talk about leadership, how it can be attained by someone
like him, one of 14 children from a tight-knit Youngstown family,
someone who served in the Army so he could attend college on the GI
Bill. He labored as a steelworker, then a social worker. He also
married up — first to a Carney, which eased his way into the
local political scene, then to his current wife, actress Kate Mulgrew,
who spends her post-Star Trek Voyager days performing plays in
New York.

But while she’s mostly there, Hagan claims to be right here,
confronting the area’s woes: manufacturing decline, the need for
regionalism, brain drain, rampant foreclosures and joblessness. And now
it’s time again, he says, to be a leader, a deal maker, no matter who
questions his connections and motives. “I represent 1.3 million people,
so in a representative democracy, you give power to representatives to
make decisions in your name for a set period of time.”

Then he shifts to a professorial tone and imparts his charges to
“engage in the political process and advance the economy to help shape
your generation’s response to the obvious problems we’re confronted
with as a community.” Some in the audience roll their eyes. Citizens
tried to engage in the political process by looking at how the MMPI
deal was done, and Hagan fought them until the very end. He’s still
fighting them. But Hagan’s had it with all the allegations of
impropriety, the claims of secrecy. To him those are all just
“uninformed opinions.”

“There are people who continuously get up and attack people and have
no real understanding of how that process works,” he says, still either
oblivious to or unconcerned with his patronizing tone. Then he shifts
gears again — “A better informed electorate is the best thing
that holds people accountable” — inadvertently offering up a
segue for the skeptics in the crowd.

One by one, the students get up to become more informed about the
intricacies of the med-mart deal or the county corruption sting. That’s
not what Hagan had in mind. Sweat starts to shine on his forehead. At a
few points, his antagonizers have him pointing down from the pulpit,
face red and puffy with indignation. “Innocent until proven guilty,” he
says in 10 different ways. And what secret meetings? The law was
followed. “What burns me up is, because [the PD] said ‘secret
meetings,’ you thought there were secret meetings. There were no secret
meetings.”

“But the public never had a chance to debate whether this medical
mart is right or what would be better for the community,” a student
says to him. Hagan notes six public hearings convened by Jones. He
neglects to mention that he didn’t attend them, nor ever gave the
slightest indication that he’d factor public feedback into his
decisions.

“By the way, we listen to the public’s view,” he says, “but
ultimately the responsibility rests with your elected representatives.”
The PD can criticize all they want, he adds, but that doesn’t make them
in charge. “They are desperate to get your readership, so what they do
is, they made that whole discussion one in which they were protecting
the public’s right to access. We had already committed to public
access.”

Also skipped: Details of the deal were released only after the PD
had threatened to sue — and only a week before it was ratified by
the commissioners’ vote.

Then, another student wants to know, what’s the deal with MMPI
snubbing Forest City, the company credited with pitching the idea back
in the late ’80s. “You can’t force somebody to want to be a partner, to
sign on the dotted line, if they don’t want to go there,” says Hagan,
checking his watch again. That’s right: We know who’s really in
charge.

Since Hagan acknowledged he’s not running for office again, a
student inquires: What keeps him from doing whatever he wants now?

“I could do that,” admits Hagan. “But I hope, after 30 years of
public life — I’ve been elected five times to the position
— that I have some credibility among the electorate to make a
measurement of what I’ve done. I have three years or so left, and
you’re absolutely right — that’s the power you gave me when you
elected me. I hope that I execute that with respect and thankfulness
and responsibility.”

Hagan steps off the stage and is ushered away. Leadership 101 is
over. The next day, Hagan is at MetroHealth, his region’s medical might
weighing heavily upon his chest.

dharkins@clevescene.com

This article appears in Apr 22-28, 2009.