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Tuesday, November 23, 2021

No One from the City of Cleveland's Law Department Was Present During Progressive Field Deal "Negotiations"

Posted By on Tue, Nov 23, 2021 at 4:48 PM

click to enlarge The 15-year lease extension and upgrades come with a hefty pricetag for the public - CLEVELAND INDIANS RENDERING
  • Cleveland Indians rendering
  • The 15-year lease extension and upgrades come with a hefty pricetag for the public

No one from the City of Cleveland's law department was present during two years of meetings on the Progressive Field deal, it was revealed Tuesday. The deal, an extended lease agreement between the city, Cuyahoga County, the state of Ohio and the Cleveland Guardians, will keep the MLB club in Cleveland through 2036 and includes $285 million in public subsidies for the maintenance and renovation of Progressive Field.

Cleveland City Council's finance committee considered legislation authorizing the deal Tuesday. And despite concerns voiced by multiple councilpeople over four fraught and tedious hours, council president Kevin Kelley moved the ordinance along. The city legislature will formally vote on the measure at next Monday's meeting, the final meeting of the year.



But several councilpeople felt deprived of critical information and wanted to know who exactly had negotiated on the city's behalf.

Jim Gentile, the city's interim director of finance, was representing the Frank Jackson administration Tuesday. He told council that both he and Sharon Dumas, former finance director and Jackson's current chief of staff, had been present at a number of the meetings. (These are referred to without irony as "negotiations.") Gentile estimated that he was physically present at seven or eight total meetings, but said no one from the city's law department was ever present when he was there. The Greater Cleveland Partnership, the city's chamber of commerce, was more directly involved than the city's legal staff.

In response to some wide eyes, Gentile stressed that both he and Dumas regularly briefed the law department after their meetings. And he assured council that the law department had indeed read the term sheet, which outlines the city's contributions: $8 million per year over 15 years, with funding coming from Progressive Field admissions taxes, a sports facility reserve fund created in the Q Deal, parking and naming rights revenue from the Gateway East garage and the city's general fund. But the law department appeared to play no part in the authorship of the agreement. 

As at last week's marathon meeting of council's Development, Planning and Sustainability committee, individual council members said they had reservations about the imperilment of the city's general fund, which will not only be tapped for a marginal annual contribution ($350,000) to the deal but stands to be cannibalized if other funding streams fall short of projections.

The Gateway East garage is projected to generate $2 million per year, for example, though it only generated $1.6 million in 2019, and only $1.1 million in 2016, an unprecedented year of success for both the Cavaliers and the baseball team. If it doesn't net $2 million, the general fund will have to make up the difference. The general fund is the main pot of money that funds the daily operation of the city, including police, fire, EMS, parks and recreation, roads, etc. Councilman Charles Slife was so unnerved by that prospect that he suggested a companion piece of legislation to raise parking rates at the garage, which the city owns, to increase the likelihood that it will meet projections.

Both councilmen Mike Polensek and Brian Kazy articulated philosophical opposition to the city's contributions, wondering aloud how council could justify giving millions of public dollars to a billionaire team owner when Cleveland remains the poorest big city in the nation and has suffered steady population loss and a host of quality-of-life disasters.

These questions and others led them to wonder who had really designed the deal, and who from the city had been negotiating on residents' behalf. Council members were briefly scandalized to learn that the city's law department was not involved. But the truth is, the presence of city lawyers wouldn't have made much of a difference. (Earlier in the meeting, incidentally, Polensek had asked why the city bothered having a law department in the first place, if council intended to keep outsourcing basic legal duties to high-priced firms. This was in the context of a new $190,000 contract with the firm of Bricker & Eckler to review the city's ARPA plan. Why couldn't the city's own attorneys review the plan, he wondered? The answer from Jim Gentile was that the guidelines were constantly evolving, and it was more prudent to contract with experts.) 

In any event, as county council recognized earlier this month, the pro teams hold all the leverage in lease-extension discussions. Cities can do little but submit to their demands. In that context, it makes all the sense in the world that the teams construct their own leases and design them so that the public bears the entirety of the risk, (fluctuating interest rates, to take one example).

The Guardians can make the deal as outrageous as they like—in the current deal, the public takes on the burden of all capital repairs at the stadium, not what you'd call the result of tough-as-nails negotiating—and still rest assured that a majority of local legislators will play along, calling it "the best deal the public has ever made," a "prototype" for lease extensions with professional teams, and a "public private partnership" of which residents should be proud and so forth, all while celebrating the economic vitality of downtown Cleveland.

Ken Silliman went out of his way to guarantee that the team and its representatives had never threatened to leave Cleveland during the negotiation process—the same guarantee was made about Dan Gilbert during the Q Deal—but the teams understand that they don't have to make those threats explicitly. Elected leaders do it for them.

And so the posture of public sector negotiators, during negotiations—whether it's the finance department, the law department, or Frank Jackson himself—is reactive to the point of obsequiousness. They know that they are not the negotiators. They are the hostages.

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