By Laura Johnston, The Plain Dealer
Written with Henry J. Gomez, Plain Dealer Reporter
CLEVELAND, Ohio — Cuyahoga County commissioners are spending millions of tax dollars on a medical mart and convention center without knowing whether the project is in danger of exceeding its $425 million price tag.
The reason: They don’t have a copy of the budget.
And that’s fine with them.
All detailed financial plans are being kept in the hands of the county’s private developer, MMPI of Chicago, officials said, to prevent contractors from learning cost projections for specific project elements.
The county’s lawyer, Jeff Appelbaum, said the secrecy is needed to negotiate low prices. But the secrecy also leaves commissioners approving expenses, including $2.3 million last week, while unable to gauge whether they can keep their promise to cap the project at $425 million.
The lack of first-hand oversight has some government watchdogs worried.
“Everyone wants this thing to succeed,” said Tom Kelly of the Citizens Reform Association of Cuyahoga County. “But the track it’s on is headed toward disaster.”
The elusive budget is the latest evidence that county leaders prefer significant aspects of the publicly funded project to be handled privately. Last week, officials said they intend to bar taxpayers from reviewing construction firms’ proposals for designing and building the complex because secrecy is needed to negotiate the lowest price and to protect proprietary information from contractors competing to become construction manager.
And last year, commissioners planned to approve a contract negotiated behind closed doors with MMPI without first allowing the public to inspect the deal. After The Plain Dealer threatened to sue, commissioners agreed to a weeklong public review.
The county expects MMPI to break ground in October for the mart, a showplace of medical technology, on the northeast corner of St. Clair Avenue and Ontario Street and for a renovated convention center nearby, beneath Malls B and C.
Commissioners agreed to finance the project in 2007 by increasing the county sales tax a quarter cent. The tax increase has raised more than $90 million.
So far, MMPI has collected $4 million, and nearly $3 million more has gone to consultants, studies and lawyers.
Commissioners on Thursday unanimously approved two additional contracts, totaling $2.3 million, for legal assistance and consulting services. The 40-month contracts will involve more than a dozen engineers, architects, support staff and attorneys, including Appelbaum. The county can cancel the two contracts at any time.
After the vote, Commissioner Tim Hagan said he has not seen a budget for the project in three months. The last thing Hagan saw was a general overview showing that the project was on track for the $425 million projection, he said.
“I think their unwillingness to share it is because they want to make sure the numbers are correct,” Hagan said. “I’m confident they will stay within their budget, unless there is a disaster.”
Barb Shergalis, who as project manager is the only county staffer working full-time on the project, said she has never seen MMPI’s total budget.
MMPI Senior Vice President Mark Falanga said the company keeps a detailed budget, with estimates for contractors and subcontractors, but doesn’t show every version to the county.
“We’ve gone through a whole host of budget iterations,” he said. “It’s too premature to disclose any of that. We’re either getting pricing or negotiating pricing. To have that available would be disclosing what we need to not disclose to get the best pricing.”
Appelbaum said the process balances the public interest for transparency with a need to negotiate lower prices.
“There are important civic reasons — to build confidence, trust, to have people embrace the project,” Appelbaum said. “But how do you balance that goal, that desirable concept, with the legitimate reasons for maintaining certain information at different points in time in confidence because it is not in the taxpayers’ best interest to release the information.”
Soon, he said, the balance will tip toward disclosure.
Within 30 days of acquiring necessary land and finalizing a site, according to a construction administration agreement, MMPI must deliver a public budget.
Some don’t want to wait.
Story courtesy of The Plain Dealer
