Brewed Fresh Daily

And — In search of a Medical Mart mathmatical formula…
…and more details!

First the Resolution – Council speaks…

Excerpts:

Resolution No. 255-09
Council Member Kelley, Polensek, Zone, Cummins, Keane, Sweeney, Westbrook, Cleveland, Pruitt, Brancatelli, Brady, Reed, Dow, Coats

AN EMERGENCY RESOLUTION
Supporting the Cuyahoga County Board of Commissioners’ and MMPI’s site selection and encouraging quick movement towards site control and construction of the new Cleveland Medical Mart and Convention Center.

WHEREAS, a Cleveland Medical Mart and Convention Center would capitalize on Cleveland’s tremendous healthcare industry and further Cleveland’s position as the leader in this field; and…

WHEREAS, Merchandise Mart Properties, Inc. (MMPI) is committed to applying their extensive knowledge and experience in the trade show and convention business to the Cleveland area market; and…

WHEREAS, these exhaustive studies have concluded that positioning the new Cleveland Medical Mart and Convention Center at the site of the existing convention center is the most advantageous location for this premier facility; and…

WHEREAS, this Council encourages expedited, good-faith negotiations with our partners at the Cuyahoga County Board of Commissioners to move towards site control and construction of the new Cleveland Medical Mart and Convention Center; and…

WHEREAS, this Council is committed to being an active partner in this process; and…

BE IT RESOLVED BY THE COUNCIL OF THE CITY OF CLEVELAND:

Section 1. That this Council supports the Cuyahoga County Board of Commissioners’ and MMPI’s site selection and encourages quick movement towards site control and construction of the new Cleveland Medical Mart and Convention Center…
===================================

To comment regarding just a few of the varied and numerous postings on this subject –

In the beginning…

Legalities of the tax — There was a question of the legalities of how the County Board of Commissioner’s passed the .25% sales tax. In discussions with the General Counsel to the Commissioners, the response was that the Ohio Revised Code allows for the tax to be passed as it was. This appears to be true, but many of us believe it was done out of spirit with the law as it clearly states that if the funding is intended for the sole use of a convention facility. See below – it was passed based on A3 as opposed to A1 that would of required a vote of the people, see #10 paragraph 3 of the ORC section referenced below (5739.026 County sales tax for specific purposes).
————————-
A(1) To provide additional revenues for the payment of bonds or notes issued in anticipation of bonds issued by a convention facilities authority established by the board of county commissioners under Chapter 351. of the Revised Code and to provide additional operating revenues for the convention facilities authority;…

A(3) To provide additional revenue for the county’s general fund;
————————-
REF: 5739.026 County sales tax for specific purposes.

http://codes.ohio.gov/orc/5739.026

Does the project have merit? Big question that’s short on solid answers. As most of the BFD readers know by now, convention facilities are recognized as loss leaders. In and of themselves they do not make money they loose money. But, the theory goes that the economic benefit they attract via the spending of the folks attending trade shows is supposed to be greater than the losses the facilities generate.

This question then leads to what are the capital and bonding costs and operating costs for the 20-year life of the project. These are estimated as follows based on the publicly available information to-date:

This is calculated by estimating only 50% of the cited potential revenue of $330 million per year in “additional, direct local spending” calculated by MMPI and the County estimating 50 trade shows per year (2). I did not bother to try to factor in interest earned etc…heck no one else has either so far as I know.

Bed Tax Q’s — There are other rumblings about the County striking a deal with the City to allow the City to retain the existing $6.5 million we collect for the current annual operations of the Convention Center. No price has been released yet for the County’s purchase of the Public Auditorium and Malls, but the potential of the City retaining the current bed tax is an interesting possible kind of annuity that would total $130 million for the 20 year period. There has not been any mention of what would happen to the $8 million per year bed tax that Positively Cleveland receives. They are worried.

EfficientGovNow, a new initiative from my employer the Fund for Our Economic Future, is now online. The idea is to reward those local governments with the best government collaboraton programs. Up to $300,000 in grant money is available to local governments that partner with other governments to reduce costs and increase the region’s economic competitiveness. The grant money is for implementation, not planning.

 The initiative has two phases. First, local governments will be encouraged to apply for the grants. That’s the phase we started today. In the second phase, the public will determine which of the proposals deserve the grant money. That phase will start this summer. We hope this program both encourages government collaboration and promotes more citizen involvement in reshaping our region.

• Cleveland (Heights) Bachelor: Weekends! (on Waterloo)
  are awesome.

NYT has compiled a good set of views on the prospects for recovery.

James Grant:

[B]ear markets end when investors give up hope..just don’t ask when.

Stephen Roach:

[I]t looks to me as if this recession won’t end until late 2010 or early 2011.

Michael Spence:

If governments are quick and clear in their intentions and intervene in a coordinated way in both the real economy and the financial sector, we will probably have an unusually long and deep global recession through 2010. If they don’t, it is likely to be worse than that.

William Poole:

Heavy-handed federal intervention into the management of companies from banks to auto makers will also delay recovery.

Eric Schmidt :

In early to mid-2010, as banks recover and begin to lend, we should see further progress with consumers taking advantage of the once-in-a-lifetime economic opportunities emerging from this historic collapse.

George Cooper (after discussing two measures of credit market correction):

If we go by the first measure we may see two or more decades of readjustment. If we go by the second, …the broader credit cycle will likely remain a significant drag on economic activity well into the next decade. Either way, we have a long way to go.

Niall Ferguson:

This is a crisis of excessive debt, the end of the Age of Leverage..At the moment, I find it quite easy to imagine two consecutive years of contraction. And I don’t rule out two more lean years after that.

Alan Blinder:

Here’s the hard truth: Nobody knows when this recession will end. Economic forecasting is a dark art, and predicting when recessions begin and end is its weakest link. That said, my best guess is that growth will return in the fourth quarter of this year.

Marcelle Chauvet and Kevin A. Hassett:

[T]he history books give us cause for hope.

The good news is that the odds of this recession lasting into the fourth quarter of 2009 are below 50 percent. But the dice will be thrown each month, and we could get lucky and be out earlier — or unlucky and be stuck in the doldrums.

Carmen M. Reinhart:

After the most severe banking crises around the world in the postwar period, the economy has taken an average of four years to return to its previous peak in personal income. After the Depression, it took the United States 10 years.

Nouriel Roubini:

Even if appropriate aggressive policy actions were undertaken — monetary and fiscal stimulus, bank clean-up and credit restoration, mortgage debt reduction for insolvent households — the growth rate would not rise closer to 2 percent until 2011. So this recession may last 36 months.

Transparency in government is coming…

This weekend, our colleague Valdis Krebs is presenting at the Transparency Camp 2009.

He’s revealing the first of our Map the Mess maps.

You can follow Transparency Camp here or on Twitter at #tcamp09

While Cleveland’s leaders are entertaining themselves with the controversy over the siting of the Med Con, the leading edge of thinking about “What’s Next?” for cities is thinking about building economies around sustainable technologies.

Mayor Nutter yesterday at the Green Jobs meeting in his city:

“‘Philadelphia was the first capital of the United States, and we plan to be the first capital of green jobs.”

Liveblog: The Task Force’s first meeting

Report by Duke University Center on Globalization, Governance and Competitiveness available here.

Source: Keystone Kops: Keystone Hotel

The Med Con food fight begins in earnest.

Forest City Enterprises pitches cheaper plan for medical mart, convention center

Forest City trows a pie: “I don’t know how you can make those kinds of assumptions if you haven’t met with the property owners”

MMPI throws one back: “If the configuration they’ve come up with is pursued, it’s not going to give Cuyahoga County a competitive facility,”

The Pepper Pike mayor cheers on Forest City: “I think it’s very exciting,”

Two commissioners duck:

Commissioners Peter Lawson Jones and Tim Hagan said Thursday that they won’t budge from the mall site unless MMPI executives tell them to reconsider.

(The third one was probably in the back negotiating with the pie company.)

Meanwhile the economy tanks:

Economy Shrinks At Staggering Rate

Berkshire Hathaway has worst year on record

Buffett’s annual letter to shareholders: “We’re certain, for example, that the economy will be in shambles throughout 2009 — and, for that matter, probably well beyond…”

Latham & Watkins Cuts 190 Lawyers

But in talking to clients, “we concluded this is not a normal recession. It will be longer lasting and a slower recovery.”

And the medical convention market starts a structural shift:

Exhibitors Back Away From Exhibits

Pharmaceutical and medical device manufacturers’ relationships with the health care industry have changed recently, but the impact on the showfloor could extend far beyond no longer giving away pens and coffee mugs.

Catherine Scheck, vice president of meetings for the Heart Rhythm Society, said she was worried about the future…

Stan Hull, vice president of pharmaceuticals at GlaxoSmithKline: “I don’t see these medical exhibit halls working in the future,”

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E.O Wilson will be delivering a free lecture on Tuesday at Severance Hall.

Environmentalist E.O. Wilson to discuss Darwin at Severance Hall

Some of his books include:

Consilience: The Unity of Knowledge

The Future of Life

On Human Nature

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