Re: Traficanti wants Cafaro Co. to drop lawsuit
Posted by: AMCSR (IP Logged)
Date: April 12, 2007 03:16PM
In answer to this issue, this is not about keeping JFS at Garland Plaza. The following is the text presented by Thomas L. Anastos in response to Commissioner Traficanti's request that the Taxpayer lawsuit be dropped.
Good afternoon Ladies and Gentlemen:
My name is Tom Anastos. I am an attorney at Ulmer & Berne in Cleveland and I am one of the attorneys representing the Taxpayers of Mahoning County through Ohio Valley Mall Company, contesting Mahoning County’s acquisition of the Oakhill Renaissance Place.
The first thing I want to clear up is that this lawsuit is not about keeping JFS at Garland Plaza. JFS has been on a month to month lease for the last 7 years. They could have moved anytime during that period. Based on public statements made by Commissioner Traficanti, they are moving out of Garland Plaza on April 15,2007 and we have done nothing to stop them. So, what is this lawsuit about?
The lawsuit is based on a simple premise, that the County did not the due diligence it should have done prior to taking on a project that will cost millions of dollars resulting in the taxpayers of Mahoning County being burdened for years to come with additional debt as scarce General Fund revenues are diverted tot he operation, maintenance and upkeep of Oakhill.
As I stand here today, General Fund revenue is being utilized to subsidize this building, the same General Fund that does not have enough money to keep the jail fully open. There are a number of questions that must be answered before the taxpayers’ hard-earned money is spent on this project. What will happen to the State loan? What will happen to the J.P. Morgan Chase loan? What will happen to the tax lien? What will happen to the mechanics’ lien? Are there asbestos problems? Are there PCB’s on the property or in the building? Is there a lead problem with the drinking water? Do the building and the grounds comply with the Americans with Disabilities Act? Where will the county get $900,000 for new office cubicles? Where will the county get the money for the JFS move? These are just a few questions that you would think the county has answers to. Well, the fact is it does not.
Let me show you now what your Commissioners have said under oath regarding some of these issues:
[VIDEO PRESENTATION BEGINS]
For example, despite the $1 million in liens against the property, which have now resulted in a foreclosure action, the sworn testimony of Commissioners Ludt and Traficanti demonstrates that they voted for the County to acquire Oakhill not even realizing that the liens had survived the SCDC bankruptcy proceedings and that the County could ultimately be held responsible for paying the liens: 1. Ludt 1: Thinks ODD mortgage dismissed
2. Traf 20: Thought ODD owned Oakhill
3. Ludt 3: No docs showing ODD forgiveness/no plan to pay
Moreover, the County does not have a plan in place yet for paying off the lien holders to avoid foreclosure:
4. Ludt 4: No plan to pay tax lien5. Traf 21: No plan to pay tax lien
PHYSICAL/FINANCIAL CONDITION In addition to not understanding or taking into account the magnitude of the problem caused by the liens against the property, despite the size and age of the building, according to Commissioner Traficanti the County plunged into the transaction with little or no understanding of the physical condition of the premises, something none of us would do when even purchasing a home when our own money is at risk: 6. AT 43:16-44:15 Wishes he knew condition
In addition, the County has made no effort to project or quantify the costs of the inevitable capital improvments to Oakhill:7. Ludt 17: No studies for improvementsEven more importantly, the County moved forward with acquiring Oakhill without knowing the historical costs associated with operating the building, the costs that it is now faced with paying on a monthly basis:8. AT 40:13-40:21 Never discussed financial condition
9. AT 41:04-41:23 D/N/K Oakhill costs
10. Ludt 15: D/N/K expenses
Commissioner Ludt testified that he does not know if Oakhill is running in the black and, according to him, if the property is not making ends meet, then General Fund monies – your tax dollars – are being used to make up the difference:11. DL 77:11-77:20 If in red, then General Fund
The Commissioners not knowing the costs associated with Oakhill, and not having taken the time to prepare a pro forma to model how the property would operate with tenants, Commissioner Ludt correctly states at the end of this (longer) clip, that today it is only a guess as to whether Oakhill can ever run the black:12. Traf 32: No analysis yet of rents from other departments
13. DL 44:21-45:06 Guess if can run in black – need to shorten
14. Ludt 27: D/N/K if will ever break even
RENOVATION COSTS Finally, as you are aware, despite the uncertainties surrounding the acquisition of Oakhill and the property’s future drain on the General Fund, the County is moving forward with its plans to renovate approximately 100,000 square feet of space for JFS. In fact, the County has already borrowed $5 million for the renovation project. Unfortunately, however, the Commissioners do not know if $5 million will be enough to cover the renovation costs:15. AT 100:04-100:21 D/N/K if will exceed $5 million
16. DL 99:13-100:01 Could be higher than $5 million
Dealing with asbestos is one of the major uncertainties in how much the renovation will cost. Yet, the possibility of costly asbestos remediation was not even taken into account in the projection that the JFS space at Oakhill could be renovated for $5 million:17. Ludt 31: D/N/K if asbestos
18. Ludt 32: Remediation is very expensive
19. AT 104:04-105:15 Asbestos and costs
There are other costs associated with moving JFS to Oakhill,
including the cost of the move itself, the cost of furnishings, and the cost to install the wiring for 350 computers to tie into the JFS line to Columbus. The cost of the office cubicles alone has been estimated at $900,000 – or $3,000 each for 300 cubicles. Despite all of these uncertainties, Commissioners Ludt and Traficanti maintain that they are not the least bit concerned that Oakhill will be a drain on the County. They also are not concerned that General Fund monies raised by the permanent sales tax that the Mahoning County taxpayers will vote on on May 8 might be used to subsidize Oakhill:
20. DL 130:11-131:16 Tax levy/General Fund/Subsidy
21. AT 114:19-116:04 Still not concerned about sales tax
We do not want the taxpayers of Mahoning County to think that we have chosen just a few clips that may have been taken out of context, so we have put Commissioner Traficanti and Commissioner Ludt’s entire depositions on the internet for public view. You can watch these depositions at www.yourtaxdollarsatwork (all one word).biz
I am here today with a proposal – a settlement proposal – from Ohio Valley Mall that would take a giant step toward insuring that the Taxpayers of Mahoning County would never be called upon to subsidize Oakhill. It is a simple, three part proposal.
First, Ohio Valley Mall would agree to dismiss its lawsuit and give the County the time to do what it should have done in the first place – figure out the finances of owning, operating, and renovating a building the size and age and condition of Oakhill.
1. The County would have time, for example, to negotiate terms with the lienholders against the Oakhill property in an effort to reduce the $1 million in debt against the property.
2. The County would have time to fully assess the costs associated with operating Oakhill and based on these costs and the rent it could hope to charge Oakhill tenants, put together a reasonable pro forma for Oakhill. Only then will the taxpayers of Mahoning County know the extent to which Oakhill will be a drain on the General Fund.
3. The County would have time to renegotiate the leases with the existing Oakhill tenants, the largest of which are a Headstart program and the Youngstown City Health Department.
4. It would have time to determine the actual costs of renovating the Oakhill space for JFS, time to figure out how it is going to pay for moving JFS to Oakhill, time to determine how it is going to pay to furnish the new JFS space at Oakhill, and time to determine what rent under the law it could charge JFS for the new space at Oakhill.
If, after taking into account all of the above, the County can reasonably demonstrate that it would be as cost-effective for JFS to move to Oakhill as it is for JFS at its current location, then the County and the Taxpayers both win.
In other words, all the County would need to do is demonstrate that the move to Oakhill will not harm JFS.
If, on the other hand, the conclusion is that moving JFS to Oakhill will cost JFS more than it is paying at its current location – meaning that the services JFS provides to those who need it most will have to be cut to pay for the County’s decision to purchase Oakhill – then our proposal is that the County should put the JFS lease out to competitive bidding. The County could, of course, itself submit a bid for the Oakhill space, but putting JFS out to competitive bidding would insure that JFS and the services it provides would not bear the brunt of the costs associated with Oakhill.
Finally, in the event that JFS gets put out to bid and the County itself is not the lowest and best bidder, then the County would have to give Oakhill back to the Southside Community Development Corp. bankruptcy estate. At that point the County would have proven beyond a doubt that Oakhill is and will be a burden to the Mahoning County taxpayers that is not worth keeping. In either event – if the County demonstrates that JFS will not pay more at Oakhill than it currently does, or if the JFS office space gets put out for competitive bidding, or if the County ultimately has to give Oakhill back – this Taxpayer lawsuit goes away, JFS’s budget is safeguarded, and Oakhill will not be a drain on the County’s General Fund. This is a win-win settlement proposal that Ohio Valley Mall thinks the taxpayers of Mahoning County should recommend to the elected officials that represent them. The Mahoning County Taxpayers need the County to take the time offered to come to terms with the Oakhill acquisition.