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Drake Sale a Bad Deal for Taxpayers

By Kevin Osborne · December 7th, 2011 · Porkopolis
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If you’re like most people, you would jump at the chance to buy something that you wanted if it was offered at just one-third of its normal price. And if you were given an 85 percent discount, you would be considered a fool to pass it up.

That’s exactly what happened last week when two of the three Hamilton County commissioners offered to sell the county-owned Drake Center to the University of Cincinnati at a rock-bottom price. But in this instance, the pending sale — although it might be a good deal for UC’s group of hospitals — is a bad idea for you and me, as county taxpayers.

Drake was offered to UC for $15 million, even though appraisals conducted by Hamilton County in 2006 revealed the facility is worth much more. According to documents, the land and buildings alone are worth $45 million; the price rises to about $100 million when the value of the business and its operations are included. Yet another estimate by Crown Appraisal Group placed that value at $59.7 million.

One thing’s for sure: Drake is worth a lot more than $15 million.

Monzel and Portune are operating county government — which, please remember, is essentially your money and assets — using a meth addict’s philosophy: “Just give me enough money to cover my fix for tomorrow. I will worry about the future later.”

The Drake Center is a long-term care and rehabilitation hospital in Hartwell. It offers a wide range of medically complicated care including rehabilitative and diagnostic services, assisted living and research. Among its specialties, the 46-acre, 314-bed facility is focused on treating patients with traumatic brain injuries, spinal-cord injuries and weaning people from ventilator use. Important work, indeed.

Hamilton County has owned Drake since 1924. The hospital was supported by a property tax levy from 1951 to 2009, when commissioners ended the levy and leased the facility to UC. Annual lease payments total just over $1 million.

The two commissioners, Republican Chris Monzel and Democrat Todd Portune, decided to approve Drake’s sale last week as a method for avoiding a deficit in the county’s stadium account for just a single year, 2012. The account, which is funded through a half-cent sales-tax increase approved by voters in 1996, is supposed to pay for the operations and upkeep of the Reds and Bengals stadiums, which are owned by the county and leased to the teams.

Because sales-tax collections haven’t lived up to rosy estimates for years, though, the county was facing a $14.2 million deficit in the account for next year. The deficits are expected to continue mounting, estimated at $26 million next year and be roughly $700 million by 2032.

To avoid a deficit in the short-term, Commission President Greg Hartmann, a Republican, reluctantly proposed temporarily reducing the amount of a property tax rebate given to homeowners during the next four years, until a better, more permanent solution could be found.

Hartmann’s proposal would’ve meant the county would give about $5 million in tax relief for homeowners next year rather than $19 million.

The latter amount equals 30 percent of all sales-tax revenues, which is what was informally pledged to voters in 1996 to help persuade them to approve the sales-tax increase.

Monzel and Portune, however, didn’t like that idea.

For Monzel, the opposition stems from not wanting to anger his conservative base of supporters, made up of groups like the Coalition Opposed to Additional Spending and Taxes (COAST) and the Tea Party.

For Portune, who’s facing reelection next year, he certainly is mindful of not wanting to be accused of “raising taxes” by whatever opponent that the Republican Party eventually lines up for him.

Publicly, Monzel and Portune say their plan is the only way that county commissioners can keep the promise given to voters 15 years ago about offering the property tax rebate.

In an email to CityBeat, Portune defended his actions. He said the deal includes UC also agreeing to fund some prenatal, infant and dental programs for low-income county residents.

“Commissioner Monzel and I came together to support a combination of policy initiatives that, when taken together, uphold, unabated, the results of the 1996 sales tax vote and the three elements that voters understood they were voting for: Taxes to build two new stadiums; to build and renovate public school facilities in the Cincinnati Public School District; and to relieve residential property owners from carrying a disproportionate burden of taxation by reducing their taxes by an amount equal to 30 percent of the total new sales taxes collected each year,” Portune wrote.

“It was the kind of action that citizens say that they want — elected leaders working together across party lines to creatively solve problems and get things done,” Portune added. “Together, Commissioner Monzel and I approved a comprehensive policy proposal that applied the assets we have in a way that addressed multiple county priorities in a positive way.”

Except it might not.

For starters, the sale’s proceeds only cover the deficit for one year. In 2013, the deficit is estimated at $26 million. Where will commissioners get money then? Selling the county jail?

Additionally, local attorney Tim Mara, the activist who opposed the sales-tax hike back in ‘96, said Ohio law prohibits commissioners from merely voting to sell a public asset like Drake. Rather, they must follow a process spelled out under law that includes auctioning off the property to the highest bidder.

More importantly, Mara rightfully criticizes the behind-the-scenes, secretive negotiations that were conducted between the county and UC. To circumvent Ohio’s open-meetings law, a part-time aide in Monzel’s office apparently was the contact person with UC. The aide then gave the information to Monzel and also to Portune and one of his aides. Had Portune and Monzel acted in concert, it would’ve constituted a majority of the commission and violated the law.

Nevertheless, the roundabout process used violates the law’s intent and spirit, Mara said.

Referring to an Ohio Supreme Court ruling from the ‘90s, arising from when Cincinnati City Council used similar tactics to negotiate a sale of Riverfront Stadium to the county, Mara said, “The court said that any pre-arranged meeting to deliberate on issues of great interest to the public must be done in public, but here they’ve come up with yet another scheme to keep the public in the dark. We had a right to hear all the discussions that went on between (Monzel and Portune), even if those discussions were in the form of messages carried back and forth by their aides.”

To quote John Shaft, “damn right.”

For his part, Portune is rankled by critics who say his involvement in the sale negotiations betrays the arguments he lodged in 2006 when his two colleagues at the time, Republicans Phil Heimlich and Pat DeWine, attempted to sale or lease Drake without his knowledge or involvement.

"Please note that I was not opposed to selling Drake to the Health Alliance,” Portune told CityBeat. “What I opposed was the structure of the Heimlich-DeWine deal that guaranteed to place Drake Hospital into severe fiscal jeopardy. Heimlich and DeWine looked to the least common denominator and constructed a deal that failed to position Drake to be an institution of excellence and instead placed it on life support. Among the elements of their arrangement that I opposed was the elimination of the Drake levy without any assurance that Drake could survive without it. I also opposed the wording of the shift in responsibility that allowed for the Alliance to walk away from Drake if the going got tough.”

He added, “In stark contrast, the arrangement that we approved … gives Drake the stable footing and future it needs and it provides for significant new investments into several critical public health priorities. In contrast to what Heimlich and DeWine did, which was to jettison Drake to an uncertain future without a needed and stable revenue stream, primarily so that they could say that they eliminated a tax levy, I have positioned Drake for the best of all possible available futures and done so in a way that also improves public health across a broad array of priorities.”

Maybe so. Forgive us if we’re skeptical about a deal that was hashed out with no transparency or public input, lacked any county legal analysis and didn’t have a professional financial review.

Meanwhile, we will recall the words that Portune himself wrote about the aborted ‘06 Drake deal: “Heimlich ‘sold’ Drake to the Health Alliance for a fraction of its worth, giving away a taxpayers’ asset for a song.”

You can say that again.


PORKOPOLIS TIP LINES: 513-665-4700 (EXT.147) or pork@citybeat.com



 
 
 
 

 

 
12.08.2011 at 08:31 Reply

You neglect to mention that Drake is losing money...every year.

 

12.09.2011 at 04:21

UPDATE: The GOP Ohio State Auditor has now come out against the sale of Drake, saying in a letter to Joe Deters that the sale violates several provisions of state law:

 

http://news.cincinnati.com/article/20111209/NEWS010801/312090047/Auditor-cautions-about-Drake-sale?odyssey=tab|topnews|text|

Also, the tax rebatewould mean a minial savings for most Hamilton County homeowners. With the average homebeing worth $106,000 in the County, the rebate yeilds a savings of $3-8 per month for the vast majority of County homeowners. However, very wealthy property owners stand to save thousands of dollars per year, and with Monzel being the COAST puppet that he is, you know who he is protecting; the very wealthiest County residents. And his puppet masters at COAST of course.

 

12.12.2011 at 10:17 Reply

Rather than selling Drake Hospital, an institution that actually helps people, for chump change, I suggest  unloading the two whitish, elephantine sports stadiums obscuring the view of one of Cincinnati's natural wonders and generating some serious cash.  The taxpayers build the things but the teams are privately owned -- a classic example of socializing the cost and privatizing the profits.  Let's see if pro sports can hack it without public welfare.

 

 

 
 
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