The heated debate over the proposed Medical Mart and Showroom in Downtown Cleveland has run the gamut from where the site should be located, what kind of terms should be offered, and when can construction begin to the much more apropos question (at least in my mind), should we even build it to begin with?
I know the arguments of Med Mart proponents; namely that the economic influx of dollars from convention attendees will bring a boom to the area, as well as establish Cleveland as 'THE' pre-eminent medical technology and supplier city in the United States.
Forgive me, but I'm skeptical...
Why? For one, the proposed deal itself. I would ask the reader to consider if the money was coming out of your own pocket (which essentially it is if you live in Cuyahoga County), if it would be something that you would consider investing in. For that reason, I'll identify the parties involved as Medical Mart Properties Incorporated (MMPI), the developer, and 'You', the County of Cuyahoga, whose economic hopes are pinned on this project. Here goes...
First, you would need to purchase the land for the Med Mart & Showroom. Estimates place this at $17 million. You'll also hire a number of consultants to provide you with planning and building estimates. These will also come out of your pocket to the tune of $750,000.
You, as the potential investor, would then pony up $425 million to provide, as a loan, to MMPI for the construction of said Medical Mart & Showroom. This will come in the form of annual loans to MMPI of $40 million. MMPI will then use $36 million per year (of that) to pay you back (keeping the $4 million difference to use as they see fit).
Once completed, MMPI will not have to pay you any money in property taxes for the length of the lease. Oh, by the way, once you finished building the Med Mart, you will give it to MMPI out of the goodness of your heart (for zero dollars). Also, MMPI gets to keep 100% of any profit it makes from the facility. Finally, MMPI will graciously accept from you another approximately $7 million a year to assist with their operating costs.
So, what do you think!?!?
MMPI insists that the economic benefit to Cleveland lies in the hordes of attendees and visitors who will swarm upon downtown for the dozens and dozens of conferences and conventions each year. However, this too has me skepically number crunching:
So what does the above say? It says that MMPI, the company that stands to reap untold millions in profits from both you and the public estimates nearly $1 billion in economic profit to greater Cleveland. However, as the very interesting article by Jim Nichols from the Plain Dealer points out, these projections may be (and likely are) WILDLY INACCURATE. If that's the case, and the billion suddenly becomes $73 million (in a good year), where's the benefit? Where's the profit? Take out the losses of property taxes, the increased burden of taxation on the people of Cuyahoga County because of the raise in sales tax, and the potential difficulty of getting people to come to Cleveland for conventions in the months of November through April, and it makes me wonder.
Is this another boondoggle that we're rushing into headlong; seeking that magic bullet to bring us back to prosperity? For all our sakes, let's hope not...