PD Extra:

Names in corruption probe surface in St. Clair Avenue property dealings

Cuyahoga County officials considered buying the St. Clair Avenue property now standing in the way of the downtown medical mart, but they let it slip away five years ago.

And today, negotiations with the California company that snatched it up have stalled, creating a problem that has the potential to cost taxpayers millions.

Developers of the planned medical mart and the county want the land on the northeast corner of St. Clair and Ontario Street as a piece of the $425 million project that will include a new downtown convention center.

The mart would be built on the land that now has a four-story office building and a parking garage.

Its value is a little more than $10 million, according to the county auditor's Web site.

Without the property, the county intends to tear down its administration building to make way for the medical mart. The county then would have to find offices elsewhere.

County e-mails from as far back as 2004 show that officials were interested in buying the property at 113 St. Clair Ave., which sits behind the county's current Lakeside Avenue offices.

Late that year, officials asked The Staubach Co. -- hired by the county to seek a new location for its offices -- to look into the possibility of purchasing the property.

But today, memories are fuzzy as to exactly why the county's interest fizzled.

"To be honest, the county missed an opportunity," said County Central Services Director Jay Ross. "We could have used it."

At the time the county was focused mainly on looking at major sites for the county administration's consolidation, Ross said.

Buying 113 St. Clair was part of early discussions about the consolidation. The county considered tearing down the structure and building offices. It would have then torn down its current offices on Lakeside and built more.

In addition, Ross said the property could have been used for a number of different developments then being discussed, including a convention center, because it would have given them control of the whole block.

He thinks the owners at the time were asking too steep a price -- between $15 million and $20 million -- for the property.

"If we could have gotten it at a reasonable price, I certainly would have jumped at the opportunity," Ross said.

But he doesn't recall if the county was aware the building was being foreclosed on and was going to be offered through a sheriff's sale.

At the time the foreclosure process was completed in 2006, the conglomerate of owners, called 113 St. Clair Properties LLC, owed more than $15 million on the property.

Commissioner Peter Lawson Jones said he thinks the discussions about 113 St. Clair petered out fairly quickly and that it was never one of the serious contenders for the consolidation.

"It was one of many properties considered at one time," he said. County officials later settled on the Ameritrust building, which they have since abandoned as an option for their offices. The county is trying to sell the complex.

As to the other possible uses for the St. Clair property, Jones said the county was not looking to be a "land baron." He said officials wouldn't have likely bought the land without a specific use in mind.

When Staubach was asked to look at the property in late 2004 and early 2005, foreclosure proceedings had already been initiated against its owners.

And Cuyahoga County Common Pleas Judge John Sutula, who was assigned the case, had already appointed a receiver to control the property and its assets.

Mark Dottore looked into numerous buyers for the property, including the county, said Dottore's attorney Rob Glickman, who did not represent him at the time.

Dottore "initiated numerous contacts with county representatives, hoping that they would be a bidder for the property," Glickman said.

"Every seemingly interested buyer seemed scared away by the fact the county could then initiate eminent domain proceedings to take the property for its current value," Glickman said in an e-mail this week.

Ross said he didn't remember whether Dottore contacted the county about the property.

In the end, the California company, L&R Development, bought the mortgage note for the property in early September 2006 in two steps. It paid $7.2 million for the mortgage. Less than a week later it paid $4.46 million for the property at a sheriff's sale.

Since then, L&R has continued to invest in Cleveland real estate.

In 2008, the company acquired Forest City Enterprises' interest in Network Parking of Cleveland and signed a long-term deal with Forest City to provide parking nationally, with the exception of New York City, according to a company release.

As a provision of the deal, L&R gave Forest City "first-look" rights at L&R land holdings in 12 states, including Ohio.

Forest City lobbied hard to have the medical mart complex built at its Tower City location. The proposal was rejected by commissioners.

Forest City spokesman Jeff Linton said Forest City has no interest in developing the St Clair property.

County officials said this week they are still hopeful they will reach an agreement with L&R Development.

"I guess with this [real estate] stuff it always ends up being about timing," Ross said.