Breaking down the agreement

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The long-awaited deal for the proposed $425 million medical mart and convention center ensures that Cuyahoga County taxpayers can track every penny of the public's money spent on design and construction.

That guarantee of public accountability -- all construction and design bills will be public records -- is just one provision in a 48-page contract that commissioners expect to sign next week with Chicago-based Merchandise Mart Properties Inc.

The contract, called a development agreement, lays out how the public's money will be spent. In all, about $900 million will go toward the project, including interest payments on construction loans.

Commissioners, following an agreement reached two weeks ago with The Plain Dealer, released a draft of the contract on Wednesday, giving the public a week to review it before they vote on it. The newspaper had threatened to sue the county to obtain the contract because commissioners had been conducting negotiations in private.

MMPI is expected to sign the agreement today. The deal isn't final until commissioners sign it after voting to approve the deal.

Fred Nance, who negotiated the agreement for the county, said on Wednesday that "every penny that is spent is subject to public record."

Among other highlights of the deal:

• MMPI pays no real property tax on the land it will control. It is unclear whether the county will owe any.

• Specific deadlines are in place that could lead to groundbreaking by fall 2010.

• Either partner has multiple chances to back out of the deal before ground is broken.

• Commissioners are forced to decide soon where to build the complex. They prefer to rebuild on the existing Cleveland Convention Center site.

• The county will not pay construction cost overruns. MMPI's general construction contractor will be required to cover those.

"I think under the circumstances, we negotiated as good a deal for the taxpayers as possible," said Commissioner Peter Lawson Jones, who sat in on many negotiating sessions with MMPI.

Yet, Jones said, "MMPI can secure a handsome profit if this is successful."

That is because taxpayers, not MMPI, will pay for construction of the complex. MMPI will be paid millions annually by the county to help pay operational costs, and the company is entitled to all revenues resulting from operating the mart and convention center.

The medical mart complex is viewed by many people as a way to bolster the region's staggering economy.

Mark Chupp, assistant professor of community development at Case Western Reserve University's Mandel School of Applied Social Science, said further public oversight of the project is needed. Chupp likes the requirements for county approval at each planning step, but said there should be a public hearing at each of the stages. He also suggested a public oversight board akin to the Cleveland school district's Bond Accountability Commission to watchdog spending.

"Given the state of our commissioners and their standing in the community, it seems you need to have some other public voice," Chupp said.

The latest stories:

March 25: Lawsuit threat ends secrecy over medical mart

March 26: Commissioner Tim Hagan rips Plain Dealer coverage of medical mart

March 28: Chris Kennedy of medical mart says Cleveland lacks strong leaders

March 30: Suburban mayors want Cleveland mayor to review medical mart construction cost estimates

March 31: Cleveland officials reassert themselves in medical mart/convention center talks

April 7: Cuyahoga County hires fourth consultant to help with medical mart

April 8: County releases med mart development agreement

Commissioner Tim Hagan, a driving force behind the project, recently defended his close relationship with MMPI President Chris Kennedy. Commissioner Jimmy Dimora is a target of a federal investigation into county corruption.

Hagan and Dimora voted to raise the sales tax a quarter of a cent, to 7.75 percent, in 2007 to pay for the project. Jones, the third commissioner, voted against it. The hike, expected to generate about $40 million annually, expires in October 2027. The 20-year life of the tax increase is the basis for the county's payments to MMPI, even though that money, by law, cannot pay off bonds issued for economic development. Instead, the county will pay for the project using money from other accounts, and replenish those funds with the sales tax money.

The county will borrow money next year for construction. Proceeds from the loan -- up to $425 million -- will be transferred to MMPI. The county will pay MMPI $40 million a year for each year until 2027. MMPI will use $36 million of that money to pay back the loan. The company can use the remaining $4 million each year for its own purposes.

The county will make "supplemental" payments to MMPI each year to subsidize day-to-day operations of the convention center. That payment starts at $6 million a year and could escalate to $7.8 million a year. The county has not determined where that money will come from.

Before construction begins, MMPI is required to sign up 10 makers of medical equipment to lease space in the medical mart for at least three years. MMPI also must arrange for five medically themed trade shows within the first year of operation.

Still to come are operating, lease and financing agreements.

The deal does not mention meeting city of Cleveland goals for hiring local businesses, as well as those owned by minorities and women.