City finances: hospital & refuse collection

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Jennifer Pae
Posts: 47
Joined: Mon Aug 07, 2006 7:53 am

City finances: hospital & refuse collection

Postby Jennifer Pae » Sun Jul 12, 2015 1:06 pm

Hello! Yes, I'm jumping in as a Lakewood resident. I was born at Lakewood Hospital and had my tonsils removed there when I was six. I am a 4th generation Lakewoodite, the product of Lakewood City Schools, and proud mom of two Lakewood City Schools students.

I'm also jumping in since I have been the City's Finance Director since 2006. I've worked for three very different mayors, and have been in the trenches for the many challenges the City has faced since that time.

So like all of you, the right direction for this community is very, very important to me and my family.

My job is the protection and growth of City's fiscal strength, and to ensure taxes and fees are collected and spent as authorized by City Council.

I have recently publicly endorsed the launch of the BuildLakewood.org. I have also been posting on Facebook and the Nextdoor sites as it relates to Lakewood Hospital. And now I'm on the Deck.

Some may feel that this should not be done on city time, but it is also my job to provide information as it relates to city finances. So agree or disagree, I'm going jump in when I feel there is an issue that needs the Finance Director's viewpoint.

Jim O'Bryan recently posted on Facebook a discussion of costs / savings involved with the implementation of the City's automated refuse & recycling program. I've attached a document where I've come up with over $3 million in general fund savings since 2008 due to the changes in the program:
Changes in Refuse Collections 2007-2014.pdf
(86.74 KiB) Downloaded 172 times
Love, hate or be somewhere in between with automated refuse and recycling, it has saved the City significantly even with the purchase of the containers and new trucks.

I've also attached a financial discussion as it relates to City finances and Lakewood Hospital that I provided to City Council at the April 20, 2015 Committee of Whole meeting:

My biggest fear as Finance Director as it relates to the Lakewood Hospital situation is the City having to bring the properties back on its books. There is too much financial risk if that happens, and I will support anything that prevents that from happening. How that prevention happens is currently being explored by City Council in a thoughtful and deliberate manner.

I'm happy to discuss anything in these two documents, or other matters as they relate to the City's finances. I cannot speak for LHA or the Cleveland Clinic, or support or defend the comments or decisions of others. And if I am personally attacked in any negative manner, I will no longer participate on the Deck.

Thanks and I look forward to further discussing City finances with you. ~ Jenn


Paul Schrimpf
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Re: City finances: hospital & refuse collection

Postby Paul Schrimpf » Sun Jul 12, 2015 1:46 pm

Is the program fully implemented? I thought there was still a phase to go yet.

When I first moved here, I found it such a unique service to get refuse collection in the back yard. I realize it costs more, but it made Lakewood special. Now we're like everyone else ... but at least we haven't taken the step of privatizing.... yet.


Jennifer Pae
Posts: 47
Joined: Mon Aug 07, 2006 7:53 am

Re: City finances: hospital & refuse collection

Postby Jennifer Pae » Sun Jul 12, 2015 3:23 pm

Paul Schrimpf wrote:Is the program fully implemented? I thought there was still a phase to go yet.

When I first moved here, I found it such a unique service to get refuse collection in the back yard. I realize it costs more, but it made Lakewood special. Now we're like everyone else ... but at least we haven't taken the step of privatizing.... yet.


Yes. The last of the recycling containers were delivered this spring.

You are right, it was a very unique service that very few communities provide, and especially in an era when many communities got out of the refuse collection business all together or charge their residents a fee for collection.

The automated collection of refuse and recycling was not a decision that was made lightly. The City of Lakewood was experiencing reduced revenues in an economy facing a serious downturn, and this was a decision that was made to continue local control without raising taxes or enacting fees while reducing expenditures.


Amy Martin
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Re: City finances: hospital & refuse collection

Postby Amy Martin » Sun Jul 12, 2015 4:21 pm

My biggest fear as Finance Director as it relates to the Lakewood Hospital situation is the City having to bring the properties back on its books. There is too much financial risk if that happens, and I will support anything that prevents that from happening. How that prevention happens is currently being explored by City Council in a thoughtful and deliberate manner.

Please tell me what you mean by this statement, I find it confusing and vague . . . how can bringing the properties back to the City of Lakewood be a financial risk?


Bridget Conant
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Joined: Wed Jul 26, 2006 4:22 pm

Re: City finances: hospital & refuse collection

Postby Bridget Conant » Sun Jul 12, 2015 4:39 pm

I'll second Amy's question and ask for clarification. Is the assumption that the property would be returned to the city as a non-operational hospital? If so, why was that assumption made?

Was there any alternative assumption that the property could be operated but not by the Clinic. That is, if you assumed the Clinic would leave, there was no assumption that say, METRO or another system could replace the Clinic. If not, why not? Why was it the Clinic or nobody?


Kate McCarthy
Posts: 447
Joined: Mon Jun 20, 2005 1:25 pm
Location: Lakewood

Re: City finances: hospital & refuse collection

Postby Kate McCarthy » Sun Jul 12, 2015 8:11 pm

First, thank you for posting this information.

Now, I was surprised you publicly endorsed Build Lakewood. I feel the site is full of disinformation but I would like you to address one assertion I find particularly disingenuous, that the proposal of the outpatient clinic with ER is a "hospital". Do you agree with this?


Jennifer Pae
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Joined: Mon Aug 07, 2006 7:53 am

Re: City finances: hospital & refuse collection

Postby Jennifer Pae » Sun Jul 12, 2015 8:58 pm

I can't speak on the claim that the proposed Clinic facility is considered a hospital. Someone else will have to answer that. Again, I don't represent or speak for the Cleveland Clinic, LHA or Build Lakewood.

However, I can speak for the City's finances. If you read the documents I attached in my prior post, you can see the history of how the City reported Lakewood Hospital on its books up until 1986.

When the City of Lakewood voter's approved the charter amendment in 1985 that the city would no longer own and operate Lakewood Hospital, and it was no longer a financial liability or asset to the City.

The private, non-profit Lakewood Hospital Association was established and leased the hospital from the City beginning in 1987. The City could not partner with a healthcare system, but LHA could. There was also considerable debt taken out on the hospital that the City could become liable for if the debt service payments were not made. These liabilities were transferred to LHA as outlined in the lease document. As of Feb. 2015, there was no debt associated with Lakewood Hospital since all debt service was paid off.

My concern is if the Cleveland Clinic is gone from the operating arrangement (Definitive Agreement), then the Lakewood Hospital Association will be left to operate the hospital and its respective properties. LHA is not a hospital system, and will not have the means or ability to operate the hospital. It would have to find another partner. Will that happen? I don't know, but MetroHealth has made it clear they are not interested and UH hasn't been interested since the mid-90s. Who else is there?

Therefore, LHA could become bankrupt meaning all of the land and buildings could revert back to the City. The City would then be responsible for the maintenance, utilities, insurance, etc. for the properties. Without a hospital system to operate the hospital, the City would have to take on these expenditures and risk. This could put a strain on the Citys ability to provide public safety, public works and human services.


Kate McCarthy
Posts: 447
Joined: Mon Jun 20, 2005 1:25 pm
Location: Lakewood

Re: City finances: hospital & refuse collection

Postby Kate McCarthy » Sun Jul 12, 2015 9:33 pm

Jennifer Pae wrote:

I have recently publicly endorsed the launch of the BuildLakewood.org. I have also been posting on Facebook and the Nextdoor sites as it relates to Lakewood Hospital. And now I'm on the Deck.


Jennifer Pae wrote:I can't speak on the claim that the proposed Clinic facility is considered a hospital. Someone else will have to answer that. Again, I don't represent or speak for the Cleveland Clinic, LHA or Build Lakewood.


I am afraid you can't have it both ways. So you cannot stand behind the claims endorsed by Build Lakewood but you endorse them without understanding them? I have long held your opinion as beyond politics. You don't speak for Build Lakewood so if you cannot affirm a major tenet of the organization what are you supporting? Build Lakewood's position that the proposed clinic is a hospital is made quite clear on their website.


Bridget Conant
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Re: City finances: hospital & refuse collection

Postby Bridget Conant » Sun Jul 12, 2015 9:35 pm

First, I would like to challenge your comment that Metro is not interested. That is simply misinformation. They were interested enough to make a proposal for the hospital. When they did not hear back from the City by the deadline, they withdrew, which you must be aware is standard contract protocol. At that time the city signed a LOI with the Clinic. Metro cannot enter into any negotiation or make a proposal without contract infringement. At this point in time, their legal counsel will rightly advise them to refrain from engaging with Lakewood.

Second, why would the LHA "go bankrupt?" Do you have access to their financial statements and can you speak to their situation? (I am not asking this in an accusatory way, I really just want to understand how you arrive at this conclusion)

Finally, the city wants land to develop - it has stated that repeatedly since this deal was announced. In fact, they seem quite pleased with the prospect of development on that site. Yet you now claim that ownership of that property would be a liability. Why would they now not want the property? The physical plant of the building and its medical equipment has value. Could it not be sold, repurposed, or offered for development?


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Jim O'Bryan
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Re: City finances: hospital & refuse collection

Postby Jim O'Bryan » Sun Jul 12, 2015 10:06 pm

Jenn Pae

Welcome back, it has been too long.

I just got back home, and am dead tired, great weekend in Lakewood for all.

Thank you for getting the numbers together on the refuse collection. I'll take a look
at them tomorrow, and hope they make me look like a fool. I know it took an effort
at a time where you must be extremely busy at City Hall.

I remember fondly when you took over for Vic Nogalo, when he moved on. It seems
like only yesterday, but it was so many budgets ago!

Jenn, one request, I would prefer to break these into two topics? What do you think?
I realized I lump them in a comment, and I have spent the trash savings 100 times
over, but you are right in a comment you made on facebook, they should be separated.

.

.


Jim O'Bryan
Lakewood Resident

"The very act of observing disturbs the system."
Werner Heisenberg

"If anything I've said seems useful to you, I'm glad.
If not, don't worry. Just forget about it."
His Holiness The Dalai Lama
Bill Call
Posts: 3168
Joined: Mon Jun 06, 2005 1:10 pm

Re: City finances: hospital & refuse collection

Postby Bill Call » Mon Jul 13, 2015 6:46 am

Jennifer Pae wrote:My biggest fear as Finance Director as it relates to the Lakewood Hospital situation is the City having to bring the properties back on its books. ~ Jenn


Why would you fear that?

If the hospital closes, the $50 million in Hospital assets, the $30 million in Foundation assets and all the land and office buildings become city property. The LOI calls for the City to pay for demolition and site preparation and take possession of that property already.

The expired LOI calls for the very scenario you are afraid of.

Why are you afraid of the City taking back possession of 7+ acres of downtown property?

Why are you not afraid of losing 1,000+ jobs?

The proposal as outlined in the expired LOI and Mayors letter to the City would close the Clinics facility on Madison and facility on Detroit and move those doctors to a new site prepared by the City. The City loses a hospital and the Clinic consolidates its current offices in one office on a prime piece of downtown real estate.

Why aren't you afraid of that?

This site has a nice graphic illustrating the economic multiplier affect of medical employment:

http://www.aha.org/content/11/11econcontrib.pdf

According to their research hospital employment has a 2.2 multiplier affect around the local community. How will the City make up that lost activity? The only proposals so far call for a recreation center.

What is the economic benefit of a recreation center?

City officials in Cleveland are enthusiastic about MetroHealth's expansion on W25th:

http://www.crainscleveland.com/article/ ... 5th-street

The Hospital expansion will revitalize an entire neighborhood.

In Avon the Mayor and other officials have bragged often about the hugely positive affect the new hospital will have on their community.

What do they know that we do not?


Bridget Conant
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Joined: Wed Jul 26, 2006 4:22 pm

Re: City finances: hospital & refuse collection

Postby Bridget Conant » Mon Jul 13, 2015 7:21 am

In a previous report to the media, you indicated that you estimated the loss to the city from the loss of revenue if the hospital closes, as per the LOI, to be 1.5 million to 1.7 million per year. You further indicated that the city could easily adjust to that loss. (which, frankly, baffled me)

How does this dollar loss compare to what you see as the liability of the city regaining the property? You have said repeatedly that if the hospital reverts to the city, you fear the "liability." Can you place a dollar figure on that?

Finally, you mentioned yourself that you are engaging social media to let people know your view on the hospital deal. You have publicly aligned with Build Lakewood, post on Facebook, and on Nextdoor forums. Would you continue with those revelations, for the sake of transparency as a city official, and share where else you are posting and if you are posting as a resident or a city employee. Thank you.


Jennifer Pae
Posts: 47
Joined: Mon Aug 07, 2006 7:53 am

Re: City finances: hospital & refuse collection

Postby Jennifer Pae » Mon Jul 13, 2015 9:20 pm

I know there have been a lot of questions, and Jim is still working on separating the refuse discussion from the hospital discussion, but I just responsed to a few questions on the Buzz, that might help in the meantime:

quote:
Originally posted by gaeliccarp:
How will the City of Lakewood make up the lost revenue if the hospital does close, not to mention that some businesses will close. Do you personally
think LHA did a stand up job to protect our valuable asset? Will taxpayers have to make up the deficit? Where will the money come from? Maybe we do not need the money?


These are all great questions. I've publically stated that between the loss in income tax withholding and the loss of the annual lease payments it could be about a $1.7 million reduction to the general fund in the short term.

Don't get me wrong, this is a serious hit, but the City is in the best financial position it has been in years, and in my opinion, can weather the loss. We've gotten through even worse revenue losses in the past 8 years with the recession and then the local government fund reductions and estate tax elimination from the State government, all without raising income or property taxes.

On the plus side, the LHA and the Clinic negotiated in the LOI that the City would get $8.2 million from the sale of 850 Columbia Rd which LHA owns. Further, the schools and city would realize property tax revenues for any properties that could potentially be developed.

I'm not convinced that the closure of the hospital will have a detrimental impact on the community such as closure of businesses, reduced property values, etc. Especially if there is going to be new investments on those properties. But of course, that can continue to be debated.

LHA had to make difficult choices since it entered into the original lease in 1987. They needed to partner with a health system to operate the hospital, and did so in the competitive health care market of Northeast Ohio. In my opinion, and this is completely my opinion, they had no other choice but to enter into the agreement with the Cleveland Clinic in 1996, which bought the hospital 20 more years. If not, we probably would be in a much different situation than we are today.

My biggest fear is if LHA can no longer operate the hospital because of continuing declining revenues, and all of their resources become depleted. According to the lease, the properties revert back to the City.

Prior to 1987, Lakewood Hopsital was an enterprise fund on the City's books. Like the water and sewer funds, the revenues to pay for salaries, operations and debt service are generated by charges to users (hospital bills for services). Therefore, no income or property tax revenue ever directly supported the hospital.

However, if there are no longer any users or very few users of the hospital, the City will be responsible for its upkeep, insurance, possible demolition, etc. This could have to come from tax derived sources. How that would happen would need to be decided, but it is not the optimal scenerio.


Bridget Conant
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Joined: Wed Jul 26, 2006 4:22 pm

Re: City finances: hospital & refuse collection

Postby Bridget Conant » Mon Jul 13, 2015 10:01 pm

Jennifer Pae

I appreciate that you are attempting to keep engaged here, but I feel you are posting the "official line" and not really addressing the specific questions you have been asked. You copied and pasted exactly what you posted today on the Buzz.

But that's OK, you are doing this on your own time. But for a numbers person, I'm surprised you throw out generalities and accept such high levels of uncertainty. For example, you are "not convinced that the closure of the hospital will have a detrimental impact on the community such as closure of businesses, reduced property values." For a finance person, I find that rather flippant. You assume that "new development" will compensate for losses but you have no idea what forms of development might replace the hospital, nor do you acknowledge that there are distinct differences in value between different land uses, all leading to vastly different outcomes. Again, I find that lack of attention to detail troubling from a finance and numbers person. You are far more willing to play fast and loose with numbers than I would be if it were MY money.


In addition, I asked about your social media presence and you did not address that. I did notice that once I posted that question here, you posted for the very first time today on Lakewood Buzz as Jennifer Pae. I would like to know where you post and what posts are "official," that is, acting in your capacity as a city employee. You have posted for some time on the Buzz under a pseudonym, during working hours. Were you directed to do so or was that of your own volition? Does the city have a policy on use of social media during working hours? Were those posts made under the "mrpoggs" pseudonym made in your capacity as a city employee? That person had an intimate knowledge of city financial business and procedures that clearly indicate the poster was a city finance employee, you.

Why was a pseudonym used? If you wished to educate the public, why didn't you use your real name? I'm not understanding your role on social media.



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