CLEVLEAND, Ohio — An official development agreement ushers in a new phase for the proposed medical mart and convention center in Cleveland. Now, folks at Merchandise Mart Properties Inc. (MMPI) inÂ Chicago will have to prove they know what they’re doing.
The agreement states that MMPI has one year to convince 10 tenants to spend three years in the medical mart, envisioned as a destination commercial showcase for the health-care industry. MMPI also has to land commitments for five trade shows and another five conferences in that time.
Otherwise, the deal could be called off.
MMPI, which wants to build and run the facility, has signed the development deal. Cuyahoga CountyÂ would lease the land and supply hundreds of millions of public dollars to help build the convention center and medical mart under the deal itÂ likely willÂ signÂ next week. Construction could begin in late 2010.
Below, MMPI Senior Vice President Mark Falanga discusses the development agreement, the company’s definition of public and private information, and what it would take to land the tenants and clients to prove a medical mart can really work.
Q. Why are you comfortable with a one-year deadline to sign 10 tenants and win commitments for 10 events?
A. We all want to know if this is viable. If we donâ€™t get these commitments that tells us something else, and we need to step back and re-evaluate. The intent of that insertion into this contract is so we donâ€™t start spending hundreds of millions of dollars and haven’t got any interest in this.
Q. What needs to happen before you start making deals?
A. We have to have a level of reality with all this before anyone can commit. We need to get this agreement signed and get the site selected so then we can develop our marketing materials and have something real to offer.
And weâ€™ll have to prove the project is real. Weâ€™ll have to demonstrate our credibility and commitment in this program, and our successes in other areas. The burden is on our collective shoulders to show the economic efficiencies and build momentum.
Q. There are concerns this deal still allows you too much leeway to keep public informationÂ from taxpayers. In your mind, what can youÂ keep private?
A. Our arrangements and our dealings with individual companies and trade-show organizers and conference organizers. That should be kept confidential. Those entities are not used to their dealings being made public in any other town. We canâ€™t be known as the place [where] … any conversation you have with us, or any deal or any letter we produce, is going to be a public document. Thatâ€™s going to compromise a companyâ€™s trade show or an organizerâ€™s position.
At the same time, this is a public-private partnership, and the county and its constituents need to and deserve the right to know what’s going on without compromising privacy concerns.
Q. Does this deal require you to disclose information you believe should be private?
A. I donâ€™t think so. We understand we have to live with our business being in the public arena, and that is part of this project.Â It’s not typically a manner in which we conduct our business. But we have not typically engaged in this type of business [deal] before.
Q. The agreement defines your first tenants as “manufacturers of medical devices or equipment.” Does that exclude any industry?
A. Any companies serving the health-care marketplace are viable candidates. A company could make MRI equipment, software, CT scanners, hospital beds, antimicrobial fabric, carpet or patient furniture. [Medical] is the market they are focused on.
Q. How large will the first trade shows be?
A. I think generally the facility is not large enough to attract the largest medical trade shows. The way weâ€™re designing it is itâ€™s subdividable. Weâ€™ll have the best shot at attracting small and mid-sized events.
Q. A next key step is buying the land, which is owned largely by the City of Cleveland. What’s a fair price for the property?
A. I donâ€™t know. We expect the negotiations to be a fair. I think the mayor and City Council want to realize the benefits of the economic impact [of the medical mart and convention center] and not lose out on that for any kind of hold-out on the land price.
Whatever that land costs, we have a fixed number to build the facility, and we take the cost of the land from that money. At some point [if the amount for the land is too high], we canâ€™t make the facility competitive and weâ€™d have to look elsewhere. We have to be mindful of that.
I’m confident we’ll come up with something everyone can live with.