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Move Ahead: Another step taken towards Cleveland's Medical Mart and Convention Center

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(WOIO) - Mayor Frank G. Jackson and County Commissioners closed on the sale Wednesday of the City's convention center which now clears the way for the Medical Mart and Convention Center development project to proceed. Earlier this month, the City of Cleveland and the County announced the signing of a Definitive Agreement regarding the sale of the existing underground convention center. This deal represents one of the County's and City's largest public/private investment projects and will build upon, enhance and broaden the region's healthcare industry.

"The Medical Mart and Convention Center project is a key element in our local version of a stimulus program. It will create opportunities for new and existing businesses and new jobs and can transform downtown Cleveland," said Mayor Frank G. Jackson. "Combined with the recently signed deal for the Flats East Bank project, the Group Plan Commission's work for our public spaces and plans for a casino on the Cuyahoga River, the Convention Center sale is another signal that Cleveland's economy is moving in the right direction."

Plans now can move forward with the official groundbreaking and the construction of a new Medical Mart and Convention Center. The groundbreaking ceremony is scheduled for January 14, 2011, while demolition and construction will start as early as January 3, 2011.

The details of the Definitive Agreement are as follows:

The County, City and Positively Cleveland have negotiated with MMPI to establish operating benchmarks with penalty provisions that would apply if the benchmarks are not met. These benchmarks include minimum facility attendance and hotel and convention center occupancy standards, with the goal of encouraging the Convention Center operator to market the facility and book events that will deliver significant economic impact annually.

Public/Private Interests. The County and City acknowledge the importance of balancing the interests of MMPI and its affiliates as a private developer/operator against the interests of the public and its institutions. Part of the public interest includes marketing the Convention Center facility to attract events that promote economic development and deliver benefit to private businesses in the City, County and region but may not necessarily be profitable for the operator of the facility. When event scheduling conflicts develop and cannot be resolved by holding the events simultaneously or seeking alternative dates, the County, MMPI or its affiliates, and Positively Cleveland have agreed to meet in order to select which proposed event would deliver the most economic benefit to the community.

Special Hiring Programs

The County will require MMPI to require its general contractor to utilize good faith efforts to meet a 25% goal of County-certified small business enterprise (SBE) participation in the design and construction of the Medical Mart and Convention Center.

The County will monitor this SBE program with the expectation that the project hiring resulting in a Convention Center/Medical Mart construction workforce be made up of 40% Cuyahoga County residents, half of which (20% of the workforce) will be expected to be residents of the City of Cleveland. The County will also require MMPI to require its general contractor to utilize good faith efforts to meet these goals.

The Agreement also includes training programs by Turner Construction and MMPI that will provide annual construction training in conjunction with the Cleveland Metropolitan School District, operational workforce training for the Convention Center and Medical Mart in conjunction with Cuyahoga Community College, and the possibility of expanding the residential hiring portion of the SBE program to cover the operational workforce at the Convention Center complex.

Malls B and C.

The County and the City have entered into an agreement that will grant the City a permanent easement over Malls B and C for the use of Malls B and C as a public park. The construction of the Convention Center complex will likely result in a rise in elevation of the surface of (a) Mall C of no higher than 1 ft. above the current level of Mall C at Lakeside Avenue, and (b) Mall B of no higher than elevation 662 ft. above sea level; provided that the Lakeside Entrance may exceed these maximum heights. The County and the City desire to keep Malls B and C as open, public space following construction of the Project. To achieve that goal, in connection with the construction of the Project, the County will restore, or cause to be restored, Malls B and C to at least their current condition (as modified by the change of elevation and the construction of certain improvements referenced above) and pay for such restoration currently estimated in the County's construction budget at $16 million. The County shall cause the work underlying Malls B and C to be designed and constructed to provide structural support for events to be held on Malls B and C that is at least equivalent to the existing condition.

Purchase Price.

In consideration of the purchase of the Property, reimbursement to the City for expenses and lost revenue, and to facilitate development of the Convention Center complex, the County has paid the City a Purchase Price of $20,000,000 .

City Bed Tax.

The City's bed tax is currently continued pursuant to Cleveland Codified Ordinances; and after the Closing Date its proceeds will be redirected toward any lawful purpose (and thus no longer directed to the Convention Center or its operations).

County Bed Tax.

The County has increased the County bed tax by 1%, which will be applied toward the operation of the new convention center.

Naming Rights.

In the event that (a) the County sells the naming rights with respect to the Project or (b) the City sells the naming rights with respect to Malls B or C, then the County or the City (as applicable) shall pay to the other party an amount equal to 50% of any such funds actually received (but net of all commissions, out-of-pocket expenses costs and other costs incurred in connection with procuring the naming rights sponsorship). The funds received by either County or City shall be set aside in separate maintenance, operating and improvement funds to be used solely for the Project (in the case of funds received by the County) or Malls B or C (in the case of funds received by the City).

Construction Guarantees.

The County's agreements with MMPI provide for the establishment of a master project budget, a guaranteed maximum price, and a budget cap for the entire Project (the "Cost Control Mechanisms"). The City shall receive prompt notice of any modifications to the County's agreements with MMPI that materially change the Cost Control Mechanisms.

Separation of Public Auditorium.

The County's plan to construct the Project includes the demolition of the 1964 addition to the Public Auditorium and the physical separation of Public Auditorium from the Convention Center, while keeping in place appropriate connectivity between Public Auditorium and the Convention Center to allow the buildings to be used as an integrated facility as needed. The City's employees located in Public Auditorium will remain in place during the demolition and construction to separate the two buildings. A separation plan outlining the essential terms for separating Public Auditorium from the Convention Center has been agreed to as part of the closing documents. The County has agreed to cause MMPI to schedule the design, construction, furnishing, equipping, and development of the Project to minimize disruption, to the extent practicable, to the continuing use of Public Auditorium.

Renovation of Public Auditorium.

The City intends to renovate and upgrade certain portions of Public Auditorium to address the future use of Public Auditorium in coordination with the new Convention Center. The Purchase Price includes compensation to be used towards such renovations, in an amount to be determined by the City. The City will coordinate the renovations with the County and MMPI.

Steps to Browns Stadium

The County has agreed to restore the stairs at the northwest corner of the site and address the use of those stairs once the project reopens to support events at Browns Stadium or north of the railroad tracks.

Competitive First Class Convention Facility

The County's programming and operations consultant, Conventional Wisdom, has reviewed the design for the Convention Center and joint-use elements of the Medical Mart and has confirmed to the County that the current design of the Convention Center will provide the high quality space necessary for the Convention Center to be marketable to its intended audiences and appropriate to having a first-class convention center.

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