CLEVELAND, Ohio – Well-known Cleveland attorney Fred Nance negotiated the $282 million Quicken Loans Arena renovation deal for Cuyahoga County. Now his law firm is slated to serve as lead counsel for the county’s sale of bonds for the project — without publicly bidding out the contract.
The no-bid deal to pay $325,000 for bond counsel bothers Cuyahoga County council member Jack Schron, who questioned the arrangement.
“It just seems to me awkward that we were just asked by the law director to amend language that would take us out of competitive bidding and you were the one who negotiated on behalf of the county,” Schron told Nance, global managing partner of Squire Sanders Boggs at a meeting Tuesday. “And your firm is the sole source (for bond counsel).”
Nance said he Pasgol does not handle bonds, that his firm has previously worked with the county on bond sales and understood the current deal.
No other council members or officials questioned the arrangement.
What is the project?
County Council is deliberating selling $140 million in bonds to expand and upgrade the Q, extending the life of the 22-year-old arena for another 18 years. Two council meetings have drawn standing-room-only crowds of supporters and opponents.
If approved, the plan, which involves no new taxes, will cost a total of $282 million over 17 years, with loan interest and creation of a rainy day fund.
Financing of the project will be shared by the Cleveland Cavaliers ($122 million), Cleveland ($88 million), Destination Cleveland (more than $44 million) and the county ($16 million).
The complexity of the deal led county administrators to add an amendment to the bond sale legislation that said “To the extent and exemption from competitive bidding is needed for anything described herein, it is hereby granted.”
“Are you asking this council to exempt competitive bidding for the way we price this out – the way we sell the bonds, the way we hire outside council?” Schron asked law director Robert Triozzi at a committee-of-the-whole meeting Tuesday.
Triozzi said it was necessary due to the many partners on the deal.
Council, with Schron dissenting, approved the amendment.
Nance’s role
Fred Nance was hired by county officials to oversee the negotiations between the four partners in the deal and reach an financial agreement.
He was seated with Cavs owner Dan Gilbert and former NBA player and Cleveland native Charles Oakely courtside at the Cavs game Thursday night.
Nance spoke to council Tuesday regarding the need for the deal to keep the Cavaliers in Cleveland. The proposal includes extending the Cavs lease by seven years, to 2034.
Schron asked if he negotiated on behalf of the county, the Cavs and Destination Cleveland. Nance replied “Yes, sir!” to each of the three questions.
Schron asked why Nance’s firm was bond counsel.
“There are efficiencies that can be achieved with this deal,” Nance said. “It is not a cookie cutter deal. There are complexities and layers to it because of the Cavs participation and the Cavs standing behind some of the public revenues. All of which is why the decision was made that we would be primarily consideration to do this work.”
The Squire Sanders Boggs considerations is at odds with the county’s stance last fall, when it hired Timothy Offtermatt as a financial advisor last fall. Officials said then that his firm Stifel, Nicolaus & Co. could provide help for bond sales but “for any future financing transactions, the County will select other members of financing teams, including bond counsel and other special advisors, outside the scope of this request.”
What is the bond counsel agreement for the Q bond sale?
According to the county, Squire Patton Boggs and Forbes Fields & Associates will be paid an amount not to exceed $325,000 to “structure the transaction” and to:
- Prepare appropriate county legislation, certificates, financing agreements and closing documents to authorize, document and consummate the transaction.
- Participate with other professionals in the preparation of an official statement and other disclosure materials necessary to market and sell the bonds or certificates of participation.
- Engage in negotiation on the county’s behalf with other parties to provide portions of the revenues applied to the payment of debt service on the bonds, assist in the preparation of such agreements and coordinate them with the bond documents.
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