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Contempt and Deception: How Flagler County Sealed a Dirty Deal for the Old Hospital

| August 16, 2013

County Administrator Craig Coffey, facing the camera, as he was briefing county commissioners and others before tours of the old Memorial hospital in May. (© FlaglerLive)

County Administrator Craig Coffey, facing the camera, as he was briefing county commissioners and others before tours of the old Memorial hospital in May. (© FlaglerLive)

It’s not unusual for politicians and their administrators on our local government boards to blow smoke in taxpayers’ eyes as they go about misusing taxpayer money. But last week’s dog and pony show by County Administrator Craig Coffey and Commission Chairman Nate McLaughlin stands out.

pierre tristam column flaglerlive

They insulted the public’s intelligence by claiming to have been transparent about the hurried deal to buy the old and decrepit Memorial hospital for the indefensible price of $1.23 million (for a property that sold for $750,000 in 2003 and that hasn’t exactly gotten handsomer since). They hid behind the cherry-picked documents Coffey stage-managed as if the substance of the deal was in those documents rather than in secret meetings Coffey carried out, with his commissioners’ knowledge, but not the public’s. Let’s not forget that on this allegedly transparent and sunshine-challenged commission, every commissioner knew a deal was going down with the hospital owners in April before it was ever mentioned in public, until FlaglerLive reported it.

And of course during that seal-the-deal commission meeting last week Coffey mocked what he calls the local “papers,” accusing them of reporting only “snippets,” and urging people to get the real truth by looking up records posted on the county’s website and in discussions spoken during workshops and meetings. “I wouldn’t encourage people to read the paper,” were Coffey’s exact words.

Because as we all know, there’s nothing like government honesty.

McLaughlin’s snide thank you to Coffey aside, fellow-commissioners sat there with their complicit silence, letting their administrator disparage local businesses as they never would let him if he was referring to, say, one of their pals’ banks, or one of their lawyer pals’ firms. But they have reasons to keep mum. Remember, these commissioners are paying for all this with proceeds from a sales tax they passed unilaterally last year and for the next 20 years, knowing fully well it wouldn’t pass at the ballot box. They don’t like these reminders because it gives voters ideas when they do get a chance to vote.

That’s why bashing media is every craven politician’s cheapest scapegoat. The problem in this case is that Coffey and McLaughlin did the bashing behind a small army of straw men, then turned around and flatly peddled one deception after another.

Craig Coffey. (© FlaglerLive)

Craig Coffey. (© FlaglerLive)

Coffey passed off a PowerPoint presentation that any clever middle schooler could have cut and pasted together as the end-all analysis of the deal. To put “PowerPoint” and “analysis” in the same sentence is an oxymoron. But even the missing bullet points left gaping holes in the presentation. There were no answers to basic questions such as the recurring costs of running that colossal new acquisition, the lost tax revenue to local governments (especially Bunnell’s crippled redevelopment taxing district for that area), the source of money for the interest payments on the loan the county will soon take out to pay for its potato-salad of a building, all this presumably with the similarly mounting maintenance costs of the larger jail Coffey and the sheriff want to build, not to mention the mountain of cans commissioners and Coffey say they’ve been kicking down the road, and that they’ll have to be paying for very soon, and so on. None of that was even hinted at in Coffey’s “analysis.”

A few weeks ago Commissioner Barbara Revels pointed out the lack of cleanliness in the Government Services Building, brought on by cuts in custodial services. If the county is having trouble keeping its main building’s toilets, it’ll be interesting to see how it intends to manage a 60,000 square foot addition—with money that will have to come out of the general fund, not from sales tax revenue. Money it does not have. Money it is as we speak raising taxes dramatically to close its deficits.

Not that you saw any of this in that pretty PowerPoint, either.

Click On:

The Documents:

One of Coffey’s most blatant deceptions, never once questioned by commissioners too busy playing their assigned roles in this closed-circuit circle jerk, was the calculation of the 60,000 square foot hospital’s reconstruction costs. First, he tried to deflate the purchase cost by $750,000 by applying a nutty pro-rated formula in accordance with the square footage only the sheriff would use, as if the county were buying just half the thing. It took Commissioner Charlie Ericksen, a Colombo-type personality who hides his claws behind a genial demeanor, to set Coffey’s numbers straight.

But only half the numbers. The rest of the discussion stuck to costs of reconstruction applying only to the half of the building the county will refurbish immediately, without taking into account the reconstruction and maintenance cost of the whole structure even though one of the selling points of the building is its size, and what it will enable the county to do in the future. One of Coffey’s “options” included that of demolishing the hospital and building new, at a cost of $4.55 million. That option was included as if to highlight its expense: $7.8 million overall, as opposed to $6.55 million for merely refurbishing half the existing building. But the $7.8 million was as close to an honest number as there was that day. It was quickly dismissed. There was a script to follow.

McLaughlin, who had been more cautious and questioning until then, went so far as to say that the hospital buy is only the culmination of years of meetings—as if the county had been negotiating buying the hospital for the past seven years rather than the past few weeks. But what the hell. Since there’s a document about rebuilding the sheriff’s office and jail dating back to 2005, let’s just say, as Coffey did, that this deal has been in the works eight years. You could dance sophistry to the rhythms of Coffey’s logic.

(And not just sophistry. There’s something sinister about the way Coffey tries to undermine his challengers. When I called him last Friday afternoon to get his reaction to County Spokesman—and my former colleague—Carl Laundrie’s accident, Coffey intimated that I was to blame for the wreck, because Laundrie had been “agitated” from hearing a version of this piece air on WNZF Friday morning. It was a vile suggestion, and Coffey knew it. He backed off when I protested. But he’d made it. That was enough. So he rolls.)

It got worse in that meeting last week. Coffey at one point not only again blamed the media about inaccurately reporting the original acquisition price of the hospital years ago. He went on to misstate the facts himself, and very gravely so, because he was again and falsely making it seem as if the sellers were giving away the property at a loss. This is what Coffey said: “The purchase price that the current owners paid of $750,000, that is not correct. Mr. Gardner will tell you that that was a number generated from his office through some error in software or what have you, but the actual purchase price, he does not have, it’s not recorded in that sense. Essentially it was a $1.6 million purchase.”

He just threw that figure out there. A figure more than twice the formal selling price. A figure backed by not a single official document, though Coffey can refer to an obscure one-page memo—not from the hospital owners, not one of whom showed his face throughout this charade, but from their real estate broker. And again, not one commissioner questioned Coffey about the substance of his $1.6 million figure. Ah, the transparency.

Coffey was conveniently mixing fact and fiction. There was a fictional transaction once recorded in Gardner’s records. Gardner has since removed any trace of that alleged 2006 real estate deal from his website, because there indeed was none. But nor was there a fictional $1.6 million transaction.

The original acquisition of the hospital, by Michael Chiumento (one of the current owners), under what was then called the Maluchi Development Corporation, closed for $750,000 on June 5, 2003. That’s the only official deal in the books. That’s the only sale figure Coffey should have cited. That figure is not based on property appraiser records, on “some software error” or anyone’s memo, but on the Clerk of Court’s records, and the dock stamp tax Chiumento’s company paid on the acquisition. Records show Chiumento changed his corporation’s name to Flagler Crossroads around 2005, dropped a couple of partners and took on a couple of new ones. He is the constant. But what business partners conducted among themselves is their business. It never amounted to an official real estate sale of the building itself. No records to show it, no tax trail.

By law, real estate transactions carry a 70-cent per $100 dock stamp tax on all documents that transfer interest in real property, if we’re to believe the Florida Department of Revenue. If you conduct a real estate transaction and don’t pay that tax, you’re evading taxes. All such transactions must be recorded with the clerk of court. (There are several mortgages under Maluchi-Crossroad’s name between 2003 and 2007, which are taxed differently, but taking out mortgages was last decade’s pastime.) There is only one transaction taxed at that rate since Maluchi took over, and that’s the 2003 transaction.

So either the owners of Flagler Hospital somewhere along the way conducted a $1.6 million real estate transaction, but didn’t pay the tax, or there never was a $1.6 million sale, and that $750,000 price is the true price paid for the building, netting its owners the astronomical profit they’re now set to reap.

Yet Coffey wants us to trust him and his numbers. Not the media. Not clerk of court and tax records. Just Coffey and his snippets. He wants us to trust him that the old hospital was a prize the county shouldn’t let slip away, that the price couldn’t have been negotiated down to a less ungodly level, though Chiumento and his partners couldn’t find a buyer for it year after year—until the county came along.

I think I’ll pass. I’ll take the papers over Coffey any day. Lucky for Coffey he has his commissioners exactly where he wants them: in his amen corner. And together they’re again making suckers of taxpayers, who’ll be paying for this for many years, with more bullet points than could ever fit on a PowerPoint.

Cue the greasy sequel to the potato palace.

Pierre Tristam is FlaglerLive’s editor. Reach him by email here.

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71 Responses for “Contempt and Deception: How Flagler County Sealed a Dirty Deal for the Old Hospital”

  1. A.S.F. says:

    I once lived in New Orleans, Louisiana. I thought nothing could be more corrupt than that. From what I am hearing and reading about the goings on right here in Flagler County, Florida, I guess I was wrong.


    • Pamela Andrews says:

      We have been trying to tell you these men are not who and what they claim to be, and what is more disappointing is we still have no manned fire station as promised here in Daytona North…
      waste of money to keep them there..we need a change here as much as we do in D.C…
      Wake up Flagler County…corruption running large here too…


  2. Diego Miller says:

    Mr. Coffey should never have been picked in the first place. He is a poser with no pedigree. He would be better suited as a used car salesman at Gibbs Chevrolet. The County Commission has kept Flagler County in the nineteenth century. Shame on these Commissioners whose silence is deafining.


  3. Nancy N. says:

    Wow the commission must have really screwed up…Pierre wrote a political article and there’s over 50 comments and not a single person has called him names yet.


  4. Anonymous says:

    Stay on this board of county commissioners and their staff. They have been doing deals as this all along and getting away with it. This needs to stop. They railroad the public with their Citizens Acadamy showing and telling only what thy want to show and tell you. Why have you not been exposing how they do business all along? Keep up the good reporting. This is just the tip of the iceberg.


  5. Ron says:

    The level of corruption, pay offs, collusion and breach of ethics must be so great amongst Flagler Country administrators and the council that something of this brazen magnitude can be thrust to fuition even with the public outrage a fever pitch.

    The Flagler County administrators and council are giving the finger to PC residents and declaring they have ZERO REGARD for the will of the people. They are renegades, outlaws and crooks. This is all coming down from the model set by the white house. The corruption and stain of lawlessness is seeping into local governments directly from the corruption, brazen dishonesty and lack of respect for the rule of law that the progressive left white house is providing. Yes, that is a terrible fact and a shame.


    • A.S.F. says:

      You are trying to blame Obama for this…SERIOUSLY??? That’s quite a stretch, even for the most rabid of FOX news addicts!


  6. Thisiswhy says:

    I moved out of Palm Coast. This article is unbelievable – what’s the motive for it’s publication? Public shame? Now.. the information about government activities may be truthful, but public admonishment of behavior isn’t going to force better choices by these people. Three hundred years of history has proven this, and conversely it’ll make them more selfish, more deceitful and insanely driven by ego – all of which have are rooted in fear.

    I say don’t lower yourself to others standards, it’s very unattractive, and besides, they’ll all end up broke or alone or both.



  7. Kelly83 says:

    This is a sham, we need to get together with signs and contact other media sources, I think one sign should say Crooks, Thieves, How much asbestos is in there? How much lead is in there? This is ridiculous. We need to band together as citizens of this county and fight against them. I say we meet there every night. You want to know what we need to do???? Well let’s band together and go after them with media attention, let the rest of the world know what kind of morons we have running our city and county.


  8. Kelly83 says:

    And another thing, I am suspect of the fact that Nate McGlaughlin, Barbara Revels, Manfre and his wife are all involved in real estate. In my opinion somebody is making money on this deal and not only Chimento and his partners.

    Chimento seems to be the common denominator in the Palm Harbor Shopping Center expansion,the Town Center Property and City Hall, and the old hospital property. Things that make you go hummmmmmmm………….


  9. Observer says:

    If Nate McLaughlin is involved you can be sure of improprieties. Wake up voters this guy has no character whatsoever


  10. Random Citizen says:

    From Florida’s website (nothing added or removed) about Sunshine violations:

    The 2001 Florida Statutes

    Title XXVII
    Railroads And Other Regulated Utilities
    Chapter 350
    Florida Public Service Commission
    View Entire Chapter
    350.042 Ex parte communications.–

    (1) A commissioner should accord to every person who is legally interested in a proceeding, or the person’s lawyer, full right to be heard according to law, and, except as authorized by law, shall neither initiate nor consider ex parte communications concerning the merits, threat, or offer of reward in any proceeding other than a proceeding under s. 120.54 or s. 120.565, workshops, or internal affairs meetings. No individual shall discuss ex parte with a commissioner the merits of any issue that he or she knows will be filed with the commission within 90 days. The provisions of this subsection shall not apply to commission staff.

    (2) The provisions of this section shall not prohibit an individual residential ratepayer from communicating with a commissioner, provided that the ratepayer is representing only himself or herself, without compensation.

    (3) This section shall not apply to oral communications or discussions in scheduled and noticed open public meetings of educational programs or of a conference or other meeting of an association of regulatory agencies.

    (4) If a commissioner knowingly receives an ex parte communication relative to a proceeding other than as set forth in subsection (1), to which he or she is assigned, he or she must place on the record of the proceeding copies of all written communications received, all written responses to the communications, and a memorandum stating the substance of all oral communications received and all oral responses made, and shall give written notice to all parties to the communication that such matters have been placed on the record. Any party who desires to respond to an ex parte communication may do so. The response must be received by the commission within 10 days after receiving notice that the ex parte communication has been placed on the record. The commissioner may, if he or she deems it necessary to eliminate the effect of an ex parte communication received by him or her, withdraw from the proceeding, in which case the chair shall substitute another commissioner for the proceeding.

    (5) Any individual who makes an ex parte communication shall submit to the commission a written statement describing the nature of such communication, to include the name of the person making the communication, the name of the commissioner or commissioners receiving the communication, copies of all written communications made, all written responses to such communications, and a memorandum stating the substance of all oral communications received and all oral responses made. The commission shall place on the record of a proceeding all such communications.

    (6) Any commissioner who knowingly fails to place on the record any such communications, in violation of the section, within 15 days of the date of such communication is subject to removal and may be assessed a civil penalty not to exceed $5,000.

    (7)(a) It shall be the duty of the Commission on Ethics to receive and investigate sworn complaints of violations of this section pursuant to the procedures contained in ss. 112.322-112.3241.

    (b) If the Commission on Ethics finds that there has been a violation of this section by a public service commissioner, it shall provide the Governor and the Florida Public Service Commission Nominating Council with a report of its findings and recommendations. The Governor is authorized to enforce the findings and recommendations of the Commission on Ethics, pursuant to part III of chapter 112.

    (c) If a commissioner fails or refuses to pay the Commission on Ethics any civil penalties assessed pursuant to the provisions of this section, the Commission on Ethics may bring an action in any circuit court to enforce such penalty.

    History.–s. 4, ch. 90-272; s. 532, ch. 95-148.


  11. From the cheap seats says:

    Now i know why Coffey got a sweetheart deal last time his contract came up. Commissioners knew they were asking him to do their dirty work, gave him a contract that gets him past an election cycle.


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