Bad Operation

We're being robbed blind -- $100 million blind.

That's how much money a couple of politically connected developers stand to make on a medical office building they're set to construct for the taxpayer-funded North Broward Hospital District.

When the $30 million project near Broward General Hospital on South Andrews Avenue is completed, the well-heeled developers will then lease it to the district at $3.1 million annually for 55 years -- for a grand total of $170 million out of our pockets.

Allow me to repeat: NBHD, which oversees four public hospitals, has agreed to pay $170 million for a $30 million building. And you wonder why the cost of health care is so outrageous?

A local bond broker who has handled NBHD financing in the past told me that the district could likely secure a loan at about 8 percent. Over 20 years, the cost would be about $3 million a year, for a grand total of $60 million.

That's a $110 million difference. Throw $10 million out of the equation to give the district some benefit of the doubt and it's merely a $100 million boondoggle.

Instead of owning the building outright in the 2020s, taxpayers won't own the building until, oh, about 2060, which means NBHD is not only selling our future but also our children's.

And that giant sucking sound you hear is coming from your own back pocket. The district's $720 million annual budget is paid by taxes -- including $155 million from property taxes.

So everyone is in an uproar over this stunning public ripoff, right? Citizens are demanding the resignations of NBHD CEO Wil Trower and every hospital board member who approved the disastrous deal, right? The developers have been tarred, feathered, and ridden out of town on the Florida East Coast rail, right?

Of course not. That would be too sane. The feds did become involved, however. Last year, the Federal Bureau of Investigation and U.S. Attorney's Office began investigating the deal, temporarily stalling it. But federal prosecutor Neil Karadbil, who is handling the case, won't say whether the probe is continuing, and, last month, the district again kick-started the project. NBHD spokeswoman Sara Howley refused to comment, other than to say the feds determined that everything about it is hunky-dory.

So it's a go, unless someone -- anyone -- can put a stop to it. There's still time: While the district board of commissioners has approved the plan, details are still being hammered out, and the papers haven't yet been signed.

The developers set to receive the huge windfall are Terry Stiles and William Murphy. At least, those will be the names on the contract; the real demon seed behind this debacle is Murphy's long-time partner, M. Austin Forman, a man who has made millions by persuading governments and politicians -- on whom he lavishes campaign contributions -- to pay inflated prices for his land. His past is littered with little scandals, like the time he promised Broward County that he would build a "World Trade Mart" near the convention center at Port Everglades. He failed spectacularly and then convinced the commission to forgive him a $1.7 million loan. And who can forget the time Broward County paid Forman $2 million for an old rundown building appraised at $900,000. Turned out the place wasn't even fit for its intended use. That was a classic. There are many more examples, but you get the picture.

Forman declined to comment; he never talks to the media. Why should he explain himself? The normal rules don't apply to this prominent parasite, whose main credential is his birthright: He's the son of Broward patriarch Hamilton Forman, the land baron and chairman of the hospital district board from 1961 to 1991.

Sound incestuous? We haven't even begun -- this deal is so inbred, it ought to be confined to a locked room in the basement of the royal palace. Bloodsuckers like Austin Forman couldn't exist without good hosts, and Broward's public officials are nothing if not that. The office building deal began with an unholy relationship: Back in 2000, Forman became buddies with Patricia "Patty" Mahaney, then the NBHD's chief financial officer.

Forman wined and dined both Mahaney, who was then making $258,000 a year, and her husband, Thomas. Hamilton's son even took the Mahaneys with him on a vacation to Africa, where they visited Zimbabwe and Victoria Falls, according to court records.

When Thomas Mahaney became involved in a software business called ADS Responscorp Inc., Forman chipped in $100,000 to $150,000 to become a partner in the venture, according to FBI reports. Patty Mahaney then negotiated a deal between her husband's company and the hospital district.

Shady, yes. Illegal, maybe. Trower, who didn't return my calls, approved the software deal knowing full well his CFO's connection to the company.

But the software shenanigan was small potatoes compared with what followed. Also in 2000, the hospital district decided it needed an office building to help attract doctors. At the same time, Forman and Murphy were buying up property on the 1600 block of nearby South Andrews Avenue. Mahaney told the feds that Murphy contacted her to see if the hospital district would be interested in the land, but she claims her good friend Forman never broached the subject.

Whether that's true or not, Mahaney was soon formulating the office building project with the Andrews Avenue site in mind. Forman and Murphy then brought in Stiles, another prominent developer who owns Stiles Corp., to build the project.

There were no bids, just a good old-fashioned deal between friends. In all, the 1.6 acres cost Forman and Murphy about $4.5 million. But the board is set to pay that cost in cash, along with $2.1 million for a parking garage. Wouldn't want anybody but us taxpayers to pay much of anything, after all.

On November 19, 2001, the first article about the proposed deal was published. "This building will really help the hospital," the Sun-Sentinel quoted Mahaney as saying. "Ultimately, this is our building."

In hindsight, you have to wonder who Mahaney really meant by "our." The board approved the rotten $170 million deal in February 2002.

I met Doug Eagon, president of Stiles Corp., for lunch at the Brasserie Las Olas last week to talk about the project. There, I learned that Eagon is a thoroughly gracious fellow and has a tasty sandwich named after him on the menu ("Doug Eagon's Favorite BBQ Sandwich"). But he supplied no facts to counter the evidence that this was a horrific deal for taxpayers.

For instance, I thought that the partners would at least manage and maintain the building, but Eagon dispelled that notion. "The district has a lot of infrastructure and resources," he said, "so they will deal with security and janitorial duties."

But Stiles will at least maintain the plumbing and wiring and other fundamental building matters, right?

"Well, no, we still have to discuss all those details," he said.

Eagon pointed out that the district has projected that rents from doctors in the building would come to $400 million over the 55 years. So NBHD would also do quite well in the deal, making some $230 million.

But the "Hey, everybody's making out good in this deal" argument doesn't cut it. The district is still paying $100 million too much for the building. Why shouldn't taxpayers make $330 million? And such projections are notoriously overblown anyway. Remember how much revenue the Office Depot Center was supposed to bring the county?

To be fair, Eagon and his boss, Stiles, are only taking advantage of a sweet business opportunity. NBHD executives are to blame. Not only was Mahaney leading the charge on the deal but she had the feckless Trower behind her, as well as William Scherer, the district's general counsel, who happens to be a long-time Forman business partner. Scherer has publicly stated that he owes everything to the Formans, who gave him his start as an influence peddler. So we know where his loyalty lies. Scherer, who actually uses a public relations firm to deal with the media, didn't return my calls.

It's no wonder that the seven-member NBHD board would approve this mess either. Most of the commissioners aren't public servants -- they're political and business opportunists who were repaid for their loyalty to Jeb Bush with an appointment by the governor. There is Paul Sallarulo, a financial adviser for Wachovia Securities who helped run campaigns for both the governor and the president; Dorsey Miller, one of Broward's most prominent black Republican activists and a staunch supporter of the Bushes; and John D. Collins, a builder who bought himself a place on the board by raising more than $100,000 for George W.'s presidential campaign and supporting the governor.

I called Miller about the deal, and he initially said, "I'm not really up to date on that issue right now." Well, it is only $170 million, after all. Then he said he'd make a call and ring me back up. When he did, all he would say was, "The information I had, that [NBHD staff] gave me, I was satisfied with it when I made my vote."

Now, that's what I call accountable.

Stiles also has cozy connections to the board. His former business partner Steven Berrard, who used to be billionaire Wayne Huizenga's righthand man, has a seat, as does one of Stiles' former lobbyists, J. Luis Rodriguez, who last week was named chairman.

Which begs the question: Why is a lobbyist chairing a public board that oversees $720 million in public funds? NBHD isn't about the good of the people -- it's about money and power and big contracts. And it's not just a Republican problem either. Democratic governors did the same thing long before Jeb Bush ever left Midland.

Thankfully, the FBI got a tip that Forman and Mahaney were involved in insider dealing and began an investigation that led to Mahaney's resignation and her indictment this past June for embezzling thousands of dollars from the district. She recently pleaded guilty and is scheduled for sentencing November 14. While the conviction could land her as much as ten years in prison, sentencing guidelines dictate that she receive 15 to 21 months.

The FBI scrutiny sent Forman under his rock -- he claims to have ended his involvement with the project, though his partner, Murphy, is still front and center. But assistant U.S. attorney Karadbil needs to go deeper. Mahaney and Forman clearly came up with a scheme to pilfer our tax money, and like a dense bank teller from an Old West flick, we're standing idly by and letting it happen. The feds are the only ones who can put a stop to it, since our state attorney, Michael Satz, is a miserable failure when it comes to public corruption cases.

But it's also up to regular citizens to fight this deal. You're the ones, after all, who are paying the price.

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Bob Norman
Contact: Bob Norman