Hospital deal hits bump in the road
October 2, 2008
By Ed Farrell
Months of public hearings, and thousands of dollars in planning may be in acute distress as King County Public Hospital District No. 4, which operates Snoqualmie Valley Hospital, considers pulling the plug on its efforts to build its new campus on state Route 18 in Snoqualmie.Last week, Don Galen, chief financial officer for the hospital, confirmed that mounting expenses have forced the hospital to consider other potential locations. The district had identified a 72-acre site, just northeast of the I-90/Hwy 18 interchange, as the future home of it’s new $70 million, 27-bed hospital.
“Right now, we’re doing the prudent thing, and that means looking around,” Galen said in a telephone interview. Galen identified a possible location within the Snoqualmie Business Park as the first, best alternate site, even though the location had previously been rejected, in part, because of the accessibility issues inherent to the site.
“We’re not at any kind of final stage. Right now, we first need to know what the county is going to do,” Galen said.
The King County Commission met Monday to debate a proposal that would expand the city of Snoqualmie’s Urban Growth Area to include the parcels in the hospital proposal.
No action was taken Monday, despite three hours of testimony – most by opponents of the hospital. The Commission is to vote on the UGA expansion on Oct. 6.
With the hospital’s interest apparently waning, the Commission could scrap the entire UGA expansion request, even though Snoqualmie Mayor Matt Larson said he would still like to see the process approved – with or without Snoqualmie Valley Hospital.
Any approval, however, would likely see a reinstatement of a previously imposed requirement to provide four acres of protected habitat for every one acre slated for development.
In recent months, officials involved with the hospital proposal had claimed a deal had been reached that would allow the hospital to purchase credits from the county’s Transfer Development Rights program as opposed to having to actually purchase additional land.
That process, however, has been complicated by intense environmental concerns that could include forcing the hospital district to provide four acres of land for the county’s Transfer Development Rights program for every one acre to be developed.
In a June interview, Rodger McCollum, the hospital’s executive director, said the credit purchase deal would “absolutely allow” the hospital project to go forward.
Agreements had already been reached to pay nearly $24 million to purchase the necessary land; contracts have been signed to create a non-profit entity that will issue tax-exempt bonds to construct the new hospital and lease it back to the district.
The district’s commitment to a new facility was rendered irrevocable when it finalized the sale of the old Snoqualmie Valley Hospital, along with 50 acres of land, to the Snoqualmie Tribe, which intends on using the facility for a regional tribal medical center geared at traditional Native American healing techniques, for $30 million.
Terms of the sale allow for the hospital to remain in operation until the tribe actually pays off the contract over a two-year period.
Galen insisted, however, that the anticipated I-90/Hwy 18 parcel is still the hospital’s No. 1 preference, and that the district has not wavered in its commitment to building its new campus in Snoqualmie.
Galen’s statements came following a recent presentation by Snoqualmie’s Mayor Larson, at a Mountains to Sound Greenway gathering, that the hospital had reached a significant stumbling block in terms of financing, and that he understood the plan, as has been the focus of intense opposition by the public and large, was unlikely to move forward – at least at the SR18/I-90 location.
“What I said was the hospital completed a more detailed cost analysis,” Larson said in a telephone interview. “The long and short of it (they determined) it would be more costly to build on that land, even it it came into the city.”
Larson also acknowledged the district was now looking at the Business Park site, which Larson said was not something he particularly favored. The city’s development standards would allow such a use, but Larson indicated the Park’s intent was to house other types of business development.
“We’re not thrilled about it, but if that’s what it takes,” Larson said.
Larson indicated that the final determinant on the I-90 location appeared to be the hospital’s conclusion that a necessary “latecomer’s” agreement – requiring it to pay its pro-rated share of infrastructure costs initially paid for by earlier developers – would render the project financially infeasible.
Because of existing agreements with Snoqualmie Ridge developers, the hospital — or any party wishing to develop the parcels in question — would be subject to paying its fair-share of what Larson termed as “fixed, sunk costs.”
While the hospital would still be subject to similar costs at the Business Park site, that project carries its own development agreements, which, according to Galen, would still be within the hospital’s operational cost envelope.
Larson added, however, that any pending hospital decision to close one door could lead to another group stepping up.
Bellevue Community College, Larson said, had discussed possibly moving forward with purchasing a larger portion of the parcel than initially planned. In previous discussion, BCC had floated the idea of building a satellite campus on the I-90 site, and offering health-industry related classes that could provide professional and educational opportunities with the hospital.
“BCC is still strongly interested,” Larson said, hinting that discussions he was involved with could be for an even larger campus than previously discussed.
“A future four-year college would be a great asset to the community,” he added.
Larson, who has frequently found himself as the leading proponent for the new hospital relocation at a number of public hearings, said he still favors keeping the hospital within the city’s boundaries.
“It’s my mandate as mayor to look out for the public health, safety and welfare of the community,” Larson said. “We have a hospital district and a hospital, and to me, (not supporting the hospital’s efforts) would be abandoning a fundamental aspect of my office.”
Larson added, however, that ultimately the benefits to the community as a whole must be considered.
“As long as citizens are paying their taxes, I have to question what value my citizens are getting on their investment, and right now, I’d have to say they’re minimal,” he said.
BCC spokesman Bob Adams said he could not comment on Larson’s statements about the school’s plans to proceed given the latest developments, and noted that BCC would not, in accordance with state law, be interested in forming a four-year institution.
Adams did, however, emphasize that BCC has long planned to expand into the Snoqualmie Valley area, and would continue to do so.
The proposed deal with the hospital, Adams said, “had no specificity to it,” and that BCC was never linked at the vest with the district.
The hospital proposal, Adams said, “provided us with an opportunity to get in, but our plans never hinged entirely upon it.”
Still, Adams would not discount the possibility that BCC could pursue an independent deal.
“We do want to provide educational facilities in that area,” Adams said, “and we could use some of that space. We do have an interest in serving that area regardless of what happens with the hospital.”
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