============================================================ Health Options Digest October 26, 2002 Coalition for Health Options In Central Eugene-Springfield ============================================================ * EDITOR'S LETTER * NEWS SUMMARY * MCKENZIE-WILLAMETTE'S PLANS 1.sn - Hospital evaluates its future in Springfield * TRANSPORTATION ISSUES 2.sn - City to form agreement with county on Pioneer Parkway extension * OTHER NEWS 3.rg - Arlie & Co. profits from land sale 4.sn - Sports complex partners honored 5.rg - Courting the customer: Oakway Center * KEY, CREDITS, MORE INFO ===================== EDITOR'S LETTER ==================== Is no news (or little news) good news? The story in the Springfield News (#1) that McKenzie-Willamette's board of directors is weighing the hospital's future location and patient services is old news to us. Still, it is amazing to see the issue spelled out so plainly in black in white. PeaceHealth's actions are threatening to put McKenzie-Willamette out of business, forcing McKenzie-Willamette to react. It is a law of physics that for every action there is an equal and oppositie reaction. But must this be true in public policy as well? Or are there more sensible ways to determine how the community's health care needs will be served for the next 50 or 100 years? It is pretty clear that the community is watching steps towards moving not one but two hospitals around, at great cost to the hospitals, their donors, and the larger community that picks up all sorts of direct (Beltline/I-5, Pioneer Parkway Extension) and indirect (costs of employees relocating) costs. All of this to secure an additional hundred or so hospital beds? Isn't this all outrageous? Or is it all -- war with Iraq, snipers, Antrax, 9-11, etc. -- so outrageous that we collectively sit back and watch events unfold, like some sort of reality-based TV show? Staff from the City of Springfield, ODOT, and the state Department of Land Conservation and Development are currently reviewing proposed amendments to faciliate building a new PeaceHealth hospital and the associated traffic impact analysis. Staff reports should be out in time for work sessions in November or the first public hearing on December 3. It remains to be seen whether or not all is in order. CHOICES is reviewing these documents as well. We may not be able to do much about some of the scarier global issues, but there is much we can do about events and decisions in our own backyard. As Governor Tom McCall once said, "This is my community and it's my responsibility to make it better." It's *our* community. Let's see how we can make it better. Rob Zako, Editor 343-5201 rzako@efn.org ====================== NEWS SUMMARY ====================== While McKenzie-Willamette's board of directors is weighing the hospital's future location and patient services, the hospital is in no position to relocate and build a new facility at this time (#1). The Springfield City Council agreed to form an intergovernmental agreement with Lane County regarding the funding and management of the Pioneer Parkway extension (#2). Land speculator Arlie & Co. has sold to investors for $4 million a 12.6-acre parcel of vacant industrial land off International Way in the Gateway area that an Arlie-led group paid just $2.5 million for a little more than two years earlier, a 63 percent markup during a period when much of the Lane County real estate market has been stagnant (#3). A celebration was held at the site of the planned Springfield Sports Complex at 32nd and Main streets to praise the public-private partnership formed to create the complex (#4). Owners took a costlier -- and more politically correct -- approach to redevelop a neglected part of their 25-acre Oakway Center that featured five lofty old oak trees: They kept the oak trees and turned the half-acre parcel the trees sat on into an open, public courtyard. The result, a growing number of shoppers and tenants agree, is stunning (#5). =============== MCKENZIE-WILLAMETTE'S PLANS ============== ------------------------------------------------------------ 1.sn - Hospital evaluates its future in Springfield ------------------------------------------------------------ By Jaime Sherman Springfield News, 10/26/02 The rumor started a week ago and spread like any rumor will. The word was McKenzie-Willamette was looking to move its hospital to Glenwood -- and soon. But the rumor was a bit exaggerated. While McKenzie-Willamette's board of directors is weighing the hospital's future location and patient services, the hospital is in no position to relocate and build a new facility at this time, said Rosemary Pryor, the hospital's director of marketing and planning. "Right now nothing has changed, and nothing will change for quite some time," she said. A few years ago when the hospital started recording a drop in profit and then failed to profit again in 2001, the hospital's board put a $50 million hospital expansion on hold. Although Pryor said she doesn't comment on the hospital's financial status in the middle of a fiscal year, she said the hospital continues to "struggle" this year. "We are not able to make money from hospital operations," she said. McKenzie-Willamette contributes its economic struggles to PeaceHealth for repressing competition in Lane County by exclusively contracting with insurance provider Regence Blue Cross Blue Shield. In January, McKenzie-Willamette filed an antitrust lawsuit against PeaceHealth, and a federal jury trial will be held in Portland in October 2003 to decide the outcome. Despite popular opinion, McKenzie-Willamette didn't file suit against PeaceHealth because it plans to build a $350 million regional medical center in the Gateway area, Pryor said. McKenzie-Willamette, which has operated in Springfield for 47 years, is weighing several options for how best to survive its economic struggles, and it is not waiting for the outcome of the lawsuit. "The goal is to try to be viable for another 50 years," Pryor said. The board is looking at several options for the hospital, including staying in Springfield, moving to another community, changing the type of service the hospital offers or joining forces with another medical group, she said. Last week's rumor that McKenzie-Willamette was considering a move to Glenwood came after a conversation between Roy Orr, the hospital's chief executive officer, and the city of Springfield. In the conversation, Gino Grimaldi, assistant city manager, suggested McKenzie-Willamette consider building in Glenwood. Maureen Weathers, chairwoman of the hospital's board of directors, responded to the city in a letter. "As we evaluate relocation, we will consider the availability of parcels of at least 18 acres that can be appropriately zoned quickly and are served with adequate street and sewer infrastructure," she wrote. The board has yet to rule out any option for the hospital and is actively talking with four potential affiliate partners, including local physicians groups who have expressed interest in joining forces with the hospital. The hospital is not publicizing a timeline for making a decision on a move or service change, but the hospital has promised to tell its 1,100 employees something substantial by the end of the year. As the hospital's board weighs its options, Pryor said the priority is to keep McKenzie-Willamette Hospital viable for years to come. "We're very encouraged that there will be good opportunities for McKenzie-Willamette to be just as strong for the next 50 years as we have been for the past 50 years," she said. http://www.springfieldnews.com/articles/2002/10/25/local/news3.txt ================== TRANSPORTATION ISSUES ================= ------------------------------------------------------------ 2.sn - City to form agreement with county on Pioneer Parkway extension ------------------------------------------------------------ By Jaime Sherman Springfield News, 10/23/02 On Monday night, the City Council agreed to form an intergovernmental agreement with Lane County regarding the funding and management of the Pioneer Parkway extension. The council authorized City Manager Mike Kelly to sign the agreement, which lays out city and county financial, management, design and construction responsibilities. The $8 million extension project would push Pioneer Parkway north of Harlow to Sony Disc Manufacturing and Symantec Corp. The agreement states Lane County will pay $5.2 million, and the city will provide $2.75 million plus all sanitary sewer funding and the contribution of PeaceHealth and city owned right-of-ways. The county will take responsibility for surveying, engineering, right-of-way acquisition and construction management. The city will do everything from obtaining permits to taking responsibility of the road after the project is completed. The city will also pay for all project costs that exceed the original estimate. PeaceHealth will benefit from the extension if it builds its proposed $350 regional medical complex in the Gateway area, and as a result, it must take some responsibility in the project. The agreement states that PeaceHealth will pay $2.75 million of the city's estimated costs, any additional costs and $600,000 toward construction of the sanitary sewer trunk line. The medical organization must also provide the right-of-way on its property. http://www.springfieldnews.com/articles/2002/10/23/local/news5.txt ======================= OTHER NEWS ======================= ------------------------------------------------------------ 3.rg - Arlie & Co. profits from land sale ------------------------------------------------------------ By Christian Wihtol The Register-Guard, 10/22/02, Page 1B Springfield -- Land speculator Arlie & Co. appears to have pulled off another big-profit coup. The company has sold to investors for $4 million a 12.6-acre parcel of vacant industrial land off International Way in the Gateway area that an Arlie-led group paid just $2.5 million for a little more than two years earlier. That's a 63 percent markup during a period when much of the Lane County real estate market has been stagnant. The purchase was by International Way Properties LLC, which is led by Cottage Grove resident Burt Loessberg. Loessberg declined to identify members of his group but said it consists of Oregon and out-of-state residents. The land sits on the north side of International Way, opposite the Sony compact disc factory. The group bought the land as a long-term investment, Loessberg said. The group has no immediate plans for it. "We are going to wait for the market to mature a little bit," Loessberg said. Loessberg said he's a business investor who moved to Cottage Grove from Oklahoma three years ago. He said he has owned some real estate investments in the past but currently has no other holdings than the Gateway property. He figures the Gateway area will boom in coming years with PeaceHealth's proposed construction of a hospital there. Eugene-based Arlie made a huge profit last December selling PeaceHealth 160 acres southeast of the Gateway industrial park. Arlie had bought the acreage in bits and pieces for a total of about $16 million, then sold the assembled tract to PeaceHealth for $34 million last December. That's a 112 percent markup. The sales price to International Way Properties in July was steep -- $317,460 an acre -- but Loessberg said the land is worth it. To buy the land, International Way Properties took out a hefty $3.81 million mortgage from Portland-based Centennial Bank due Sept. 1, 2005, real estate deeds show. But Loessberg said that even with this debt to service he doesn't feel pressure to quickly develop the site and generate income from it. One option is to subdivide the property into small parcels that could be sold, but Loessberg said he hasn't decided whether to take that path. A group headed by Arlie -- International Way Partners -- bought the land in May 2000 from Washington businessman Robert Selzler. The purchase deed did not list a sales price. However, at the time, Arlie land-deal manager John Musumeci announced that International Way Partners paid $2.5 million for the land. Also, the sale's settlement statement, which was recently obtained by The Register-Guard, shows the purchase price as $2,474,190. Settlement statements, which are completed at the closing of a sale, typically are not public. But they often are circulated among people involved in a deal. After it bought the property, Arlie began marketing the land for a substantial markup but found no takers. A year ago, Arlie filed plans with the city to divide the 12.6 acres into three parcels and build a 30,000-square-foot headquarters for itself on one of the parcels. But Arlie never moved ahead with that and never made any improvements to the land. International Way Partners was a partnership of Arlie and two other Eugene investors. Earlier this year, International Way Partners transferred the property to the sole ownership of Arlie. Arlie then sold to Loessberg's International Way Properties this July. While Loessberg declined to identify the members of International Way Properties, he confirmed that none are members of Arlie and that Arlie no longer has any control over the property. Arlie declined to comment on the sale to The Register-Guard. http://www.registerguard.com/news/2002/10/22/1b.bz.arlie.1022.html ------------------------------------------------------------ 4.sn - Sports complex partners honored ------------------------------------------------------------ By Jaime Sherman Springfield News, 10/23/02 A celebration was held Tuesday at the site of the planned Springfield Sports Complex at 32nd and Main streets to praise the public-private partnership formed to create the complex. About 50 people from the city of Springfield, Willamalane Park and Recreation District, Broad Base Programs Inc., Kidsports, Carolyn S. Chambers Trust and Arlie & Co. participated in the celebration. A representative from each group spoke briefly. "I would really like to thank all the partners," Rob Adams of the Willamalane Board of Directors said. "This is the biggest and best partnership." The 160,000-square-foot sports complex will be built over three years in three phases. The $12 million complex will include an ice rink, gymnastics center and six volleyball and basketball courts. Land to the south of the center will include five multi-purpose soccer fields. Construction on the center section of the property may begin as early as next spring and could be partially completed by next fall. Mayor Sid Leiken spoke on behalf of the city, saying the sports complex is a dream come true and a "lasting legacy." "This is going to be one of our proudest moments," he said. Leiken praised Arlie & Co. for donating 10 acres of the property to Broad Base Programs last year and State Sen. Bill Morrisette for initiating the plans for the complex in the late 1980s. Broad Base is a nonprofit group formed to build and operate the complex. Arlie's director of operations John Musumeci represented the company at the celebration. In addition to the donation, Arlie sold 20 of its 35 acres at the site to the city for the complex. "Wow. You know in business we try to do business that's a win-win," Musumeci said. Donating the land to Broad Base Programs is one of the best transaction his company has done, Musumeci added. "The community wins. The children win," he said. "We're absolutely tickled to be a part of this project." Arlie & Co. owns the front parcel of land at the site and plans to build shops and restaurants on it. To accommodate the complex, the city plans to improve 32nd Street by adding three lanes, bike paths and sidewalks. The road must be completed before Broad Base's fields can be used, said John Tamulonis, the city's community and economic development manager. Public hearings will be held in November and December on rezoning the site from a mix of industrial zoning to parks-open space. The land to the front of the property will remain zoned for commercial use. "If the development plans are worked out, we may see some construction by next spring," Tamulonis said. http://www.springfieldnews.com/articles/2002/10/23/local/news2.txt ------------------------------------------------------------ 5.rg - Courting the customer: Oakway Center ------------------------------------------------------------ By Christian Wihtol, Business Editor The Register-Guard, 10/28/02, Page 1F Several years ago, when Linda McKay Korth and her son, Steve Korth, were wondering how to redevelop a neglected part of their 25-acre Oakway Center that featured five lofty old oak trees, one retailer suggested plunking a 50,000-square-foot store on the spot. The trees would have to go. The Korths, whose family has owned the center since 1963, balked. They feared such a move would turn Oakway Center into a look-alike of behemoths Valley River Center in Eugene and Gateway Mall in Springfield. Competing against such monsters head-on is tough. So instead, the Korths took a costlier -- and more politically correct -- approach. They kept the oak trees and turned the half-acre parcel the trees sat on into an open, public courtyard. They dotted the courtyard with lawns, tables and benches, street lamps and hanging planters. And around the courtyard, they built about 33,000 square feet of retail space -- including a soaring, 2 1/2 -story enclosed public atrium -- and 12,000 square feet of offices. The result, a growing number of shoppers and tenants agree, is stunning. The place -- formally titled Heritage Courtyard -- officially opened this summer. It probably isn't the most profitable real estate venture in recent years in Eugene. But it's among the most unique. And it's also among the most admired. The development won two People's Choice Awards in the Southwestern Oregon Chapter of the American Institute of Architects 2002 contest for best commercial architecture and best commercial landscaping. "I wish there were more places like this," said Susan Dennis, a retired executive assistant who lives less than a mile away and has made a habit of walking to the courtyard. A special aspect Dennis has come to savor: In the courtyard, you're outdoors, but you don't hear or see traffic. Retail real estate development can often be a humdrum task. Create acres of stark asphalt for parking, put up some bland, big-box buildings for national chains that squeeze local retailers, then watch the cars flow in and listen to the cash registers jangle. But the shopping-mall industry has a growing number of contrarians, such as the Korths. These folks figure a segment of shoppers want something aesthetically pleasing. The industry has even given a name -- lifestyle centers -- to the new breed of malls that is emerging. Experts can't quite agree on what constitutes a lifestyle center, but the International Council of Shopping Centers counts about 30 such centers nationwide. Most have been created in the past six years. Oakway Center and its Heritage Courtyard are too small and too new to be on the council list. In Rolling Hills Estates in California, a developer in 1999 created a lifestyle center by removing the roof from the previously enclosed courtyards and walkways of an old mall. That same year, a developer opened a mall at Southlake, Texas, that features an outdoor, tree-lined plaza with fountain and gazebo. The place also offers outdoor skating on a plastic surface. In a Texas-style version of the Korths' tree preservation, the Alamo Quarry Marketplace mall in San Antonio, Texas, was built in 1997 on the site of a defunct cement plant, and the developer kept the original smokestacks as landmarks. In Eugene, the long-established Fifth Street Public Market with its courtyard and terraces fits the bill for a lifestyle center -- although it caters much more heavily to the arts-and-crafts and tourist trade than does Oakway Center. All these places still have much more in common with traditional malls than they do with, say, Eugene's downtown Saturday Market. But they're incorporating elements -- natural features and open-air settings, for example -- that are distinctly different from traditional, enclosed malls. PRICEY WORK The Korths won't say how much they've spent building Heritage Courtyard. The city values the work at $2.75 million. Steve Korth said the plan that would have involved felling the trees and putting up a 50,000-square-foot store would have cost only about $2 million. Plus, the Korths are in the midst of tearing out a wall in an old part of the mall that is next to Heritage Courtyard and turning it into 9,000 square feet of additional retail space. That work is estimated to cost $275,000, the city says. In addition, the Korths spent $25,000 studying the root zones of the five oak trees to ensure that foundations didn't damage them, Steve Korth said. The Korths say they took the costly courtyard route for two reasons: First, they can afford to, and second, it makes long-term business sense. The family has long owned the entire mall property outright. That gives them financial flexibility. By contrast, a developer who has to buy land and pay to install infrastructure is under more financial pressure to generate a quick return, Steve Korth said. The family intends to hold onto the mall, so it's willing to make decisions that will keep the mall competitive for years to come, said Linda McKay Korth. The courtyard "adds so much to the overall experience" at Oakway Center, she said. "Without that, you don't have much of an identity." Tom Coyle, executive director of Eugene's Planning and Development Department, said the Korths' redevelopment work has been "extraordinary." Consumer retailing tastes evolve quickly, and traditional strip malls are "dying, fading away," Coyle added. Tenants at Heritage Courtyard are enthusiastic about the new venue. Mark Beauchamp, co-owner of Eugene-based Cafe Yumm, opened a Cafe Yumm eatery in the courtyard in July. Sales have been brisk and the Korths charge a reasonable rent of about $1.70 a square foot per month, plus common area maintenance fees, Beauchamp said. Customers are bowled over by the spot, which includes seating in the airy atrium, Beauchamp said. "We get literally dropped jaws when our customers walk into the Heritage Courtyard," he said. "We get that every day." The Korths said they solicited local restaurants for the courtyard because they think Eugene-area residents are partial to locally owned eating spots. So far, the courtyard has four locally-based restaurants. Beauchamp said he signed a five-year lease and has spent about $250,000 outfitting his store. SCUFFLING WITH SKATEBOARDERS But the project hasn't been without problems for the Korths. Linda McKay Korth said the retail spots have filled up quickly, and there's just 3,700 square feet left. However, the office space, all of which is on the second floor surrounding the courtyard, has been slower to go. About 5,700 square feet remain available. The development is all on private property, but it didn't take long for skateboarders and transients to stumble onto it, she said. The skateboarders "basically are good kids, but they have done some real damage," she said. The Korths said they have worked hard to make sure skateboarders step off their boards and carry them on mall property, and have cited people for trespassing about a dozen times in the courtyard area. At entryways to the courtyard, the Korths have posted tastefully designed signs, complete with the Oakway Center's oak-leaf logo, reminding visitors that the place is private property, noting that skateboarding is banned and asking bicyclists to walk their bikes. The courtyard's high degree of polish, control and artifice may not be to everyone's taste. Retiree Bill Bowen, visiting from Florence while his wife shopped at a cosmetics store in the courtyard, said the place looks a lot like San Diego, where he grew up. The courtyard is dotted with little reminders of the close control exerted by management. Some tables in the courtyard sport signs that read: "Yumm customers only!" or "This table is reserved for customers of Johnny Ocean's Grille. Thank you!" Piped-in music sometimes gives the courtyard the feel of an office elevator. The lawns, shrubbery and walkways are manicured. Linda McKay Korth said the family hired an extra full-time maintenance employee to work on the courtyard. The oak trees shed debris all year long, she said, and the employee blows clean the sidewalks and lawns every day. "I didn't realize how dirty oak trees are," she said. The Korths formally opened the courtyard last June. Many days in the summer, it was packed. With cooler fall weather arriving, the outdoor area now is often largely devoid of people. Steve Korth said that's inevitable, although the Korths have tried to combat that by providing covered walkways around the courtyard to shelter shoppers from the rain. They built natural-gas pipes into the courtyard so they can set up outdoor heaters, although they haven't used them yet. "Our peak season (for the courtyard) is half the year, at best," Steve Korth said. But for customers such as Susan Dennis and her husband, Harry Dennis, that's no drawback. They say they're thrilled to have good restaurants in an opulently landscaped setting within walking distance of home. It's the kind of nodal development that public officials spend so much time talking about, said Harry Dennis, a retired wastewater treatment plant manager. The development has also given a jolt to policy wonks at the city's planning department. The courtyard development is set back from Oakway Road, with a parking lot taking up the space between the development and the street. The city's new land-use code requires that new retail development be next to streets, with parking behind the development -- a rule that could hamstring future projects similar to Heritage Courtyard, Coyle said. The new code allows redevelopment sites -- such as Oakway Center -- to apply to be exempted from that rule, but that process is complex and time-consuming, Coyle said. City planners and elected officials need to figure out if they should change the code to encourage other courtyard-type projects, Coyle said. Contact Christian Wihtol at 338-2381 or cwihtol@guardnet.com. http://www.registerguard.com/news/2002/10/28/1f.bz.courtyard.1027.html =========================== KEY ========================== "Health Options Digest" is best read with an email program that recognizes links to web pages. It includes leads from and links to stories and opinions from the following publications: rg = The Register-Guard sn = Springfield News ew = Eugene Weekly cn = Comic News ode = Oregon Daily Emerald cce = City Club of Eugene Newsletter or = Oregonian For some stories, two links are given. Use the first link if the story is still current; use the second if another issue has since been published. ========================= CREDITS ======================== "Health Options Digest" is published once every week or so by the Coalition for Health Options In Central Eugene-Springfield (CHOICES) as a service to the community. It is intended as an unbiased digest of news and opinion related to proposed changes in health care options for the community. The purpose of "Health Options Digest" is to inform, not editorialize. Please forward your copy of "Health Options Digest" to a friend. If you know of someone who should be on the CHOICES email list, or for questions about your subscription, send email to rzako@efn.org. ======================== MORE INFO ======================= Please visit our web site for info about how you can contact us, the local papers, elected officials, PeaceHealth and McKenzie-Willamette: http://www.efn.org/~choices