Perspectives on the Court of Appeals ruling

Dear CHOICES Subscribers,

Do you believe the condor is an endangered species?

As foreshadowed by our recent "Three Days of the Condor" comments, last week the Oregon Court of Appeals ruled that PeaceHealth cannot build a regional hospital on their RiverBend site under existing land use plans. In brief, the court said that a regional hospital isn't a house (nor something that supports nearby housing). Therefore PeaceHealth can't build a regional hospital on land designated for housing. The decision isn't just a technicality but a major setback for PeaceHealth. The hospital is far from a "done deal" and PeaceHealth may ultimately change its plans -- as it has already done so a few times in recent years.

There's an important principle at work here. Zoning is designed to balance the interests of neighboring property owners and to ensure certainty. A property owner foregoes the right to use his or her property for some kinds of uses in exchange for the certainty that neighbors won't convert their properties to incompatible uses. Someone living in a quiet residential neighborhood doesn't want a busy drive-through store -- or a regional hospital -- popping up next door; a heavy industry shouldn't be allowed to locate next to an elementary school.

So-called property rights advocates understand only half this principle. They talk a lot about their right to do whatever they want with their property, but little about the rights of their neighbors to not have to suffer the consequences. Most sensible people understand the need to balance property rights between neighboring property owners.

In this case, several years ago Arlie and Company borrowed money from PeaceHealth to buy up residential land in the Gateway area, even though it had no intention of building housing. It appears that Arlie was speculating that they could sell the land to PeaceHealth and make a handsome profit. (Perhaps just to make sure, Arlie's John Musumeci started the "Gang of 9." In hindsight, it is clear that the "Gang of 9" discredited the Eugene City Council enough to give PeaceHealth an excuse for abandoning its long-time home in Eugene.)

Similarly, when PeaceHealth purchased the Arlie land, it knew the land was designated residential, even though it intended to build a regional hospital there. Apparently, PeaceHealth believed it could find loopholes in the land use laws to allow it to put a hospital where the community had decided it wanted a residential neighborhood. Those who have watched the process closely have been astounded at the contortions that PeaceHealth and Springfield have gone through to try to squeeze a regional hospital onto land planned for housing. The clear desire of the community as expressed in the Gateway Refinement Plan was for the RiverBend site to develop as part of a neighborhood -- not one of the area's largest commercial developments in decades.

Now that the Court of Appeals has struck down PeaceHealth's plans, PeaceHealth should place the blame for delays and costs squarely where it belongs: on itself. Like the court, who based its decision in part on Webster's Third New International Dictionary, it could have saved itself and the community a lot of time and expense if it had just understood that a regional hospital is not a house nor something that supports nearby housing (i.e., an "auxiliary use" to housing). Blaming concerned citizens for PeaceHealth's woes is like blaming the boy who said the emperor had no clothes for making him naked.

(The Court of Appeals also upheld the decision by the Oregon Land Use Board of Appeals (LUBA) that Springfield failed to adequately analyze the traffic congestion the hospital would create and whether there is a need for additional commercial land. But at least for now, these issues are secondary to the primary issue that PeaceHealth can't build a hospital where housing is planned.)

The recent Court of Appeals decision marks the third recent legal defeat for PeaceHealth. Last November, a federal jury sided with McKenzie-Willamette Hospital, finding that PeaceHealth tried to monopolize the local market for hospital services, engaged in price discrimination and unlawfully interfered in McKenzie-Willamette's business relationships. In March, LUBA ruled that the Springfield erred last September when it issued excavation and fill permits to PeaceHealth prior to approving a master plan for development of a hospital. We are seeing a pattern of flouting or at least bending the law.

So what now?

PeaceHealth and Springfield may now try to redesignate for commercial uses all the land intended for a regional hospital and related medical and commercial services. But they may not succeed in doing so. Indeed, one must wonder why they didn't try to do this in the first place, as a hospital is clearly a commercial (as opposed to a residential or industrial) use and thus belongs where commercial uses are planned. The fact that PeaceHealth and Springfield didn't go this route before suggests that they already know that doing so will run afoul of the Eugene-Springfield General Metropolitan Plan (Metro Plan) or Statewide Planning Goals related to economic development, housing and transportation.

But we hope that, through grace, PeaceHealth will live up to its own mission and join with others in deciding how the community can best and most cost-effectively provide for the hospital needs of the community. Almost two years ago, CHOICES proposed a "Hospital Siting Commission" to aid in doing just this.

Regardless of the process for moving forward, we urge PeaceHealth, Springfield, McKenzie-Willamette/Triad, Eugene and the larger community to be guided by the following principles:

    * Our community benefits from having two strong, viable hospital that offer different kinds of services with different philosophies in different parts of the metropolitan area.

    * Both hospitals need expanded and modernized facilities.

    * To help control health care costs, both hospitals should use existing facilities as efficiently as possible, constructing new facilities only to the extent that is necessary.

    * Eugene and Springfield should continue to assist PeaceHealth and McKenzie-Willamette/Triad as appropriate.

    * Eugene and Springfield should "bury the hatchet" and stop trying to "steal" major developments from each other. Rather, both cities should recognize that they are part of a single housing/employment/shopping market and that important public and private services need to be distributed throughout the metropolitan area.

    * PeaceHealth needs to allow McKenzie-Willamette/Triad a fair chance to be economically viable. In particular, PeaceHealth should support McKenzie-Willamette/Triad's efforts to relocate without needing a new Certificate of Need -- just as PeaceHealth can.

    * Everyone in the community should appreciate the importance of having quality, affordable health care options and should be willing to balance these interests against other important interests.

As a first step, we invite representatives of PeaceHealth, McKenzie-Willamette/Triad, Springfield, Eugene and the Jaquas to discuss with us how we can all move forward to better achieve common goals and balance competing interests.

In conclusion, we just witnessed another major plot twist in the ongoing "Tale of Two Hospitals." We continue to believe that health care is too important to the community to be played out like a game of Monopoly, with each side trying to build its hospital on Park Avenue. Couldn't Eugene, Springfield, Lane County, PeaceHealth, McKenzie-Willamette and others all just play nice, sit down together, and figure out where it makes the best sense to have our community's two hospital?

For CHOICES,
Rob Zako
343-5201
rzako@efn.org

P.S. Following are other perspectives on the recent court ruling.

http://www.registerguard.com/news/2004/06/11/ed.edit.riverbend.0611.html

June 11, 2004

A significant setback: Court rules PeaceHealth project has problems

A Register-Guard Editorial

PeaceHealth's RiverBend project ran aground on Wednesday, high-centered on a series of land-use setbacks contained in an Oregon Court of Appeals ruling. PeaceHealth and the city of Springfield must remedy the serious defects cited by the court before the $350 million regional medical center can move forward.

Larger questions loom in the wake of the ruling. Chief among them: Can PeaceHealth withstand the increasing financial burden that opponents of its project are prepared to inflict through legal challenges every single step of the way?

Is the huge project -- a nine-story regional medical center designed to serve this area's health care needs for decades to come -- a good fit for the 180-acre site PeaceHealth has purchased?

Are everyone's health-care costs being increased unnecessarily as a result of the way this process has been handled?

Let's deal with the last question first. The answer is, regrettably, yes. It's hard to say how long the project will be delayed as a result of Wednesday's ruling, but few people are buying PeaceHealth CEO Alan Yordy's sunny projection of just "a few months."

"Every dollar we waste on legal challenges is a dollar that doesn't go to providing services to the community," PeaceHealth spokesman Brian Terrett said. Not to mention the dollars spent on rising interest rates, unplanned transportation improvements, additional land-use studies and revised bids for construction and materials.

The parties to this conflict are quick to point fingers about who's responsible for the mess, but there's blame enough to go around.

PeaceHealth has been guilty of hubris and an unrealistic expectation that the importance of its mission should guarantee unquestioning support. Springfield has been overzealous in its assurances to PeaceHealth that it could take care of the necessary planning and zoning issues. Opponents of the project have unfairly painted PeaceHealth as a greedy corporate robber baron intent on damaging the environment and ignoring the law.

But a broader view suggests that the first -- and most significant -- failure was the inability of the regional planning process from the get-go to provide suitable, available sites for a new hospital. Health care services are as vital as police, fire protection and water, yet no land with suitable zoning, access and acreage existed for construction of a regional medical center.

The land-use planning process is not designed to prevent development. It's intended to guide growth and make certain that residential, commercial, industrial, park and other uses occur in appropriate areas with access to cost-effective essential services.

Home builders, hardware store owners and hospitals should be able to depend on metropolitan planning to provide predictable, efficient guidance about where to build. The difficulty PeaceHealth -- and McKenzie-Willamette Medical Center, for that matter -- has had finding and purchasing suitable land suggests that this area was flatly unprepared to accommodate a large new medical center, particularly in a central location.

Who knows how long PeaceHeath can keep adding astronomically to its costs before the RiverBend project would no longer be feasible? The more important question is: Does it have to come to that?

The costs of these delays will ultimately be borne by all health care consumers in Lane County. Opponents owe it to this community to say unequivocally, right now, whether they intend to block every effort PeaceHealth makes to build a hospital on the RiverBend site or whether, given full compliance with appropriate land-use regulations, they will accept the project.

The saddest outcome of this mangled process so far is the message it sends to the people who work at Sacred Heart Medical Center, a compassionate, community-centered health care organization. Finding appropriate ways to make the necessary and welcome expansion of their facilities possible makes more sense than acting as if they're trying to build a nuclear waste dump here.

Copyright 2004 The Register-Guard

http://www.registerguard.com/news/2004/06/16/ed.col.johnson.0616.html

June 16, 2004

Guest Viewpoint: PeaceHealth has only itself to blame

By Al Johnson

The June 11 Register-Guard editorial on the Oregon Court of Appeals decision in the PeaceHealth case makes some unsupported assumptions. A brief response is necessary before those and other unhelpful assumptions become dogma and close minds that need to be open.

First, a short explanation of why my clients, Robin and John Jaqua, are fighting the RiverBend project. The Jaquas are proven friends of PeaceHealth. They also are friends of the hillside above and the river below their farm. They feel strongly that the McKenzie River is a precious natural asset that would be unnecessarily degraded by putting a massive monolith 145 feet high and 850 feet long so close to the river. They also worry that it will set a precedent for more high-rises and other encroachments. The Jaquas want to preserve the river corridor and the hillside as a healing environment for the entire community.

Now, let's examine those assumptions. The first unsupported assumption is that PeaceHealth's financial and legal problems are somehow caused by those who have enforced the plain text and graphics of the Metro Plan. PeaceHealth's problems have been caused by PeaceHealth, which chose to ignore the Metro Plan and to pursue a high-stakes strategy of putting facts on the ground while relying on arcane loophole arguments that didn't work.

The second unsupported assumption is that the Metro Plan fails to provide for hospitals. Wrong again. The Metro Plan provides for hospitals the same way that it provides for office buildings and other commercial uses -- on lands designated for commercial use. The fact that there isn't a large greenfield set aside for such uses doesn't mean the Metro Plan is faulty. Sure, there are constraints that go with redevelopment, but those are constraints that keep our cities functional. Our compact growth policies have driven a lot of redevelopment. That's why we have the upgraded Oakway shopping center instead of a new mall in the Lane Community College basin. Glenwood's future depends on the same policies. Why not put the hospital there?

A third unsupported assumption is that the risk of higher medical costs is created by delaying the project. This one is worth The Register-Guard's examining in depth. Maybe the real risk of higher costs comes from saddling the region's health-care consumers with the expense of building two new hospitals, including a megahospital. Maybe the real cost risk is the prospect of having one megahospital with little or no competition.

One assumption The Register-Guard rightly doesn't make is that PeaceHealth and the city of Springfield will be able to fix their land-use problems unilaterally. The Court of Appeals said that the 2003 amendments could be made by Springfield alone, but those decisions didn't do the job. It remains to be seen whether all necessary decisions can be made that way. I doubt it. The PeaceHealth proposal and the resulting dislocation of McKenzie-Willamette Medical Center are seismic changes to the Metro Plan community. They threaten to upset long-standing transportation, housing, employment and land-use patterns and plans.

It is no failure of the Metro Plan that PeaceHealth suddenly decided to go where no one ever expected it to go. It is certainly not a failure of the Metro Plan that a hard-won community consensus cannot be lightly set aside at the whim of a single powerful institution. It should be reassuring.

An assumption the Jaquas refuse to make is that city and hospital leaders will not learn from experience. In "The March of Folly," Barbara Tuchman's famous review of history's slow learners, the author observes that "Learning from experience is a faculty almost never practiced," and that "mental standstill ... is fertile ground for folly." She also reminds us that "there is always freedom of choice to change or desist from a counter-productive course if the policy-maker has the moral courage to exercise it. ...Yet to recognize error, to cut losses, to alter course, is the most repugnant option in government."

The Jaquas are ready to be part of the solution, but they can't solve the problem unilaterally. They have presented a variety of alternatives along the way and have been rebuffed at every turn. It is not being stubborn to ask that the road to compromise be a two-way street. If PeaceHealth is not willing to consider alternatives that meaningfully address issues of concern, then the Jaquas will continue the fight with every resource available to them.

Al Johnson is a Portland attorney who represented John and Robin Jaqua in their challenge to an earlier Oregon Land Use Board of Appeal's ruling on the city of Springfield's approval of PeaceHealth's plan to build the RiverBend development on 180 acres east of Game Farm Road in the Gateway district.

Copyright 2004 The Register-Guard

http://www.springfieldnews.com/articles/2004/06/16/opinion/opinion01.txt

June 16, 2004

Eugene to Springfield, Springfield to Eugene? Hospital dance goes on

A Springfield News Editorial

It's been some time since PeaceHealth announced it planned to build a new hospital called RiverBend in northern Springfield in the Gateway area.

While that was good news to the city of Springfield (and bad news to the city of Eugene), it wasn't good news for McKenzie-Willamette Hospital, Springfield's own hospital of more than 40 years.

But more than a year ago, McKenzie-Willamette announced it was being purchased by Triad, a for-profit hospital group, one of the biggest in the United States. Triad announced it planned to build a new, bigger hospital.

Since then several problems have surfaced: PeaceHealth has faced innumerable challenges from opponents in the Gateway area; and McKenzie-Willamette faces the challenge of finding a new location.

As both hospital groups realize, finding a place for a large facility, such as a hospital, isn't easy. And, as The Register-Guard pointed out in an editorial, land-use planning in the Springfield-Eugene area hasn't included hospital sites.

The Oregon Court of Appeals last week handed down a decision that said PeaceHealth couldn't put a hospital in an area zoned for residential development. In addition, the court said, PeaceHealth and the city hadn't met the state's requirements for identifying and taking care of traffic problems in the Gateway area.

Which puts PeaceHealth in a quandary: Will it go back for rezoning or appeal the Appeals Court decision? At any rate, it looks as though construction will be delayed.

McKenzie-Willamette hasn't run into much opposition yet because it has yet to decide on a new location. The hospital is considering the current site of Eugene Water & Electric Board, which is fairly close to the new federal courthouse (which almost came to Springfield).

That doesn't sound like a great site, right next to the railroad track and the Ferry Street Bridge -- which has its own traffic problems.

Where are we going with all this? How much money will it cost to go through all these processes as well as building two brand new hospitals?

The dance goes on -- at least for a while.

Copyright 2004 The Springfield News