Dear CHOICES members and subscribers,

We recently received a letter from an attorney representing Arlie & Company ("Arlie") and John Musumeci requesting that we retract some statements we made in our recent "Mea Culpa." Our statements and the letter from the attorney are reproduced below. A facsimile of the letter from the attorney is available on our website: http://www.efn.org/~choices/files/Arlie-Attorney.pdf

In particular, Arlie and Mr. Musumeci made three specific claims.

First, Arlie and Mr. Musumeci objected to being labeled as a "land speculator" rather than a "real developer."

The Random House Dictionary, College Edition, defines a "speculator" as a "person who is engaged in commercial or financial speculation." It defines "speculation" as "engagement in business transactions involving considerable risk for the chance of large gains." It defines a "developer" as a "person who invests in and develops the urban or suburban potentialities of real estate, especially by subdividing the land into home sites and then building houses and selling them." We recognize that a person or organization can be both a "land speculator" and a "developer," engaging in different sorts of activities at different times.

In a story titled "Dealmaker: John Musumeci is a high-risk businessman with a 'colorful past,'" dated September 11, 2001, The Register-Guard reported:

"The Arlie-PeaceHealth plan is trademark Musumeci: buy land on speculation, work furiously to nail down a big development concept, gamble that nothing goes wrong and look to rake in the payoff. John Musumeci, consummate risk-taker, is perhaps the most unusual and controversial businessman to set up shop in Lane County in years."
http://207.189.149.131/news/20010911/1a.musumain.0911.html

In a related story titled "Arlie selective as it amasses host of holdings," dated September 11, 2001, The Register-Guard reported:

"Arlie & Co. in the past couple of years has unquestionably become Lane County's most active land speculator, buying large tracts of property with dizzying speed, then quickly selling some pieces and hanging onto others. ...  Arlie & Co. has two arms. One, run by Musumeci, works speculative deals and development projects with raw land. The other, run by Musumeci's wife, Suzanne Arlie, manages income properties. Arlie does very little bricks-and-mortar work. The company's biggest local projects for its own account are nothing more glamorous than a 44-lot manufactured home park for the elderly and a Dari-Mart store, both in Cottage Grove. Rather, Arlie seems to specialize in cobbling together deals, then selling off property for others to develop. ... It's clear, though, that Musumeci relishes speculative deals."
http://207.189.149.131/news/2001/09/11/1a.musureal.0911.html

In a story titled "PeaceHealth closes deal on 160 acres in Springfield," dated January 1, 2002, The Register-Guard reported:

"After three months of negotiations, PeaceHealth finally reached agreement Monday to buy riverfront land in north Springfield, dubbed RiverBend, for its new hospital. But the deal looks far different from the one PeaceHealth leaders announced last September. The nonprofit hospital corporation will pay more than four times what it originally intended for twice as much land, and its erstwhile development partner, Arlie & Co., will be largely out of the picture. Instead of paying $8 million for 75 acres on the McKenzie River and having Arlie & Co. hang onto another 75 acres for future development, PeaceHealth is paying $34 million for 160 acres. It's not clear what role, if any, Arlie will play in the development, but it's clear PeaceHealth paid a premium so it could exercise more control over the project. ...  It wasn't immediately clear how much Arlie paid for the 160 acres it sold to PeaceHealth. The company announced in April that it had paid 'just over $8 million' for 94 acres in the area, or about $85,000 an acre. It's selling the 160 acres to PeaceHealth for $212,500 an acre."
http://207.189.149.131/news/2002/01/01/1a.peacehealth.0102.html

We are not aware of any inaccuracies in these stories.

Second, Arlie and Mr. Musumeci objected to suggestions that no real progress has been made on the Crescent site. Indeed, they sent a picture showing that Arlie is building roads on the Crescent site: http://www.efn.org/~choices/files/Arlie-Crescent.jpg

We would welcome learning that Arlie has contracted to construct actual buildings on the Crescent site and is actively seeking tenants to occupy these buildings.

Third, Arlie and Mr. Musumeci objected to our characterization of who loaned them money to purchase what property.

In "Arlie selective as it amasses host of holdings," The Register-Guard reported:

"As Arlie has bulked up its Lane County holdings, it has taken on ever-bigger loads of debt. Earlier this year, the company took on its biggest local debt yet: to fund its purchase of the future PeaceHealth site in Gateway for $8.6 million, Arlie took on $7.5 million in loans, including $4.2 million borrowed from PeaceHealth itself. On other land deals, Arlie has taken on millions more in debt."
http://207.189.149.131/news/2001/09/11/1a.musureal.0911.html

In "PeaceHealth closes deal on 160 acres in Springfield," The Register-Guard reported:

"Ironically, PeaceHealth, through a Seattle holding company, helped Arlie buy the 94 acres last April with a $4.2 million loan."
http://207.189.149.131/news/2002/01/01/1a.peacehealth.0102.html

Again, we are not aware of any inaccuracies in these stories.

As we don't know all the details of Arlie's financial transactions, we would appreciate learning the specifics from Arlie: Who purchased what property from whom when and for how much using funds from where?

As the attorney didn't call attention to any other alleged inaccuracies, should we presume our other statements about Arlie and Mr. Musumeci are true? In particular, we wrote: "Some say that Musumeci is trying to position himself to buy up more media in the Eugene-Springfield area, perhaps even The Register-Guard." As the attorney did not ask for a retraction of this statement, are we to conclude that Mr. Musumeci does indeed have plans to purchase The Register-Guard? Inquiring minds want to know!

Finally, the attorney for Arlie and Mr. Musumeci wrote that they "believe that everyone benefits when diverse views based on accurate information are shared with other members of the community." We wholeheartedly agree. Indeed, their statement pretty much sums up the editorial philosophy of "Health Options Digest." We welcome all news and views concerning hospital siting and related issues.

In particular, we invite Arlie and Mr. Musumeci to enlighten us by providing more details about the concerns they raise and related matters.

But what do YOU think? Please let us know.

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

P.S. The history of Arlie and PeaceHealth going back over three years, as documented by the local media, is available through back issues of "Health Options Digest," which is available on our website: http://www.efn.org/~choices/digest.html

------ Forwarded Message ------
From: Rob Zako <rzako@efn.org>
Date: Wed, 12 Jan 2005 12:47:32 -0800
To: CHOICES Email List <choices-l@efn.org>
Subject: [Choices] Mea Culpa

Dear CHOICES members and subscribers,

Mea culpa -- my fault.

The story I recently posted, "Springfield Pulls Surprise, Denies PeaceHealth," is my fault. I made it up. It isn't factually true.

I want to be quite clear that I made the story up, as it is possible that some people were confused by the story, which appeared to be written by Bob Keefer of The Register-Guard. Some people believe everything they read is true, or don't read all the way to the end of a story to the explanation.
...
John Musumeci is a land speculator who heads up Arlie & Company. He is also the founder of the "Gang of 9," which among other things skewered the Eugene City Council for considering that perhaps a hospital on Coburg road past Costco might not be such a good idea. He really did borrow money from PeaceHealth's parent corporation in Bellevue, Washington, which he used to buy the RiverBend site. But I have no proof that there was a secret handshake deal. He really did turn around and sell most of that site to PeaceHealth for almost twice what he paid for it. When PeaceHealth and Musumeci couldn't agree on who would get to do the prime mixed-used development on the site, the relationship soured and eventually PeaceHealth bought out the last 12 acres that Musumeci owned. Arlie & Company has talked a lot about doing an "urban village." Indeed, Arlie swapped land with PeaceHealth as part of the deal and now owns the Crescent nodal development site out on Coburg Road where PeaceHealth had earlier planned to build a hospital. The City of Eugene has approved plans for nodal development on the Arlie site. I think all that is needed now is a real developer -- as opposed to a speculator -- to come in and actually build something. Lastly, Musumeci has bought a local radio station that runs Air America Radio, a liberal alternative to conservative talk radio. Some say that Musumeci is trying to position himself to buy up more media in the Eugene-Springfield area, perhaps even The Register-Guard. I have never met Mr. Musumeci and don't know what he is like. He has testified before about PeaceHealth's plans, but stopped doing so after he sold the last of his interest in the RiverBend site. He was not at the meeting Monday night.

Suzanne Arlie really is the wife and business partner of John Musumeci. Arlie & Company is named after her. I don't know her at all and she wasn't at the meeting Monday night.
...
Finally, I, Rob Zako, was at the meeting Monday night. Things actually happened the way that Bob Keefer reported they happened (see below) -- not the way I imagined they might have happened. It's really too bad, isn't it? I think my win-win-win-win-win version is better than the win-lose-lose-lose-lose version we are stuck with. But maybe we aren't stuck with the real version, maybe it isn't too late. After all, the difference between fact and fiction might not be so great. In this case, all it would take is for people to actually act in ways that they could act, but for whatever reason they choose not to act. All it would take is, well, for people to act like Dave Ralston acted, to be courageous and do the right thing, simply because it the right thing to do. And perhaps CHOICES and others will need to appeal again, just to give folks more time to build up the courage to do the right thing. Appealing, per se, won't ensure that the right thing happens. Appealing merely creates the opportunity for people to reconsider their decisions.

In conclusion, I apologize to The Register-Guard and to everyone I mentioned in my made up story for suggesting that they might behave in ways they have, in fact, not. I hope my apology clears up any confusion people might have between fact and fiction.

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

------ Transcription of Letter from Attorney: http://www.efn.org/~choices/files/Arlie-Attorney.pdf ------
Barg Coffin Lewis & Trapp, Attorneys LLP

One Market
Steuart Tower, Suite 2700
San Francisco, CA 94105-1475
Tel 415 228 5400
Fax 415 228-5450
www.bcltlaw.com

January 21, 2005


Via U.S. Mail and Email


rzako@efn.org
Rob Zako, Editor
CHOICES
P.O. Box 70753
Eugene OR 97401

Re: January 11, 2005 email to CHOICES Mailing List/Springfield Pulls Surprise, Denies PeaceHealth/Mea Culpa

Dear Mr. Zako:

    This firm represents Arlie & Company, Inc. ("Arlie") and John Musumeci. The purpose of this letter is to request that you refrain from transmitting false and defamatory statements regarding Arlie and Mr. Musumeci to individuals on the CHOICES email list. We further request that you retract the false statements contained in your January 12, 2005 email, including the false statements that Arlie and Mr. Musumeci are not real developers, that no real progress will be made on the development of the Crescent site as long as Arlie owns the property and that PeaceHealth's parent financed Arlie's purchase of what is now referred to as RiverBend.

    Recently you sent two emails to individuals on the CHOICES email list. The first email dated January 11, 2005 was apparently a fictionalized account of a Springfield City Council meeting. This email contained false information regarding Arlie and Mr. Musumeci, however you acknowledged at the end of the email that the story was made up. (Footnote: We do not address the issue of whether false and defamatory statements can be made with impunity by labeling the publication satire.) However, the second email sent on January 12, 2005 purported to correct the factual errors contained in the first email. Thus, the reader was left with the impression that the January 12, 2005 email contained accurate information. In fact, the January 12 email repeated and expanded upon the false statements contained in the January 11 email.

    For example, you state in the January 12 email that Mr. Musumeci and Arlie are land speculators, as opposed to real developers, and that Arlie is not taking action to develop the Crescent site in accordance [with] the plans approved by the City of Eugene. This is false. Arlie has pursued numerous development projects in Lane County and elsewhere. Indeed, Arlie has expended millions of dollars formulating plans for the Crescent site. In addition to the work of Arlie's full time in-house land use planners and architect, who have literally devoted thousands of hours to this project, Arlie has retained numerous outside professionals to work on the Crescent site. Construction has already begun on roads at the Crescent site. Although Arlie is not a construction company, and will not construct the buildings on the Crescent site, the work that Arlie has done and continues to do there is no less important. Your January 12 email also states falsely that Arlie used funds borrowed from PeaceHealth's parent to buy the RiverBend site. In fact, after Arlie had already purchased nearly all of what is commonly referred to as RiverBend, Arlie obtained a loan from an affiliate of PeaceHealth to purchase a contiguous property.

    Please do not misinterpret the intent of this letter. My clients do not seek to limit or restrict your right to speak out on issues of public interest, even when your position is critical of Arlie or its officers or employees. On the contrary, my clients believe that everyone benefits when diverse views based on accurate information are shared with other members of the community. Indeed, community input played, and continues to play, a critical role in the formulation of development plans for the Crescent site and in the preparation of Arlie's recent proposal for the EWEB site. On the other hand, attacks based on false information serve no public interest and wrongly damage the targets of the attack.

Thank you in advance for considering Arlie's and Mr. Musumeci's position on these important issues. We look forward to the publication of a retraction.

Sincerely,
/s/ Jonathan Polland