City eyes taxpayer options to help fund a hospital in Eugene.

Byline: Joe Harwood The Register-Guard

Eugene officials are considering asking taxpayers to dig deep for money to help pave Triad's way toward building a hospital in the city's downtown.

Subsidy options analyzed thus far by the city to help Triad Hospitals Inc. include issuing bonds; launching a campaign for a voter-approved capital levy; using urban renewal district taxes; using one-time dollars that may materialize over the next few years; and waiving permit fees and other development charges, according to an analysis drafted by city staff.

The list of options, prepared by the city as it mulls what - if anything - to do to assist in the hospital siting, was obtained by The Register-Guard in a public records request.

City Manager Dennis Taylor will present a list of options and recommendations to the City Council on June 16.

Any possible subsidies would come on top of $500,000 the City Council last year set aside for use as incentives related to the development of a hospital.

The subsidy discussion comes as Triad evaluates how much it would have to spend to build a hospital at its choice site: the Eugene Water & Electric Board property at the foot of the Ferry Street Bridge. A significant issue in Triad's decision may be how much aid the city can offer.

The utility and Triad are awaiting two appraisals of the riverfront property that should provide an updated market value for the land by the end of the month. A previous appraisal put the price at $31 million.

EWEB estimates that moving its operations would cost $35 million, and the utility expects any sale of its current facility to cover the relocation of its operations and not lead to rate increases.

Triad has said it will not spend more than $80 million to buy a site and build a new hospital.

The numbers have fueled speculation that the for-profit hospital corporation might ask the city for some type of subsidy, for example to cover any difference between EWEB's asking price and what Triad is willing to pay. Negotiations are ongoing.

Perhaps the most controversial of the possible subsidy concepts is the idea of asking voters to approve general obligation bonds that could be used to help pay for developing Triad's new McKenzie-Willamette Medical Center on the 26 acres now occupied by EWEB. The bonds would be repaid through property taxes.

But general obligation bonds can only be used for public projects such as road improvements, not for development incentives, according to the city documents. Such bonds also could not be used to buy property that didn't remain in public ownership, said Sue Cutsogeorge, Eugene's financial analysis manager.

That restriction would prevent the city from issuing bonds to fill any site purchase price gap - even if there was the political will to do so.

"The hospital is a for-profit entity; it's a business," Eugene Mayor Jim Torrey said. "I would not support bond measures to help the hospital come to Eugene."

Other Eugene officials, including Taylor, have echoed the same sentiment, saying the city will not fill a price gap with public money.

Another option floated by the city is asking voters to approve a capital levy of up to 10 years to cover public improvements related to a hospital development. But the city staff deemed a levy undesirable because it would butt up against Measure 5 property tax limitations and cause a loss of taxes levied for the city library and school programs, according to the city's analysis.

Another option listed by the city would be to issue urban renewal bonds to finance street and access improvements at the EWEB site, and possibly even the construction of a parking garage. Estimates put those improvement costs at $15 million or more.

To help lure a hospital, the City Council earlier this year expanded the urban renewal district to include the EWEB property. Property taxes generated within the district would be used to fund the improvements.

Urban renewal bonds "are one tool we have, but exactly how that would work is up in the air right now," Cutsogeorge said.

In a May 20 e-mail, Assistant City Manager Jim Carlson estimated that by issuing urban renewal bonds, the city might be able to raise as much as $19 million to pay for the street and access improvements a hospital would require.

Cutsogeorge cautioned that the $19 million is a preliminary estimate and could change after further analysis.

If EWEB and Triad were able to strike a deal for the land, city officials have said they would favor using the property tax increments generated within the district - primarily from new taxes paid by Triad and by medical offices that would follow the hospital - to service any bond debt.