EWEB site: Arlie declares `the gloves are off' as councilor's comments fuel ownership fight.

Byline: Joe Harwood The Register-Guard

Eugene real estate firm Arlie & Co. came out swinging Thursday, declaring it will fight to win ownership of the Eugene Water & Electric Board's downtown campus.

"The gloves are off," said John Musumeci, Arlie's vice president, in reaction to a statement made at a public forum Wednesday night by Eugene City Councilor Bonny Bettman. She cautioned utility officials that the city doesn't favor a mixed-use style development as proposed by Arlie at the EWEB site. Instead, Bettman said, she wants a new McKenzie-Willamette Medical Center there, as proposed by Triad Hospitals Inc.

Arlie in recent weeks has offered $28 million for the EWEB property, much higher than the $24.8 million bid Triad made last year.

A majority of speakers at the forum said they wanted a hospital at the site, given the pending move of Sacred Heart Medical Center from Eugene to Springfield. Bettman said the EWEB property is zoned for industrial and public use, and she's in favor of changing that to allow a hospital. She said city help would come only for a hospital on the site.

Bettman on Thursday elaborated on her comments. She said the city would give Triad and EWEB an extraordinary level of help in order to site a hospital on a location that poses many challenges. But that elevated level of city support would not be forthcoming for any development other than a hospital, she said.

After detailing traffic access, contamination and other problems that would make the EWEB site difficult to develop, Bettman on Wednesday night had said: "In addition, the EWEB site is zoned as industrial property and is public land. It is not zoned for residential or commercial uses. The city has the authority and resources to mitigate those challenges, but only in pursuit of a hospital," according to a tape recording of the forum. Arlie has said it wants to create a commercial/residential complex on the site.

Some of those attending took Bettman's comments to mean that the city would not cooperate in letting the EWEB parcel be used for anything other than a hospital.

EWEB Commissioner Sandra Bishop on Thursday said she was shocked by Bettman's comments Wednesday night.

"If what Councilor Bettman said is reality, then the only option we have is to keep the land in public ownership and stay put," Bishop said. Bishop has been skeptical about selling to Triad, saying the land is worth more than Triad's offer.

Bishop said Bettman's comments presented "a very bizarre interference in our business operations."

Arlie official Larry Reed, who attended the Wednesday forum, reported Bettman's comments to Musumeci, who reacted with ire.

Until now, Musumeci has presented Arlie's bid for the EWEB property as a "backup" offer to Triad's in the event that EWEB and Triad fail to seal a deal. But on Thursday, Musumeci said Arlie will no longer play second fiddle to the hospital proposal.

And he lashed out at Bettman.

"What Bonny Bettman did, in effect, is plant a poison pill in the process," Musumeci said.

"I am not going to be bullied or deterred by the Eugene City Council in our mission to buy and develop the EWEB property," Musumeci said. "I'm appalled they would use the same tactics that scared (Sacred Heart Medical Center) to Springfield to scare off other bidders."

Bettman on Thursday declined to say specifically if she would fight an attempt by EWEB or Arlie to get the land rezoned to allow a mixed-use development. Instead, Bettman said she would "consider any zoning change on any city property on the merits of that particular proposal and its benefit to the public."

That didn't appease Musumeci, who has had skirmishes with Bettman and some other members of the council.

All of this puts Musumeci and his firm back in the limelight, where they've been on and off for years with their local real estate ventures.

Ever since Arlie made its offer for the EWEB site, real estate and political observers have wondered about Arlie's goals.

Some thought Arlie, by outbidding Triad, might be trying to kill any chance of Triad moving to the EWEB site. That would put Triad back in the market for a big Eugene property - perhaps forcing Triad to renew its interest in a large tract Arlie owns in northeast Eugene.

Arlie and Triad talked last year about Triad building its hospital on 39 acres Arlie owns on the north side of Crescent Avenue, east of Coburg Road. But the sides say those talks fell apart early last summer.

Musumeci vigorously denies Arlie has any interest in forcing Triad back to considering the Crescent property.

"That's just not true at all," Musumeci said. "The (development) opportunity over at EWEB was real clear to us, and it was a real easy read."

He said the EWEB property presents "a depth of opportunity" for a spectacular riverside development that could come to define the city. Musumeci pointed to the Eugene Downtown Plan, a document in the works for more than a decade that the City Council adopted last April.

That plan calls for a mixed-use development on the EWEB site, plus efforts to provide better public access to the river.

Musumeci said that in the months leading up to Arlie's public offer for the EWEB site, he saw the negotiating process between EWEB and Triad going nowhere.

"To me, as a deal maker, it didn't look like there was a meeting of the minds between EWEB and Triad," he said.

"There was a meeting of the minds of Triad and the City Council. It was like the groom and the best man deciding on the bride, but no one bothered to ask the bride."

Scott Diehl, Arlie's chief operations officer, said research revealed that the EWEB site is more valuable than Triad's $24.8 million offer.

"It's absolutely the crown jewel of Eugene," Diehl said. He added that Arlie has "no secondary motives other than developing the property."

Musumeci said Arlie and Triad weren't able to come to an agreement on the Crescent site primarily because Triad wanted to buy the entire 39 acres.

Roy Orr, CEO of McKenzie-Willamette, confirmed that negotiations broke down partly over Triad's need for more than the 20 acres Arlie offered.

Diehl said he, Reed, Orr and another Arlie official flew to Triad headquarters in Plano, Texas, 10 months ago to discuss a deal. Triad at the time was already concentrating on the EWEB parcel.

"We didn't realize how important acreage was" for Triad, Diehl said. At the Plano meeting, Triad made it clear it wanted the entire 39-acre Crescent parcel, he said.

Diehl said that was never a possibility. He said Arlie wants to develop part of that site as stores, offices and housing.

Orr has a different recollection of the talks. He said Arlie approached him last spring about putting the hospital on the Crescent site, and he agreed to listen. By contrast, Musumeci says Triad approached him.

Aside from Triad wanting more land than Arlie was willing to part with, Orr said a second hospital on the north end of town wouldn't serve the entire community's needs for acute and emergency care.

Also, Orr said, the Crescent property was not inside the downtown "incentive zone" the City Council set up to help cover development expenses for a hospital. The city thus far has offered Triad about $12 million in transportation upgrades to provide better access to the EWEB site.

Musumeci said the Crescent deal died in part because the downtown incentives offered by the city were too good for Triad to pass up.

"It's just that they found another bride with a handsome dowry," Musumeci said.

Orr said any more talk of Triad looking at the Crescent site - even if the EWEB proposal falls through - is a waste of time.

"No, we would not be interested in Crescent," Orr said.