SONY SALE: CDs to MDs.

Byline: Sherri Buri McDonald The Register-Guard

SPRINGFIELD - The former Sony compact disc plant in Springfield, with its sleek design and acres of manicured lawn, was the city's premiere industrial property when it was built in 1995. But, just eight years later, amid slumping CD sales, the factory abruptly shut down.

Springfield Mayor Sid Leiken said the city will miss having a prestigious global manufacturing company and big property-tax payer at that site. But PeaceHealth's purchase of the property, and its plans to develop RiverBend, a $350 million regional medical center about a half-mile south of the site, open the door for another industry in the Gateway area: medical research, Leiken said.

"We will have a user," he said. "Is it the user we expected? No. Would we rather have a for-profit, probably."

But, Leiken concluded, "once the RiverBend development comes into play, then we'll be much better off than if that building had stayed vacant for a long period of time."

Under Sony ownership, the facility never consistently generated the massive tax dollars that the community had hoped for.

Sony's plant and equipment were exempt from property taxes for a year while the plant was being constructed and five years under Springfield's enterprise zone program. Sony paid full taxes on the property for only a couple of years before the company pulled the plug on the facility.

PeaceHealth plans to use the 327,000-square foot Sony building as an annex to the planned RiverBend medical center.

After PeaceHealth's purchase of the plant and 18 nearby vacant acres in September for the bargain price of $16.6 million, the factory's assessed value plunged to $13.4 million in 2004, down from $66.1 million in 2003.

Sony also had moved most of its costly manufacturing equipment out of the plant by Jan. 2004, which greatly lowered its assessed value. The plant's machinery and equipment had been valued at $23.4 million in 2003, according to Lane County property tax records.

How much PeaceHealth actually will pay in property taxes on the site depends on how it uses the space.

If a group of doctors leases space in the building, for example, that would be taxable, said county tax assessor Jim Gangle.

PeaceHealth is evaluating its space needs to determine which departments will be moved from locations in downtown Eugene to the former Sony plant, said PeaceHealth spokesman Brian Terrett.

The recent settlements between PeaceHealth and opponents of the RiverBend medical center require more functions to remain at Sacred Heart Medical Center's Hilyard campus in downtown Eugene. Those agreements "have caused us to take a stop in our process and re-examine what's going to be out there," Terrett said.

At the same time, PeaceHealth is eager to move some departments to RiverBend Annex to free up space for patient rooms at the hospital downtown, he said.

Last month PeaceHealth moved the 10-employee Sacred Heart Medical Center Foundation, which manages donations to the hospital, into 4,400 square feet at RiverBend Annex.

PeaceHealth also will move its lab division, Oregon Medical Labs, into 70,000 to 80,000 square feet of the annex. OML has 430 employees and is a regional lab providing clinic and hospital testing services. It also does national drug testing.

It's not clear-cut as to whether all of OML's business would be considered for-profit and therefore subject to property tax, or whether it would be connected with PeaceHealth's nonprofit operations and therefore not subject to tax, Gangle said.

Another department slated for relocation is the 20-employee materials management division, which manages the hospital's warehouse and supplies. The division will take about 60,000 square feet of the annex.

PeaceHealth hopes to fill the annex, which has a total of 250,000 square feet of usable space, by January next year, Terrett said.

He had no estimate of how many employees will work there. That depends on which departments are moved to the annex, he said.

Leiken said the prospect of OML's 430 jobs - and more growth ahead - is good news for Springfield, and helps soften the blow of lower property tax revenue from the former Sony plant.

"OML pays good wages and continues to expand," Leiken said, "so what we'll be losing in some of the property tax value, we'll be gaining in the value of good, solid family wages.

"In the short run are we going to feel some pinches? Yes," Leiken said. "How strong they're going to be, I don't know. But in the long run, I think we'll be in a much better position than many other communities around the state."

Leiken also is optimistic that the medical center and related services might help attract or spawn other medical ventures.

Jack Roberts, who is the executive director of the Lane Metro Partnership, agrees that the Gateway area could one day become a center for medical innovation.

PeaceHealth, which has not had much of a research focus up to this point, has had discussions with Portland-based Oregon Health & Science University about increasing the university's presence in Eugene, Roberts said.

Also, with Invitrogen's Molecular Probes campus in west Eugene, which is now the world's leading supplier of fluorescent dyes used in biological research, "there seems to be a growing synergy around medical research," Roberts said.

CAPTION(S):

PeaceHealth wants to use the former Sony site in Springfield as an annex to the planned RiverBend medical center. PeaceHealth plans to use the 327,000-square foot Sony building as an annex to the planned RiverBend medical center.