Triad Hospitals raises offer on EWEB land to $24.8 million.

Byline: Joe Harwood The Register-Guard

Triad Hospitals Inc. sweetened its offer by almost $2 million for 22.5 riverside acres now occupied by the Eugene Water & Electric Board, but whether the increase will be enough to persuade the utility to sell remains unclear.

Texas-based Triad, which wants to build a new McKenzie-Willamette Medical Center on the site, submitted a bid of $24.8 million this week after being told its initial offer of $22.9 million was not acceptable.

Triad, the majority owner of McKenzie-Willamette, wants to replace its aging Springfield facility with a five-story, $85 million medical center on EWEB's downtown property.

The utility's board met in a nonpublic session to review what EWEB General Manager Randy Berggren called a "conceptual agreement" with Triad. The offer resembles a framework that would be expanded into a sales contract over an eight-month review period. The utility's board will vote Tuesday night whether to accept the proposal and continue negotiations.

After the closed meeting, two board members expressed concern over whether Triad could offer enough money to make sure EWEB customers aren't burdened with a portion of costs of moving the EWEB headquarters and other facilities to a new location, and whether a hospital is the best use of EWEB's riverfront property.

Some community members have argued the city would be better off redeveloping the site to open up access to the river, as has been done in Corvallis and Portland, rather than allowing a five-story hospital there.

When the utility first considered selling the property, the board set a firm guideline that any sale would have to cover the cost of buying a replacement site elsewhere and building new facilities. A rough estimate puts that figure at $38.5 million. Commissioners have stated several times that they would not sell if ratepayers - stung by a half-dozen rate hikes since 2002 - have to pick up any part of the tab.

"I'm going to vote no (on the latest Triad offer) because I will not risk charging ratepayers," said Sandra Bishop, the board's vice president. "The economics of it do not add up and the timing is not appropriate for EWEB and the ratepayers."

Bishop said two appraisals commissioned by Triad and EWEB earlier this year put too low of a value on the downtown property. The appraisals valued the land and the utility's administration building - the property that Triad has proposed buying - at $22 million to $24.8 million.

"The only responsible thing to do is hold the land until the economy (improves) so the true value of that riverfront land can be realized," Bishop said. "This (latest offer) feels like a fire sale."

Commissioner Dorothy Anderson said after Friday's meeting that her primary concern remains whether a sale to Triad and a subsequent EWEB move would lead to another EWEB rate increase.

"My underlying concern is cost to the ratepayers," Anderson said. "I'm also concerned whether that (hospital) is the best use of the property."

Anderson declined to say how she might vote Tuesday.

Commissioners Ron Farmer and Mel Menegat did not return calls seeking comment Friday afternoon. Board President Patrick Lanning left town immediately after the meeting and could not be reached for comment.

But previously, Menegat, Farmer and Lanning have all said they don't want ratepayers to be hurt by EWEB selling the riverfront site and moving elsewhere. Menegat and Farmer have both appeared willing to move forward if a Triad proposal comes close to meeting EWEB's financial needs.

EWEB made Triad's offer public Friday afternoon. The conceptual agreement, the result of a five-hour Oct. 21 meeting among EWEB, Triad and Eugene city officials, calls for the utility to keep 3.2 acres of land along the riverbank that it would sell to the city for roughly $1.5 million.

Triad would have eight months after signing the contract to conduct feasibility studies on the EWEB property, while the utility would have the same eight months to find a replacement site and complete studies. During that period, according to the agreement, either party could unilaterally terminate the contract.

EWEB is considering buying 46 vacant acres at the southeast corner of Belt Line Road and Roosevelt Boulevard for $1.6 million. The utility could eventually build new operations and administration facilities there.

Triad's latest offer to EWEB is intentionally vague, with many specifics set to be worked out during the eight-month investigation period. It was unclear Friday whether Triad's $24.8 million cash offer for the EWEB property is also subject to further negotiation.

Triad spokeswoman Rosie Pryor could not be reached for comment Friday. EWEB spokesman Marty Douglass said the utility hopes the price is negotiable.

To try to close the gap between what Triad is willing to pay and what EWEB is willing to take, the city has taken a more visible role to moving the process forward.

In addition to the $1.5 million the city has tentatively agreed to pay EWEB for the riparian zone along the Willamette River, officials have also offered EWEB $500,000 to help it relocate its telecommunications equipment, a city official said.

The official said the city might also waive $400,000 in wetland mitigation costs that EWEB would have to pay in order to develop the Roosevelt site.

That $2.4 million from the city, along with Triad's offer of $24.8 million, brings the sales package to $27.2 million. However, that's still $11.3 million short of what EWEB has estimated it needs to build a new headquarters elsewhere.

The $38.5 million figure EWEB has been using for its cost to move and build new facilities comes from a 2002 study. The figure includes a 30 percent contingency cushion.

If the utility's board votes to continue negotiations with Triad, it would undertake an $800,000 design study later this year that would give managers a better idea of the actual costs.

Tuesday's meeting begins at 7:30 p.m. in the board room, North Building, EWEB headquarters, 500 E. Fourth Ave.