Triad presses EWEB for formal contract.

Byline: Joe Harwood The Register-Guard

The Eugene Water & Electric Board is feeling a little heat from Triad Hospitals Inc.

Triad has begun pushing EWEB to enter into a more formal contract to sell 22.5 acres of the utility's headquarters site for a new McKenzie-Willamette Medical Center.

But just what that contract might look like, and whether it would set a price for the EWEB site, is unclear. The sides apparently still remain far apart on price.

More than two months ago, Triad sweetened its offer to $24.8 million for the riverside property, and proposed a conceptual agreement that would allow them to continue negotiations. But neither side has signed that agreement.

That agreement resembled a framework that could have been expanded into a formal sales contract over an eight-month review period. The 240 days was supposed to give Triad time to conduct feasibility studies on the land, and provide EWEB time to study its actual costs of relocating to west Eugene.

Instead, the Texas-based hospital corporation is now seeking a sales contract that offers more assurance than an agreement in principle that EWEB would eventually sell the property. That has EWEB officials a bit concerned.

"We were left with the sense after our meetings (last year) that an agreement in principle would serve as a foundation for negotiating a contract of sale," said EWEB General Manager Randy Berggren. "The expectation was we would be able to put an agreement in principle in place fairly quickly."

Triad and EWEB officials in early November said they expected signatures on that agreement document by Dec. 1.

The utility's board authorized Berggren to sign the agreement because it "is overtly recognized that it is not a contract," Berggren said. The draft agreement in principle made it clear that the $24.8 million that Triad offered was a starting point in negotiations, Berggren said.

EWEB, relying on a 2002 study, figures it needs $38.5 million from the sale of its downtown headquarters and operations facilities to cover the costs of moving and building a new campus. The utility is preparing to launch a new study to gain a more accurate picture of relocation expenses.

Triad now wants a stronger pact because it needs to show state hospital regulators a specific location for the new facility in order to begin the application process to move from Springfield to Eugene, Triad spokeswoman Rosie Pryor said. "Our goal is to memorialize these things in writing."

Berggren said he lacks the authority to enter into a sales contract with Triad, and would refer such a proposal to the utility's board.

"When you get into a streamlined contract of sale, price becomes important," he said.

Roy Orr, chief executive of McKenzie-Willamette, said attorneys representing both sides have been hammering out details for a proposed contract and are nearly finished.

"I think it's fair to say we've gone from the highlights to a fuller agreement," Orr said. "I think we're on the verge of taking it to the EWEB board."

Orr declined to talk about what sales price the draft contract might contain.

Triad and EWEB jointly commissioned two appraisals last year on the property that put the market value for the land and administration building at $22 million to $24.8 million.

Berggren said a contract should address the price disparity.

"They've moved to a contract of sale and that changes the landscape for me," he said. "If they brought a sales contract for $38.5 million, I think the board should take it."

Berggren said if Triad submits a contract with a purchase price less than $38.5 million, he would recommend the board reject it.

The earliest the board would take up the contract issue would be Feb. 15, though it's unclear if Triad would submit a contract by that time.

Pryor said until EWEB completes the design study to determine how much money would be required for it to move and build new facilities, EWEB's $38.5 million relocation figure "is just a number" the utility is using because that's all it has.

"We've made clear (that) if the number is $38.5 million, we hope it will change because that is not an offer we have made for the property," she said.

Meanwhile, Triad might even reduce the $24.8 million offer made in November, by $1.5 million. That's because the higher of the two appraisals conducted last year included a 3.2-acre riparian strip along the Willamette River that the city now wants to buy for $1.5 million from EWEB.

If EWEB removed that property from the sale parcel, Triad would reduce its offer to account for the loss, according to a memo written by Berggren to the EWEB board.