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HomeMy WebLinkAboutItem B: Hospital DevelopmentEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: City Council Priority Issue - Hospital Development in the Central Core Meeting Date: August 8, 2005 Agenda Item Number: B Department: Central Services Staff Contact: Dennis Taylor www. eugene-or, gov Contact Telephone Number: 682-5010 ISSUE STATEMENT The purpose of this work session is to review the proposed work plan for addressing the priority issue for hospital development in the central core of Eugene. The council is asked to approve or modify the proposed action plan. Specific elements of the action plan that require council policy or budgetary action would be brought forward as separate items. BACKGROUND In February, the City Council met to develop strategic priorities for the community. Out of that session emerged eight priority issues. The priority issues and executive leads for each issue are: 1. Launch neighborhood initiative - Public Works 2. Conclude discussion on City Hall/Police Building - Assistant City Manager 3. Facilitate the development of a hospital in Eugene's central core - City Manager 4. Complete and consider Police Department reviews and implement appropriate changes - Police 5. Push arts and outdoors as a theme for Eugene - Planning and Development 6. Re-staff Fire station #9 - Fire and Emergency Services 7. Develop City Council position on racial issues - Human Resources and Risk Services 8. Develop a strategy to help the homeless in Eugene - Library, Recreation and Cultural Services The expectation from the council was that the City Manager would develop recommended action plans for each strategic priority and return this summer for discussion, input, and adoption of the plans. Subsequent to the council's identification of these issues, a template was developed by the Executive Managers for use by each project team in developing specific action plans. A copy of that template is included as Attachment A. The action plan for Hospital Development in the Central Core is included as Attachment B. This action plan identifies the major policy issues to be addressed, the overall description of project phasing, the nature of work to be accomplished, resource needs and proposed project outcomes. L:\CMO\2005 Council Agendas\M050808\S050808B.doc RELATED CITY POLICIES Specific policies related to each priority issue will be addressed in specific action plans. The Hospital Development in the Central Core Action Plan identifies several key issues regarding incentives and land use issues that must be addressed as the action plan moves forward. COUNCIL OPTIONS The council is asked to provide direction on the Hospital Development in the Central Core Action Plan. The council may approve or modify the proposed action plan. Approval or modification of the action plan would give staff direction to continue implementing the action plan. The council could also direct that no additional work be done on an action plan, effectively putting this priority issue "on hold." CITY MANAGER'S RECOMMENDATION The City Manager recommends that the council approve the proposed Hospital Development in the Central Core Action Plan. SUGGESTED MOTION Move to approve the proposed Hospital Development in the Central Core Action Plan. ATTACHMENTS A. Priority Issue Action Plan Template B. Hospital Development in the Central Core Action Plan FOR MORE INFORMATION Staff Contact: Dennis M. Taylor, City Manager Telephone: 682-5010 Staff E-Mail: dennis.m.taylor~ci.eugene.or.us L:\CMO\2005 Council Agendas\M050808\S050808B.doc ATTACHMENT A Council Priority Issues Action Plan Template The following information will help each priority issue team prepare their action plan. This is a set of guidelines which can be tailored to meet the context of the priority issue, understanding that the magnitude of the priorities vary widely. Try to stay as close to the outline as possible because one if the desired outcomes of the overall process is that the action plans all have a similar look when presented to the City Council. A. Planning Horizon and Focus Use a 3-5 year horizon for identifying what the priority issue action plan will accomplish. Focus on the first 18-24 months as the first phase of the action plan. Use the material brain- stormed by the Council as a starting point for framing the action plan. That material will be provided at your team meeting. B. Priority Issue Outcomes Specifically identify a set of proposed outcomes for the priority issue. You may decide to identify an overall set of outcomes for the 3-5 year period or you may elect to divide out- comes into two sets, one for the 3-5 year period and a second set for the first 18-24 months. C. Progress to Date In this section you should identify all work that has already been accomplished on this prior- ity issue over the last few years. Connect these accomplishments to the stated outcomes. Also identify any work currently in progress or identified in department planning documents that connects to any of the outcomes. D. Action Plan The action plan should have three components: 1. Action Steps and Tasks - Given the time horizons and progress to date, identify spe- cific action steps and associated tasks designed to reach the stated outcomes of the priority issue. 2. Responsible Staff - Identify names of staff responsible for coordinating the work of each action step. 3. Timeline - Estimate a timeline for each objective to include major milestones. E. Resource Needs Identify approximate resource needs. In addition to an estimation of staff time, consider con- sulting fees, temporary help, materials and supplies, etc. F. Monitoring and Evaluation Identify steps you will take to monitor progress on action plan. Include a method for evalu- ating the impact of the plan on the proposed outcomes. ATTACHMENT B Action Plan Hospital Development in the Central Core At the February 2005 retreat of the Eugene City Council, hospital development in the central core was identified as a council priority issue. The work plan to accomplish this priority item is set out in this attachment. A 3-5 year horizon is used to identify what the action plan will accomplish with particular focus on the first 18 months. A. Planning Horizon and Focus Three phases are anticipated in completing the development of a hospital in the central core area of Eugene: 1. Site Selection Phase. This phase is the time period when EWEB and McKenzie- Willamette are pursuing a due diligence examination of their new facility development sites. The Site Selection Phase is currently expected to be completed by October 2005. This phase could, however, be extended in the event that EWEB needs more time to complete its due diligence process on their new headquarters site, or if McKenzie-Willamette decides to look for an alternate location for their new hospital. 2. Planning andDesign Phase. Once a site has been selected for hospital develop- ment, the planning and design phase will begin. This phase will include actions by the City to permit various aspects of the hospital development on the chosen site, work by the City to design the Patterson Street underpass, and design work by McKenzie-Willamette on its new facility. This phase of work should take about one year for the hospital and two years for the Patterson Street underpass. 3. Construction Phase. Once designs are complete for both the new hospital facility and the transportation improvements, the construction phase will begin. Both projects are antici- pated to take about two years to complete. Because the underpass project is expected to take longer in the planning and design phase than the hospital, it is anticipated that the hospital will open about one year prior to the completion of the underpass project. B. Priority Issue Outcomes The proposed outcomes for the Hospital Development in the Central Core issue fall into three timeframes coinciding with the three phases identified above. Phase 1 Site Selection Phase The outcome from the Site Selection Phase would be the successful selection of a site in Eugene's central core for a new hospital development. The site selection phase should be com- plete either by this fall or by spring of 2006. Phase 2 Planning and Design Phase The proposed outcome for the second phase of the action is planning and design work that pro- vides a design for a hospital facility in Eugene's central core and associated transportation improvements. The Planning and Design Phase for the hospital facility should take about one year after the site is selected. The Patterson Street underpass project is anticipated to take two years in planning and design. The longer design phase for the underpass reflects the complicated interactions and negotiations that will have to occur with Oregon Department of Transportation ("ODOT"), Union Pacific Railroad, private property owners and EWEB to design this project. Phase 3 Construction Phase The outcome from the third phase of the action plan would be successful completion of construc- tion of a new hospital in Eugene's central core, as well as transportation improvements to pro- vide better access to the hospital development and the river. The Construction Phase for both the hospital and the underpass should take about two years from completion of the design of each project. C. Progress to Date Initial council discussions about hospital expansion and siting in conjunction with PeaceHealth took place in 2001. At a council work session on September 18, 2002, the council directed staff to prepare a draft list of potential sites and inducements for hospital development in Eugene. A continuation of the work session on hospital sites occurred on November 13, 2002. On Septem- ber 24, 2003, council adopted Resolution 4778 regarding hospital siting and incentives. On October 22, 2003, council adopted Ordinance 20299, which accommodates hospital uses in a wider range of zone districts; this ordinance currently is on remand from the Land Use Board of Appeals. On supplemental budget #1 in December 2003, council set aside $500,000 in a reserve for hospital siting. This reserve was meant to provide incentive funding for a hospital that would locate within the central city area. Exhibit 1 sets out a map of the approximate incentive zone for hospital development. This zone is south and west of the Willamette River, and within a 2.25- mile radius of Second Avenue and Chambers Street. The precise boundaries of this area have not been adopted by map through council action. Work sessions were held on several dates in 2004 to update the council on the status of attracting a hospital to Eugene. On January 21, 2004, council directed the City Manager to evaluate three alternatives to extend Agate Street to provide access to a potential hospital located on the EWEB site. On June 16, 2004, council authorized the City Manager to inform McKenzie-Willamette Medical Center ("McKenzie-Willamette") that the City would be willing to undertake construc- tion of two transportation projects, if McKenzie-Willamette constructed a hospital on the EWEB site with a value of not less than $85 million. On September 22, 2004, council directed the City Manager to pursue a development agreement for the benefit of providing access to McKenzie-Willamette via Patterson Street, contingent upon McKenzie-Willamette's constructing an $85 million hospital development with a substantial Willamette River setback. An illustration of the Patterson Street underpass project is included as Exhibit 2 to this action plan. During this time, EWEB has been working to determine whether this move would be feasible from the public utility' s perspective. In order to assist with decision making, EWEB hired an architectural firm to conduct a master planning process for their new site at Roosevelt and 2 Beltline in west Eugene. EWEB has been exploring three choices: stay at the current site and upgrade facilities; move non-headquarters operations to another location and keep its existing headquarters; or move all operations to another site. EWEB has committed $1.1 million towards the master planning process and anticipates having results by October 2005. In December 2004, council met to receive an update on the hospital project, including informa- tion on the development agreements that had been verbally approved by the hospital and the City by that time. Council also passed a resolution authorizing execution of a design finance agree- ment that would provide funding for the start of design work on the Patterson Street underpass project. The design finance agreement has not yet been signed by the City or McKenzie- Willamette. Exhibit 3 to this Action Plan includes an outline of the proposed financing plan for the construction of the underpass. In February 2005, EWEB and McKenzie-Willamette signed an agreement to continue negoti- ations regarding the land transaction. Based on that agreement, McKenzie-Willamette began the Certificate of Need process that is required for the hospital to relocate in Eugene. Both EWEB (in February) and McKenzie-Willamette (in March) have held public forums on the proposed land transaction and relocation of both facilities. As a result of the actions taken by the council in December and the verbal agreement with McKenzie-Willamette regarding early design costs, the City's Public Works Department soli- cited requests for proposals from firms to design the Patterson Street underpass project. The firm of OBEC Consulting Engineers has been selected to do the design work once the City receives funds from McKenzie-Willamette to start the design process. D. Action Plan The action plan has three phases that would lead to construction of a hospital in the central city area by the end of calendar year 2008. Phase One Site Selection Phase The Site Selection Phase is the period of time during which McKenzie-Willamette is making a decision about the appropriate site for its hospital development. The current preferred location is the EWEB site in downtown Eugene, but other sites could also be considered. During this phase, EWEB is undergoing a due diligence process to determine the costs for moving facilities to a new headquarters site in west Eugene. If the EWEB site is the chosen location for a new hos- pital, the selection could be made by fall of 2005, or the selection process might be extended until spring of 2006, depending on EWEB's timeline for its due diligence process. If the EWEB site is not the chosen site, an alternate site selection process timeline would depend on the characteristics of the site itself. If, for instance, the Lane County Fairgrounds were considered, the timeline for site selection might take longer than the selection process for a privately owned site because of public process issues. Much of the City's work on this phase of the project has already occurred with regard to the EWEB site. Some of the activities that could be undertaken by the City during this phase will include: · Provide McKenzie-Willamette with additional information on sites that may be con- sidered for location of a hospital in Eugene, if the EWEB site is not chosen as the pre- ferred location. · Provide EWEB with information on the site for relocation of its headquarters, such as additional information on the City's wetlands mitigation program. · Determine the extent of any City subsidies for a particular site being considered for hospital location. Phase Two Planning and Design Phase The Planning and Design Phase will include actions by the City to permit various aspects of the hospital development on the chosen site, work by the City to design the Patterson Street under- pass, and design work by McKenzie-Willamette on its new facility. This phase of work should take about one year for the hospital and two years for the underpass. Some of the activities that will be undertaken by the City during this phase will include: · Assess the need to add City or contract staff to handle the land use and permitting issues. · The Planning Commission (in their role as the City's Citizen Involvement Committee) will review and approve a citizen involvement plan for the required Metro Plan Amendment. · Assist McKenzie-Willamette with zone change, land use permits and site master plan. · Design and review of privately engineered public improvement (PEPI) projects, if any. · Building permit review. · Determine the extent of the riparian area purchase and execute the purchase. · Determine the extent of any subsidy for access and transportation improvements at EWEB's new headquarters site and solicit approval from council for funding those improvements. · Assist McKenzie-Willamette with any public information outreach during the design phase of the new hospital development. For the Patterson Street underpass project, assuming the EWEB site is the chosen hospital loca- tion, additional tasks that will need to be undertaken include: · Execute design finance agreement with McKenzie-Willamette to provide funding for the costs of early design work on the Patterson Street underpass project using the approach outlined in Exhibit 3. · Solicit council approval of a finance agreement to fund the balance of the Patterson Street underpass project; execute the agreement with McKenzie-Willamette. · Complete design work on Patterson Street underpass project. Note: if there is a signifi- cant delay before this project begins, the City may need to re-bid the design work con- tract. · ODOT rail approval of the underpass. · ODOT approval of the signal at Patterson/Franklin. · Railroad approval of the underpass. · Willamette Greenway permit for the underpass and extending Avenue A to the research park property. 4 · Community involvement in the design. · Acquisition of several buildings between Franklin and 8th. Exhibits 4 and 5 to this action plan include details of the process and issues related to land use permitting, PEP! projects and building permits. Phase Three Construction Phase The Construction Phase will include construction of both the hospital facility and the Patterson Street underpass. Each project is expected to take about two years to construct, once the respect- ive designs are complete. Some of the activities undertaken by the City during this phase will include: · Monitor and inspect new construction at the new hospital site. · Construct the Patterson Street underpass project. Staff assigned: The staff assigned to the Action Plan include Dennis Taylor (City Manager), Kurt Corey (Public Works), Susan Muir (Planning & Development), Jim Carlson (Assistant City Manager), Tom Tallon (Fire & EMS), Matt Shuler (Fire & EMS), Keli Osborn (Planning & Development) and Sue Cutsogeorge (Finance). Other staff will work on various aspects of this project as needed. For instance, Planning staff will be assigned to the land use permits and Public Works staff will work on the design and construction of the Patterson Street underpass. Timeline: A timeline with the three project phases is set out as Exhibit 6 to this Action Plan. The timeline shows a new hospital opening by the end of calendar year 2008. E. Resource Needs The total cost to the City for the Hospital Development in the Central Core is expected to total more than $13 million if the EWEB site is the chosen location. If another site is chosen, the total cost to the City could differ significantly depending on the needs for that particular site. An estimate of costs by component for the EWEB site is as follows: 1. Patterson Street Underpass: The Patterson Street Underpass is a critical piece of the puzzle for McKenzie-Willamette's decision to locate a hospital on the EWEB site. This project is expected to cost $12 million and funds to pay this cost will come from a bond issued to McKenzie-Willamette and repaid from the incremental taxes generated by this development. The funds for this project are included in the FY06 budget. 2. Purchase qfRiparian Area: It is anticipated that the City will purchase approxi- mately 50 to 75 feet along the riverbank for the length of the property for purposes of providing ongoing protection of certain riparian areas. The exact location and amount of property pur- chased for this purpose will be determined in cooperation with McKenzie-Willamette and EWEB. The FY06 budget includes a total of $1,050,000 for this purpose to come from the General Fund, the stormwater fund and Riverfront Urban Renewal funds. The budgeted amounts represent a placeholder for the types and amounts of funds which may be used for this project. The City will still seek Federal transportation grants, State of Oregon bike/pedestrian grants and other sources. Because the exact amount of land and the purchase price for the land have not yet been determined, this item could cost more than the amount included in the budget. 3. Access and Transportation Improvements: The City will consider assisting EWEB with the cost of access and transportation improvements needed at the new EWEB headquarters site, if necessary to complete the relocation transaction. The exact improvements and their cost have not yet been determined. F. Monitoring and Evaluation Most of the decisions that need to be made regarding location of a hospital in the central city area will be made by parties other than the City. Much of the City's work will be monitoring the progress of EWEB and McKenzie-Willamette in their discussions and decisions around facility relocation. The first major indication of progress on this project will be the execution of the land trans- actions for the purchase of portions of the EWEB site by both McKenzie-Willamette and the City (for the riparian area). Some of the milestones that will occur as a result of the City's action during the first two phases of project implementation are: · Completion of the land use issues for the EWEB site, including possible Metro Plan amendment. · Execution of financing agreement for Patterson Street underpass (preliminary design work agreement and agreement for the remainder of the design & construction costs). · Resolution of the riparian, right-of-way and bike and pedestrian issues. Coordination of this complicated set of transactions among the City, EWEB and McKenzie- Willamette provides a possible model for future partnerships between the City and developers. Indeed, this project already has improved the working relationship between the City and EWEB. Although the action plan will be considered most successful if construction begins within two years on a hospital development in the City's central core area, another positive outcome is the groundwork laid for bringing the City, other public agencies and private parties together in exploring development opportunities that advance Council-adopted goals and provide benefits to the larger community. Exhibits to the Action Plan Exhibit 1 - Map of Hospital Incentive Zone Exhibit 2 - Diagram of Patterson Street Underpass Exhibit 3 - Outline of Proposal to McKenzie-Willamette Medical Center Exhibit 4 - Potential City of Eugene Permitting Process & Issues Exhibit 5 - Development Reviews and Approvals for Proposed Hospital Exhibit 6 - Timeline Hospital Action Plan - Exhibit 1 RI Hospital Action Plan - Exhibit 3 Outline of Proposal to McKenzie-Willamette Medical Center McKenzie-Willamette is proposing to construct a hospital facility in the City of Eugene (the ;;Hospital"). The Hospital will be located in the Eugene Renewal Agency's Riverfront Urban Renewal Area. The Riverfront Urban Renewal Area will receive the ;'tax increment revenues" from the Hospital. The tax increment revenues are the property taxes on the increase in property value that results from the construction and operation of the Hospital. In order for the Hospital to go forward with the project, additional transportation access needs to be provided by constructing a Patterson Street underpass (the ;;Street Improvements"). The City of Eugene proposes to construct the Street Improvements and to pay for those improvements with the proceeds of a bond that is purchased by McKenzie-Willamette. The bond will be secured by the increase in tax increment revenues that results from the construction of the Hospital, but would not be secured by any other revenues of the City or its Urban Renewal Agency. The City has plans to use the other revenues of the Agency to accomplish additional high priority projects within the Riverfront Urban Renewal Area. The Street Improvements are estimated to cost approximately $12 million. The Hospital is esti- mated to have a total taxable assessed value of approximately $61 to $72 million (assuming the property is assessed at 72% of the cost of $85 to $100 million). The property on which the Hospital will be located is currently largely exempt from property taxes, but there are a couple of tax lots that have a taxable assessed value of about $2 million*. This means that the Hospital will increase the assessed value of in the Riverfront Urban Renewal Area by about $59 to $70 million. The consolidated tax rate (the sum of all property tax rates) in the Riverfront Urban Renewal Area is currently about $18/$1,000 of assessed value. This means that the Hospital should produce about $1 to $1.2 million of tax increment revenues each year, assuming a 93% county- wide property tax collection rate. If the bond that McKenzie-Willamette purchases bears interest at 5% per annum, the tax increment revenues will repay the bond with interest in approximately 15 to 19 years. The Riverfront Urban Renewal Area will terminate on June 30, 2024. When the area terminates, the Agency will no longer be able to collect tax increment revenues. This means that the bond must also terminate in that year, regardless of whether it has been paid in full. If McKenzie-Willamette constructs the Hospital, maintains its value, and pays its property taxes beginning in 2009, the tax increment revenues from the Hospital are estimated to be sufficient to fully repay the bond between 2023 and 2027. However, McKenzie-Willamette, as purchaser of the bond, will bear the risk that property taxes on the Hospital are not sufficient to pay the bond before the date the bond terminates or when the Urban Renewal Area terminates. If the Hospital is not constructed, or has an assessed value that is less than current estimates, or is damaged or destroyed, or becomes exempt from property taxation, the tax increment revenues from the proposed facility may not be sufficient to fully repay the bond. * More research needs to be done to determine the amount of taxable assessed value within the property that the Hospital would purchase from EWEB. Hospital Action Plan - Exhibit 4 McKenzie Willamette Medical Center Potential City of Eugene Permitting Process & Issues July 22, 2005 The following information represents a synopsis of existing land use information for property on East and West side of Ferry St. Bridge owned by EWEB. Existing Conditions East of Ferry St. Bridge West of Ferry St. Bridge Metro Plan Heavy Industrial High Density Residential/Mixed Designation Use Zoning PL/TD (Public Lands, PL/TD, I-2/TD, I-3/TD (Public Transit Oriented Land, Light-Medium Industrial; Development), Willamette Heavy Industrial and Transit Greenway Oriented Development) Land Use Actions Required (Based on current code) (Assumes no response to Court's remand on hospital code amendments) Metro Plan Change designation from Change designation from High Amendment Heavy Industrial to Density/Mixed Use to Commercial Commercial Zone change Zone Change from PL to Zone Change for PL, I-2, I-3/TD C-2/TD (processed to C-2/TD (processed concurrent concurrent with Metro Plan with Metro Plan Amendment) Amendment) Land Use Permits Hospital requires CUP in C- Hospital requires CUP in C-2; 2 zone; Willamette Traffic Impact Analysis required; Greenway Permit & Traffic Adjustment Review may be Impact Analysis required; needed; no Willamette Greenway Adjustment Review may be required needed Master Plan for EWEB site required per Downtown Plan Legislative Process: Approximate time line below will be extended to accommodate legislative actions (Metro Plan Amendment), but can overlap with Quasi-Judicial, Development Application process Quasi-Judicial Process: Development Applications Pre Development Conference (3 weeks lead time) Application Filed (Willamette Greenway, Traffic Impact Analysis, Master Plan & Adiustment Reviews can be vrocessed concurrently.) Completeness Review (maximum 30 days from date application is filed) Public Hearing with Hearings Official (45-60 days from day application is deemed complete, includes notification time and City staff recommendation) Hearings Official Decision (Appealable to Planning Commission) Note: Schedule does not include applicant's time for application preparation or revisions; or possible appeals to the Land Use Board of Appeals Hospital Action Plan - Exhibit 5 D velopm nt Revi ws and Appr vals for Proposd H spital Land Use Actions Construction Permit Review (if EWEB site) *Fire Code -site (access, hydrants) *Metro Plan Amendment -building safety (alarm,sprinkler systems) *Zone Change -hazardous materials -life safety *Conditional Use Permit -specialty processes Construction *Willamette Greenway *State Construction Codes Inspections Permit -plumbing * Fire Testing & Periodic Fire NEW HOSPITAL -electrical Inspections Inspections *Traffic Impact Analysis -structural , Ensure safe, legal Master Plan for EWEB -mechanical * Construction uses and building site required per *(potential) Adjustment Inspections maintenance Downtown Plan Review(s) *Public Works -stormwater * Land Use Inspections OUTCOME: -wastewater LAND USE PERMITS -streets & sidewalks * Public Works -street trees Inspections -floodplain protection -transportation, parking circulation OUTCOME: -erosion prevention/site management OCCUPANCY PERMIT *Land Use -commercial development standards Privately En.qineered -bicycle & motor vehicle parking -landscaping Public Improvements -signage {if any) -conformance with land use approvals OUTCOME: PUBLIC IMPROVEMENTS OUTCOME: PERMIT BUILDING PERMIT(S) Hospital Action Plan - Exhibit F HOSPITAL DEVELOPMENT IN THE CENTRAL CORE TIMELINE ! Calendar Year 2005 1 Calendar Year 2006 I Calendar Year 2007 I Calendar Year 2008 I Calendar Year 2009 1 Phase One: Site Selection Phase One Continued (if needed) i-------] Phase Two: Planning & Design Hospital Patterson Street Underpass Phase Three: Construction Patterson Street Underpass Hospital Opens