City of Vancouver flags wave outside the new City Hall in August. PeaceHealth officials that month expressed interest in buying the building from the city for executive offices.
In searching for a potential location for a new corporate headquarters, Bellevue-based hospital chain PeaceHealth made it clear to Vancouver officials they found their missing link at 415 W. Sixth St.
Just one problem — Vancouver had already picked up that piece of property to serve as a new City Hall.
Read letters exchanged between PeaceHealth and Vancouver officials.
PeaceHealth, a Catholic nonprofit that is in the process of merging with Southwest Washington Medical Center, sent a letter to outgoing City Manager Pat McDonnell dated Aug. 11, saying that it was considering “moving all executive offices from Bellevue … if we can find appropriate space.”
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And though the city had owned the former Columbian building for less than two months, PeaceHealth President Alan Yordy told McDonnell that he wanted it.
On Aug. 16, PeaceHealth got an answer from the city, via then-Assistant City Manager Eric Holmes: No.
“Absolutely not,” said Holmes, who is now Vancouver’s city manager, this month in discussing PeaceHealth’s interest. “We went through about a dozen-year process to identify what our needs are, that ultimately led to the acquisition of the building.”
No official offers were made, but Vancouver Mayor Tim Leavitt said that a figure in the range of $21 million was mentioned.
The city bought the former Columbian building for $18.5 million in June from Bank of America after Downtown Vitality Partners forfeited it in a bankruptcy settlement earlier this year. Downtown Vitality Partners is owned by the Campbell family, which also publishes The Columbian, and had no financial stake in the deal between the city and the bank.
PeaceHealth’s price tag would mean the city — which just passed a 2011 budget that included $9.1 million in cuts — could make a marginal profit on the sale, but Holmes said it doesn’t match the money Vancouver stands to save in the long run. The move is expected halve the $2 million a year Vancouver spends on renting and maintaining five buildings spread over 10 miles, and it will consolidate city services into one central location.
In his reply to PeaceHealth, Holmes did say that “there are several other opportunities in the central business district” that may work for the hospital’s estimated 340 corporate and back-office employees, and he will employ all “reasonable resources” to help them find a solution.
PeaceHealth executives toured the six-story former Columbian building in 2009 (before Downtown Vitality Partners turned the property over to the bank), and found it to be “ideal,” Yordy wrote in the Aug. 11 letter.
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At the time, PeaceHealth was quoted a price of $40 million — which was too much, and the timing was “not ideal,” Yordy continued.
But when he returned this summer, Yordy wrote he was surprised to learn that the city had bought the building for less than half that price, and was “mystified” that PeaceHealth’s Realtors had not heard of the discounted price.
“While this may be water under the bridge, I wanted to let you know that we still have a high degree of interest in the building if there is any way we can work out an arrangement with the city,” he said.
Leavitt said he stands by city administrators’ decision to not flip the City Hall building.
“We obtained a screaming deal for the citizens and taxpayers of Vancouver,” he said. “That building cost $42 million to build, so it’s safe to say that for the city to be able to get into a like building, the sale price would be $42 million dollars.”
Columbian Publisher Scott Campbell said the value of the building when it was completed, including its land, was approximately $43 million.
Vancouver has also invested more than $55,000 so far into redesigning the former newspaper site to fit its needs, General Services Manager Tim Haldeman said. A full move to the new City Hall will be finished by August 2011, with complete move-in costs expected to be about $23 million. The net negative impact of removing the site from the city’s tax rolls is estimated at about $22,000 a year, city data show.
Leavitt noted that the city will be moving out of its nearby Esther Short Building at 610 Esther St., and that would be available for purchase and redevelopment.
“There are plenty other opportunities downtown,” Leavitt said, and reiterated Holmes’ commitment to working with PeaceHealth.
PeaceHealth spokesman Brien Lautman also said Wednesday that the company was not “unhappy” with Vancouver for declining to sell its new City Hall.
Campbell confirmed Tuesday that PeaceHealth had expressed interest in 415 W. Sixth St. in 2009.
He said that PeaceHealth remained in the dark about Bank of America selling the building at a discounted rate seemed to be an “unfortunate coincidence” for the hospital chain.
“It was up to (Bank of America) to market the building, either through back-room conversations with the city or by putting it out on the market,” Campbell said. “They maybe could have got more than $18.5 million for it.”
