Covenant change concerns both city and hospital

Frontiersman editorial board

The deal to bring a new, larger and better-equipped hospital to the Valley has hit a snag, but the messages about how serious that snag is are mixed. When the national hospital giant, Triad Hospitals Inc. penned a deal to form a partnership with Valley Hospital Association, the understanding was that Triad would own the lion's share of the joint venture while VHA would maintain a significantly smaller slice of the pie. The advantage for VHA was that it could expand its hospital and provide better, and more, services to the community.

The local association's share of the new joint venture will solely depend on the assets VHA brings to the table. The current association's net worth will determine its investment, and Triad will pick up the rest. Based upon the cost of the new hospital, the split will likely work out to be something like 80/20, with VHA owning about one-fifth of the new company.

In an apparent effort to increase the equity VHA can bring to the deal, Triad has asked that the land the current Valley Hospital sits on be relieved of a Palmer covenant that required the land be used in a way that enhances the community -- through health care-related operations or some other public purpose. That precludes the possibility of many kinds of private businesses, and Triad says that reduces the value of the land.

Palmer's concern is that, once the covenant is lifted, the new joint venture could essentially use the building for any kind of business, or sell the property to another private interest -- again for a number of uses outside the city's vision. Triad says that won't likely happen, and all of the uses the hospital company has theorized about so far would fit within Palmer's desire for use that benefits the community.

It seems late in the game for this sort of hurdle, though. The covenant has been in place since VHA took possession of the land where Valley Hospital sits, and Palmer has never shown any signs of changing its mind about how that land should be used. Triad has claimed that the covenant is essentially a limit upon the joint venture's "clear title" to the property, but that is clearly not true. Much of the private property in the core area is covered by some sort of covenant or regulation.

Triad's desire to lift the covenant may well be an effort to boost the resale value of the land, and nothing more. The company may be sincere in its claims that it will use the property for purposes that fit within Palmer's vision. But "may" is a big word, and once the covenant is lifted, Palmer will no longer have any guarantees about how the Valley Hospital facility will be used in the future. If Triad isn't willing to at least sweeten the pot for Palmer in some way, it's hard to see any incentive for the city to lift a covenant that not only clears the way for its largest employer to move out, but also leaves the ultimate use of the old property in doubt.