Tim Ryan tryan@wolfrivermedia.com
The city’s deadline for a deal with ThedaCare that would allow the former Shawano Medical Center to become a medical training facility came and went Wednesday with no signed agreement.
Instead, after extending the deadline to 6 p.m., city and ThedaCare officials spent much of Wednesday in what City Administrator Brian Knapp called “intense negotiations,” but no agreement was reached by the extended deadline.
Knapp said the city will hold one more meeting with ThedaCare Friday afternoon in hope of salvaging the agreement, but in the meantime will also move forward with the fallback option approved at a special Common Council meeting Tuesday night.
Starting Thursday, Knapp said, the city will begin looking for an alternative location for the training center and exploring financing options for the project.
“We’re going to start researching alternative sites, but we haven’t abandoned an opportunity with ThedaCare yet,” he said.
Knapp said the failure to get an agreement with ThedaCare — if it goes that way Friday — would have a very negative impact on taxpayers.
“If we don’t have a reasonable reuse for the (hospital) property, for the building, then it’s likely to have to be razed,” he said.
That cost previously has been estimated at about $1.5 million, though it’s not clear whether the city or ThedaCare would be responsible for covering it.
“I think there will be a lot of litigation. A lot of expense. A lot of cost to the taxpayers,” said City Attorney Tim Schmid. “All kinds of negativity arising out of the lack of cooperation from ThedaCare.”
Approval from ThedaCare was the last item needed before developers could move forward with a proposed medical residency training center at the former hospital after it relocates next month to County Road B next to ThedaCare.
The Shawano Plan Commission and Common Council each gave unanimous support to the project in July with the approval of a developer’s agreement between the city, ThedaCare and the development group, Shawano Medical Holdings LLC.
Jeffrey Remsik, a ThedaCare spokesperson who has been a consultant on the project, said Wednesday night that an agreement could still be reached with the city and SMH.
“We respect the city’s decision to start looking at alternatives given the timetable the developer has outlined,” he said. “At the same time, we’re committed to trying to find a solution that’s in everybody’s best interests. We’re looking forward to meeting on Friday with the city and the developer to try and reach some common ground.”
Under the agreement, SMH would acquire the property from the city and ThedaCare for $1 but would reimburse them for the costs they incurred clearing the title to the property. That includes the $250,000 settlement that was paid to the heirs of Susan Smalley, the original owner of a roughly 3.5-acre parcel acquired by the city in 1901 that eventually became home to Shawano Medical Center. The hospital expanded over the years, and ThedaCare now owns about two-thirds of the hospital campus.
Other costs, including legal fees, would bring the total reimbursement to about $380,000, which SMH will have to pay when it begins occupying the property.
The hospital property, which was previously tax-exempt except for the clinic, would go on the tax rolls. A nonprofit 501(c)3 would be set up to operate the residency training program.
SMH would also negotiate with ThedaCare for the purchase of six residential properties adjacent to the hospital.
SMH hopes to take possession of the property as soon as Shawano Medical Center moves out of the facility, which is expected to happen Sept. 19-20. Under the agreement, if the medical residency program is not in operation within two years, SMH will have to restore the property for potential redevelopment consistent with the recommendations of a city-ThedaCare task force that considered future uses for the property.
If SMH fails to offer a satisfactory redevelopment of the property within another six months, it would have to raze the building and restore the property to a “greenfield” condition and transfer ownership to the city, according to the agreement.
Title to the property could also revert back to the city if SMH fails to fulfill any of the obligations of the agreement.
ThedaCare would be absolved of any future costs or responsibilities for the property.
The agreement also calls for SMH to put up a either a $1.5 million irrevocable letter of credit or a performance bond to cover the estimated cost of razing the Shawano Medical Center building if it should come to that.
SMH has declined to answer questions raised about the medical residency program until the deal has been finalized.