Of­fi­cials eye deal amid money woes

UAMS earns $648,110 sub­leas­ing Wash­ing­ton County’s prop­erty

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - SCAR­LET SIMS

FAYET­TEVILLE — The Univer­sity of Arkansas for Med­i­cal Sci­ences North­west re­gional cam­pus earns $648,110 an­nu­ally by sub- leas­ing prop­erty Wash­ing­ton County owns.

The county has leased prop­erty to the univer­sity for $1 per year since 2007, county lease records show.

Some elected of­fi­cials are considering tak­ing back some of that prop­erty and get­ting the rent money for the county. Also, the move could mean lower rent for at least one non­profit or­ga­ni­za­tion sub­leas­ing from UAMS.

The county has a $5 mil­lion gap be­tween ex­pen­di­tures and rev­enue, ac­cord­ing to records from the Trea­surer’s Of­fice. Jus­tices of the peace have dis­cussed bud­get cuts and tax in­creases even be­fore start­ing the 2018 bud­get process.

Jus­tice of the Peace Tom Lund­strum, a Repub­li­can rep­re­sent­ing north­west­ern Wash­ing­ton County, has said the county’s fi­nan­cial sit­u­a­tion is dire and some­thing must be done. Jus­tice of the Peace Joel Maxwell, a Repub­li­can rep­re­sent­ing western Wash­ing­ton County, has said the Quo­rum Court should con­sider sell­ing or oth­er­wise bet­ter uti­liz­ing some of its prop­er­ties.

The county owns about 51 parcels coun­ty­wide, ac­cord­ing to a list pro­vided by County At­tor­ney Brian Lester. Among those, nine are near Col­lege Av­enue and North Street, prop­erty records show. UAMS leases five of the parcels, Lester said.

County Judge Joseph Wood said in an email the county is ex­plor­ing the idea of sell­ing some prop­erty or de­vel­op­ing it to “help with the pro­jected bud­get short­fall.” Wood is not in­ter­ested, how­ever, in tak­ing over prop­erty UAMS is us­ing, he said.

County judges con­trol county prop­erty un­der state law.

UAMS oc­cu­pies the for­mer Wash­ing­ton Re­gional Med­i­cal Cen­ter main build­ing. A few build­ings sur­round­ing it have re­mained va­cant for years, in­clud­ing one the county re­mod­eled ear­lier this year for a Vet­er­ans Ser­vice Of­fice.

UAMS sub­leases 64,257 square feet of county prop­erty to five agen­cies, said Les­lie Tay­lor, UAMS spokes­woman said in email. Wel­comeHealth, a non­profit or­ga­ni­za­tion for­merly known as North­west Arkansas Free Health Cen­ter, leases one of the build­ings.

The money from the sub­leases pays for util­i­ties, main­te­nance, se­cu­rity and in­sur­ance for ten­ants, Tay­lor said.

UAMS has put $15 mil­lion into the prop­er­ties “for nec­es­sary im­prove­ments and sig­nif­i­cant main­te­nance up­grades to make the prop­erty us­able for clin­i­cal, ed­u­ca­tional and re­search space for our North­west Re­gional Cam­pus,” ac­cord­ing to a state­ment re­leased by the univer­sity.

UAMS and county of­fi­cials are still talk­ing, Tay­lor said. This is the first time the county-UAMS agree­ment has been ques­tioned since it started 10 years ago, ac­cord­ing to the UAMS state­ment.

It’s a new ad­min­is­tra­tion rais­ing ques­tions, Tay­lor said. Wood be­came county judge in Jan­uary.

Jus­tice of the Peace Ann Har­bi­son, a Demo­crat rep­re­sent­ing south­ern Wash­ing­ton County, be­came con­cerned over the sub­lease with Wel­comeHealth late last year af­ter a doc­tor called her about it. Har­bi­son said the $102,282 an­nual rent that Wel­comeHealth pays UAMS is too high, Har­bi­son said.

Har­bi­son said she asked Lester to look into the mat­ter. The univer­sity said it has held up its end of the bargain, in­clud­ing main­tain­ing build­ings.

“The prop­erty was leased to us in good faith, and we have man­aged and uti­lized the prop­erty as agreed,” ac­cord­ing to the state­ment.

TO LEASE OR NOT TO SUB­LEASE

Al­low­ing UAMS to sub­lease prop­erty was meant to help the univer­sity gen­er­ate rev­enue lo­cally, said Ge­orge But­ler, who served as county at­tor­ney from 1999 to 2014 and then re­turned as chief of staff in 2015.

But­ler was in­volved in ne­go­ti­a­tions to get a UAMS Fayet­teville cam­pus af­ter Wash­ing­ton Re­gional moved to North Hills Boule­vard in 2002. The med­i­cal cen­ter had started as the Wash­ing­ton County Hos­pi­tal in 1950.

The main build­ing, which sits on about 8 acres, sat empty un­til County Judge Jerry Hun­ton signed a lease with UAMS in 2007, But­ler said. Hun­ton left of­fice in 2008. Mar­i­lyn Edwards served as county judge from 2009 to 2016. She signed a new lease with UAMS in 2009. The lease ends Feb. 29, 2029, but can be ex­tended an­other 20 years, ac­cord­ing to the lease.

Hun­ton said he never dis­cussed sub­leas­ing with UAMS dur­ing the orig­i­nal ne­go­ti­a­tions, but he wouldn’t have minded. UAMS is good for the com­mu­nity and has the right to run its own busi­ness, he said.

Jus­tice of the Peace Sue Madi­son, a Demo­crat rep­re­sent­ing south­east­ern Fayet­teville, said the Univer­sity of Arkansas Sys­tem, which in­cludes UAMS, doesn’t “seem desperate” for fund­ing. Tak­ing that prop­erty back and us­ing it for new rev­enue for Wash­ing­ton County seems like a good idea, Madi­son said.

Lester said the main part of the cam­pus was pur­chased from the fed­eral gov­ern­ment with a re­stric­tion the prop­erty be used for a hos­pi­tal or sim­i­lar ac­tiv­i­ties. But, that re­stric­tion shouldn’t ap­ply to all the parcels UAMS leases, he said.

Madi­son, who served as a jus­tice of the peace in the 1990s, agreed, and said she didn’t know why some of those parcels ended up be­ing part of the “UAMS deal” orig­i­nally. Plus, the lease may not be valid be­cause Edwards didn’t hold a pe­ti­tion hear­ing or is­sue an ex­ec­u­tive or­der, both of which are re­quired, Lester said.

Wood said in email he wants a con­tract “that com­plies with the re­quire­ments of Arkansas law.”

But­ler said the county had the right to lease prop­erty un­der state law, and the lease is proper.

CAUGHT IN THE MID­DLE

The sub­leases came to light af­ter Wel­comeHealth of­fi­cials be­gan ask­ing for a lower rent. UAMS hasn’t re­sponded to the re­quest, said Monika Fis­cher-Massie, ex­ec­u­tive di­rec­tor of the non­profit med­i­cal clinic. The clinic rented space from the county on Col­lege Av­enue near the his­toric court­house un­til 2013.

The non­profit group changed its name to Wel­comeHealth in 2015.

Fis­cher-Massie said she re­cently met with Wood who told her the county would lower the rent if it takes back the prop­erty. The non­profit group also may get the op­tion to buy the build­ing, said Brit­tney Gul­ley, di­rec­tor of devel­op­ment.

“Who­ever our land­lord is, we’d like them to con­sider that we are a com­mu­nity need and a non­profit,” Gul­ley said.

Lester said the amount the univer­sity charges to Wel­comeHealth is an “ex­or­bi­tant amount of rent.” Tay­lor said the amount is be­low mar­ket value.

Wel­comeHealth pays $11 per square foot, ac­cord­ing to fig­ures par­tially de­rived from county prop­erty records. Com­mer­cial med­i­cal space in Fayet­teville ranges from $15.51 to $17.39 a square foot on av­er­age, said Mervin Je­baraj, in­terim di­rec­tor of the Univer­sity of Arkansas’ Cen­ter for Busi­ness and Eco­nomic Re­search.

The rent in­cludes util­i­ties and makes up 12 per­cent of the free clinic’s $855,000 bud­get, Fis­cher-Massie said. Wel­comeHealth also has spent $750,000 to ren­o­vate the build­ing so it could be used for med­i­cal pur­poses, she said.

Wel­comeHealth rented from the county for next to noth­ing for years, but the group thought that build­ing would be razed for a park­ing lot, Gul­ley and Fis­cher-Massie said. Two pre­vi­ous county judges, in­clud­ing Edwards, had talked about build­ing a park­ing lot there, But­ler said.

Fis­cher-Massie said the clinic’s plans to move were al­ready in mo­tion by the time county of­fi­cials nixed the park­ing lot idea. Even so, no one forced Wel­comeHealth to move, But­ler said. The non­profit group chose UAMS, Tay­lor said.

“They could have cho­sen to rent at an­other lo­ca­tion,” she said.

The non­profit group is wor­ried about shrink­ing rev­enue with the high rent, but it doesn’t want to move, Gul­ley said.

“In a sense, [UAMS] kind of got us where they want us,” Gul­ley said.

“We’re a mon­ey­maker for them,” Fis­cher-Massie said.

NWA Demo­crat-Gazette/DAVID GOTTSCHALK

Marr-Lynn Flory (right), fam­ily nurse prac­ti­tioner, speaks with vol­un­teer Rachel Best on June 21 at the nurses sta­tion at Wel­comeHealth in Fayet­teville. Wel­comeHealth is pay­ing about 12 per­cent, or $102,000, of its an­nual bud­get to Univer­sity of Arkansas for Med­i­cal Sci­ences.

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NWA Demo­crat-Gazette/DAVID GOTTSCHALK

Wel­comeHealth as seen June 21 in Fayet­teville. The non­profit group also put about $700,000 of its own money into the old build­ing to pro­vide bet­ter com­mu­nity, med­i­cal ser­vice to low­in­come “work­ing poor” peo­ple.

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