Pennock linked to Hastings

January 3, 2009
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HASTINGS — A Pennock Hospital executive said the hospital intends to seek state permission early this year to build a new facility more than one mile west of Hastings, despite the city’s reluctance to extend sewer and other municipal services.

Jim Wincek, Pennock vice president of support services, said the nonprofit, 88-bed hospital is preparing to forge ahead on the $60 million project on 32 acres at M-43 and M-37, even if it has to build its own sewage treatment plant and dig its own water wells.

“It is inside Rutland Township, and there certainly are no sewer or water facilities available to anybody in Rutland Township,” Wincek said.

The hospital last month asked the township to help obtain service from Hastings, he said. Rutland Township Supervisor Jim Carr said that he is now compiling information and plans to present Pennock’s request to the city.

Hastings City Manager Jeff Mansfield said he is concerned that ancillary development would hopscotch to the new hospital area and siphon business away from the carefully tended downtown district. He said the city is prepared to control utility extensions in the interest of self-preservation.

“The bigger concern is it would stimulate development around the hospital itself, and that it would occur away from the city and toward the Grand Rapids area,” Mansfield said.

“The fear is that would create a commercial area far enough away to be independent … and compete with our downtown. By managing our services, we have some input into how that growth occurs.”

Carr, who serves on the Joint Planning Committee with Mansfield, said he shares those concerns. He’s also worried about Rutland’s 3,500 residents getting stuck with an expensive bill for sewer services they don’t want or need. Additional costs could come from increased demands for law enforcement, Carr said.

“What we’re doing is trying to stay away from leapfrog development — running sewer out in the middle of nowhere and everybody developing off that spout,” Carr said.

Real estate speculators already have been buying land near the hospital site, he added. Wincek said that the new hospital, estimated at 160,000 square feet, could end up connecting to municipal sewer services after building its own. That’s still cost-effective, he said.

“We calculated it’s costing us about $75,000 a month in losses for each month of delay in construction of the new building,” Wincek said. “We have to look at the bigger picture: What is the cost of opportunity lost, of building now as opposed to waiting until sewer arrives?

“I’m not sure what we’re going to wind up with,” Wincek added. “It’s politically uncertain right now.”

Pennock Hospital, established in 1916, has been in its Hastings location since 1923. The hospital is overcoming several years of instability and change in leadership after the former CEO in 2006 admitted in court to stealing addictive pain-killers from the hospital pharmacy. He resigned from his job, paid a fine and entered a substance use disorder treatment program for health professionals

In the recent past, the hospital’s financial performance also suffered and some layoffs occurred.

President & CEO Sheryl Blake Lewis arrived on the job in 2007 from a similar job in Goshen, Ind. Wincek followed her to oversee construction of the new hospital.

In its 2006 filing with the Internal Revenue Service, the most recent available, Pennock Hospital reported a positive margin of $3.8 million on $104.8 million of revenue. The organization employs 567 people, according to its Web site, and is the city’s largest employer.

Pennock has owned the Rutland Township acreage since 2001, paying $1.3 million, according to Barry County online records. The 2008 state equalized value was $1.5 million.

Mansfield said that when the hospital first bought the property, development was pegged for 20 years down the road. Now, Wincek said, a new hospital could be complete as soon as 2012, although he called it “a very soft date.”

Pennock intends to pay for construction with a combination of savings, operations surplus, a bond issue and a public fundraising campaign, Wincek said.

Wincek said Pennock has applied to the state Department of Environmental Quality for a wastewater treatment permit. Pennock also has dug two test water wells that show that the underlying aquifer is useable and adequate for hospital needs. The hospital is applying for related permits.

The Rutland Township Planning Commission in December approved a special use permit for the new hospital.

Pennock also must apply to the Michigan Department of Community Health for a Certificate of Need before building a new hospital. Wincek said he expects the application to be filed in early 2009.

Mansfield said a Public Act 425 agreement, which would allow it to provide services to a contiguous portion of the township in exchange for property tax sharing, is unlikely because of the distance to the site. He said Pennock has resisted suggestions for other sites or for expanding into the park near its current site, believing that the location where two state highways meet is the best spot.

“To go that far to do municipal services is a challenge,” he added.

The Joint Planning Committee, which includes the townships of Barry, Carlton and Hastings and Barry County, as well as the city of Hastings, may provide a forum for hammering out the issues, Mansfield said, with a unique approach called an urban services agreement.

“The township and the Joint Planning Committee would only consider extending government services together, all services as a package,” he said. “We don’t want to facilitate and accelerate growth in utilities and not have the rest of those services go along. Let’s just keep this all together as a package.”

Mansfield said he wants Hastings to avoid the fate of small towns around the state, which have seen their business districts wither when commercial development, along with accompanying residential, occurs in a nearby but not contiguous area.

Carr said he wants to keep the development at a reasonable pace and prevent big-box development from poaching business from Hastings’ downtown.

“We’re trying to coordinate the way growth happens — bring it out from the city in a constructive and concise way.”

Although the JPC remains as a forum for hammering out common land-use issues, Carr said he recognizes that competing interests and the technicalities of planning and zoning can get in the way of the goal.

“I think they feel it’s almost a city versus hospital thing, and nothing could be farther from the truth,” added Mansfield. “I’d love to see the hospital be successful, to do what they need to do to make sure they are a viable entity in the community for a long time. Our goal is to protect our downtown.”

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