Borough drops asking price for old hospital property

For about half the average price of a home in Seattle, you could buy Wrangell’s former hospital property.

The borough assembly passed a resolution on Nov. 18, dropping the price of the property from its appraised value of $830,000 to a new asking price of $498,000, pretty close to the reduced price of $470,000 the borough advertised in 2022.

The property, which has been vacant since SEARHC moved out in 2021, currently sits empty. It costs the borough several tens of thousands of dollars a year to insure and maintain the building against damage from cold and water.

In dropping the price to 60% of its appraisal value, borough officials hope they can get the property off their books as soon as possible. Though City Hall came close to selling the property to Georgia-based developer Wayne Johnson this summer, Johnson pulled out of the deal on June 28.

Johnson had agreed to pay $200,000 for the 1.94 acres, with plans to demolish the decades-old 30,000-square-foot hospital to build condominiums.

After Johnson walked away, the borough implored its economic development board to identify a list of hopes for the property’s sale. The board said that, ideally, any sale would see the property transformed into something that spurred economic development in town — whether job creation or increased tax revenue.

The borough is willing to take a smaller payday on the front end with the hopes that the long-term economic benefits eclipse the short-term cost of a reduced sales price.

However, anyone prospective buyer who makes an offer below the property’s appraisal value is required to “submit a detailed proposal outlining specific economic development benefits of their proposed use,” per the assembly resolution.

Kate Thomas, the borough’s economic development director, said she will promote the sale through a nationwide public property surplus website and “any other marketing materials we have.” She said sale strategy conversations between her and Borough Manager Mason Villarma are underway.

The $498,000 asking price does not include the six borough-owned lots adjacent to the property, which Johnson had wanted for his condo project.

As part of his offer to the borough, the developer had agreed to cover the costs of the hospital building demolition.

“The reason we pursued the sale with Mr. Johnson was the value of demolition,” Villarma said. “But I think prospective buyers got the notion that we would (accept) $200,000 for any proposal, and that’s not the truth.”

Assembly Member Jim DeBord was the sole member of the assembly to express concerns about the price drop.

“We had the perfect solution, but that got torpedoed,” he said, citing the near sale to Johnson. “I think somebody is going to end up in over their head, and we’re going to have bigger issues and lose site control.”

DeBord said his ideal solution would be to “find some type of funding to demolish” the building and then explore the best solution for the “nice piece of property” afterward.

Villarma said he expects a demolition could cost the borough around $2 million, something he said could be assisted by the EPA’s brownfields program — a grant and loan program designed to help municipalities to safely “clean up and sustainably reuse contaminated properties” like the old hospital which contains some asbestos.

Villarma said the borough could try and cover its bases by simultaneously exploring demolition grant funding through the EPA while also marketing the property to potential buyers. “It’s not mutually exclusive,” he said. “I think that’s not a bad backstop. Maybe that’s a good solution.”

The assembly passed the resolution to drop the asking price; the only dissenting vote came from DeBord.

 

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