AUGUSTA — MaineGeneral Medical Center plans to hold an online auction to sell its Augusta hospital campus and Seton campus in Waterville.
The moves come as the hospital system moves forward with its consolidation plans, which are anchored by a new 192-bed regional hospital in north Augusta slated to open in December 2013.
The online auction is scheduled Oct. 22-24 by Jones Lang LaSalle, which has offices in Boston and provides commercial real estate services.
Prequalified prospective buyers — no other hospitals, please — can bid on the two properties together or separately. MaineGeneral won’t be moving into the new hospital until spring and fall 2014, which means any developer buying the property will be able to collect rent from the hospital to offset the cost.
“We’ve been working on the plan and what direction to take for quite some time,” said Paul Stein, administrative director for support services at MaineGeneral Medical Center. He said the consensus was “the best way to rid ourselves of these buildings would be to put them up for auction.”
“We realize it’s going to be a challenge to sell these buildings and we hope to attract some developers who have time to develop these buildings because neither community needs to have more vacant buildings.”
Hospital officials have been in talks with real estate experts and municipal leaders in both Augusta and Waterville about the future of the two campuses.
In Augusta, the property spans just more than 19 acres, including the seven-floor hospital, parking lots, three houses and a building that once housed the Augusta General School of Nursing and is now primarily used for offices. Some of the property borders the Kennebec River and the former Augusta Mental Health Institute campus.
However, The Family Medicine Institute building that houses the hospital’s primary care practice is not included in the sale, Stein said.
In Waterville, the 88-acre property includes the eight-floor Seton building on Chase Avenue, which once had 43 in-patient beds and currently houses offices and outpatient services.
Stein said the hospital will set a minimum bid of $1.7 million to $2 million for each of the properties.
“We had the buildings appraised three years ago and then six months ago, both the Seton campus and the Augusta campus, and they were between $2.5 and $3.5 million for each,” he said. Stein said the appraisers noted that buildings are unique and would be difficult to market.
Because of the prequalification requirement, Stein said, “We should have a good idea of the interest level of developers before the auction happens.”
The timing should be good as well, Stein said.
“The buildings are much more attractive to a potential developer right now when they’re currently occupied,” he sad. “It gives a developer cash flow and some time to determine a longer range plan for the building.”
Stein said if the hospital waited until it vacated the buildings to sell them, it would have to maintain and secure them.
He said hospital and city officials hope the properties can return to the tax rolls. Because the hospital is nonprofit, it is exempt from property taxes.
“We’re excited about the hospital’s plans and wish them well,” Waterville Mayor Karen Heck said. “I would love a developer to come in because that would free up a lot of the tax-exempt property we have in the city.”
Heck said the prospect of a planned natural gas supply line in central Maine would make the hospital site even more attractive.
“There is a real need for affordable residential property in Waterville, and if somebody wanted to develop that into residential property, it would be great,” Heck said.
She also suggested the Seton site could house a small for-profit college.
Augusta City Manager William Bridgeo echoed some of Heck’s sentiments, but said he has concern about selling the property at auction.
“I might personally have taken a different approach and brought in some commercial developers” and sent out a request for proposals, he said. But, he added, “If a credible developer can step forward and reuse the building and it goes on the tax rolls, then great.”
That’s been a challenge for Augusta officials in several other cases. The historic Kennebec Arsenal and Cony flatiron building, for example, have languished for years amid failed redevelopment efforts.
Bridgeo said the redevelopment of the Augusta MaineGeneral campus will have a large impact on the city.
“I’m very happy to see the hospital is moving to ensure that the hospitals in Augusta and Waterville are going to be reused and hopefully not end up in a situation of vacancy,” Bridgeo said. “It would be very difficult challenge to continue momentum to redevelop downtown if the large hospital building were vacant.”
Hospitals not wanted
Other hospitals need not bid on either property. Deed restrictions will ban any health care proposals that compete directly with MaineGeneral Medical Center.
“We really don’t want other health care facilities moving in,” Stein said. “It wouldn’t be in our best interest or really the communities’ to duplicate those services.”
He offered a few examples of the future uses for the campus in Augusta such as housing for University of Maine at Augusta students or some state offices. Stein also said assisted living or long-term care uses could be a possibility if there was a need for them.
“We certainly want to be flexible, but we don’t want someone coming in and putting in an outpatient surgical center,” he said.
The financing package for the new $312 million hospital does not anticipate any revenue coming from the properties.
“We did not know how the financial market was going to go,” Stein said.
The hospital is retaining its Thayer campus in Waterville, which will undergo a $10 million renovation and house a 24-hour emergency department as well as a number of outpatient services. Thayer, however, will no longer have inpatient beds.
State regulators conditioned their approval of the new regional hospital on Thayer retaining inpatient beds until the completion of the full build-out of Interstate 95′s exit 113 in Augusta. That project, run by the state Department of Transportation, is slated to take place in the next construction season and be completed a month or two prior to the opening of the regional hospital.
“We feel the DOT really has a good handle on things,” Stein said.