This fall, the city of Gainesville and the Northeast Georgia Health System struck a deal that gives the city control over the property on the southern end of the Jesse Jewell Parkway pedestrian bridge but lets the health system have a say in where that bridge finally leads.
On Oct. 16, the Gainesville City Council voted unanimously to take over a $10 million contract on that property from the health system, with a few strings attached.
One of those strings is that the 6.8 acres at 110 Jesse Jewell Parkway cannot be developed to provide medical services or products without the permission of NGHS.
The planned vote by the council was not made public in advance, but in an Oct. 15 email to health system spokesman Sean Couch from city spokeswoman Nikki Perry, she said the purchase would be presented under “city attorney issues” on the agenda. That email and others was obtained by The Times in an open records request.
“The opportunity arose during conversation with the prior owner, and we moved quickly to secure the property – knowing our interest was aligned with the City,” Couch wrote in an email sent to The Times Friday.
The sale was closed on Nov. 19, using funds from the city’s capital reserves, according to Perry. The health system had made its offer on the property in August, and then approached the city about the land, according to records and interviews with officials.
NGHS signed a letter of intent with the developers who owned the property in August, according to records. Then, later that month, Couch contacted Perry asking to discuss a “potential real estate transaction.”
The health system knew through previous communication with the city that the city was interested in the property for its potential to kickstart midtown development, Couch told The Times Friday.
Neither the health system nor the city had the land appraised.
Charles McKay, an appraiser with Metro Appraisals in Gainesville, said there are not many lots left downtown near the central business district. This land’s location near the pedestrian bridge is also a factor that makes its situation unique, he said.
“It’s unusual in the fact that there aren’t many properties like it left, and that it adjoins the bridge that gains access to the (central business district),” McKay said. “It’s all unusual because properties like it just don’t sell very often.”
Downtown land that has sold recently has gotten anywhere from about $700,000 an acre to $2.7 million an acre, McKay said.
The city paid $1.47 million per acre for this land. The $10 million purchase was funded using capital reserves, and Perry said Thursday afternoon that the city had about $76 million in that fund. The current fiscal year’s Capital Improvements Program fund is at $54 million. The program includes money that is set aside for budgeted projects and general capital expenditures, from all departments. Dollars are not cut off at the end of a fiscal year but stay in the fund until project completion. Funding sources for the program include transfers in from other departments or funds, including the general fund and hotel/motel tax fund.
Emails obtained by The Times through an open records request indicate that representatives of the health system had heard that Northside Hospital, based in Atlanta, could be interested in the property at 110 Jesse Jewell Parkway.
Couch said Friday that, like many in the area, the health system had heard the rumor from general gossip in the community. Members of the Gainesville City Council told The Times they had also heard about possible interest from Northside.
But those rumors turned out to be just that — speculation that quickly spread.
Katherine Watson, a spokeswoman for Northside, told The Times Monday that Northside had never expressed interest in the property and was not actively looking in Gainesville. Northside acquired the Northeast Georgia Diagnostic Clinic in Gainesville earlier this year, that hospital’s first presence in the city.
Before the announcement of the agreement, Perry and Couch drafted responses to questions they anticipated from public and the media. In a draft sent on Aug. 27, an offer on the land from Northside is mentioned. Then, on Oct. 15, the day before the vote, Couch said there had never been confirmation of any other offers on the property.
RK Whitehead, the chairman of the NGHS Board of Trustees, said it would not be feasible for the health system to buy any empty property that is available just to keep out competition.
“We want to do what is best for our patients and our health system and our community,” he said.
Whitehead said the health system did not have specific plans for how the site would be developed, but rather saw how influential that property’s development could be and wanted to be at the table for that decision.
“Here was an opportunity to make sure that a key piece of property in our downtown was developed in a manner that would be beneficial for not only Northeast Georgia Health System but the entire region and community,” Whitehead said. “If you wait around and wait too long for something, it will pass you by.”
The condition about new medical uses is standard in the health system’s land sales, Whitehead said.
“Once you have the ability to control it, you want to make sure that anything that might go on that property in the future is not detrimental to what the health system and the hospital wants to do,” he said.
Whitehead said the health system is working on a master plan to evaluate facilities, and the system has a shortage of administrative space and wants to keep an eye on the real estate market.
“When there’s something available that may fit in to the puzzle, it makes sense to take a hard look at it,” he said.
Whitehead said the health system’s new residency program, starting next summer, also shapes the health system’s strategic planning efforts, as that program will bring young doctors to Gainesville who will need to live near the hospital and will be spending their off time in the community, too.
“(Graduate medical education is) a big deal. Everything that we’re doing is looking through that lens a little bit,” Whitehead said.
Whitehead said efforts like midtown development and the upcoming Parkside on the Square condominiums will change the environment downtown, and the health system wanted to see the land be developed with something that could serve as a gathering place outside business hours.
“If somebody bought it and built an office tower there, and people were there from 9 to 5, but it was dark during the weekend and dark at night, that doesn’t help lend vibrancy to where Gainesville is going to be going over the next 15 or 20 years,” Whitehead said.
Couch said a “live, work, play” development could attract millennials, including those in the medical field, and could make Gainesville a more appealing option for young doctors deciding where to complete their residencies.
“Given the low unemployment rates out there right now, it’s a very competitive job environment, so we are always trying to make sure we can do anything that aids our efforts to get the best of the best here and that Gainesville and Hall County is attractive for them,” Couch said.
The city is now marketing the property, with the hopes of selling it to a developer who could turn the empty land into a hotel, retail, residences or office space. Like Couch, officials said they also want to see a mixed-use development go in on the site.
“We want to be sure, now that we have control of the land, that a project comes in that is going to benefit citizens in Gainesville,” Councilwoman Ruth Bruner said. “… We really want it to have a mix of some housing and hopefully some mixed-use, and not just office buildings or just apartments. There needs to be a mix.”
Mayor Danny Dunagan said Tuesday that the city has already heard from several developers who are interested in the site. A conference center is an especially important need for the city, he said.
“Our biggest vision is for a hotel and conference center, and that’s what some of the developers are looking at,” Dunagan said. “There’s a possibility, they’re talking about some retail on there and maybe some residential on it, too … hopefully, with a conference center that the city of Gainesville needs desperately. We just don’t have anywhere to meet with large groups.”
City Manager Bryan Lackey told The Times in October that 2008 plans for the site were made difficult by the economic recession. But improving economic conditions could give the property a second chance, he said.
Developers had hoped to build a hotel with a conference center and two 11-story office buildings, helping spur development in Gainesville’s midtown, which has also been a focus of the city’s in recent years.
But those plans were never realized, as the economic recession hit and a development of that size became less feasible.
The pedestrian bridge leading from the Roosevelt Square area to 110 Jesse Jewell Parkway earned the nickname “bridge to nowhere,” as it was completed before the proposed development ever broke ground.
But much has changed in the decade since then.
“There’s certainly lots of opportunities, a lot going on in downtown Gainesville,” Lackey said in October. “The real estate market, the economy is going really well right now, so the Council felt the time was right to take advantage of the opportunity.”
About an acre of the property previously housed Gainesville’s police and fire headquarters. That land was sold to City View Plaza LLC, owned by local developer Wendell Starke, for $2 million in 2008. Starke joined with Lee Caswell, an Atlanta-based developer, to form Gainesville City Center LLC, which was the most recent owner before the city bought the land in November. They acquired other properties and demolished the city’s public safety building, a shopping center and a bank operations center.
Caswell declined to comment about the sale. Starke, when contacted by The Times, repeatedly said he had no involvement in the property.
Councilman Sam Couvillon said the main reason he supported the land purchase was to give that property a purpose and contribute to midtown growth.
“We want somebody to come here to town and create a bridge to somewhere,” Couvillon said.
In 2008, when the land was sold to developers, the city entered into an agreement with the Gainesville Redevelopment Authority that required developers to fund the design, permitting and construction of the pedestrian bridge. The city agreed to reimburse developers when the project was complete, or no later than Feb. 15, 2017.
In February 2017, the city had to uphold that agreement and paid developers almost $2.5 million to reimburse the cost of the bridge, even though the proposed hotel and office buildings had never been built.
Future of midtown
The property is a focus of the city’s plans to redevelop midtown as a new business center and
extension of the city’s downtown area. New rules passed by the Council in November ban new businesses or nonprofits that the city wants to discourage in midtown, like homeless shelters, pawn shops, coin laundries and industrial uses that emit smoke or noise. Existing ones can stay.
Officials are also working to find a developer for the former Hall County Jail site, which they see as another spot that could revitalize the area.
Councilman George Wangemann said that after the 2008 development plans never came to fruition, city officials wanted a say in how the land was developed to help shape the area.
“The city is just trying to control that land — since it is very valuable land — and control who goes there,” Wangemann said.
That idea was repeated by other councilmembers, who emphasized the city’s desire to have a say in midtown development and what goes on that piece of land.
“It’s an opportunity for us to have control over this property that we otherwise would not be able to have as much input as we are about to be able to have. … It is going to be a connective piece between downtown and midtown,” Councilman Zack Thompson said. “It is extremely important to get a quality development there.”
Couvillon and Thompson both said they had heard speculation of Northside moving in, but that rumor did not affect how they made a decision about the purchase.
“If they come to town and they find a piece of property they find suitable for their needs, then they would go through the process,” Couvillon said.
Thompson also said he was more focused on the potential of the land.
“I didn’t look at it as trying to partner with anybody or keep free market out of Gainesville. … What a great opportunity for our city to really give a shot in the arm to midtown,” Thompson said.
Councilwoman Ruth Bruner also said discussions among the Council had not centered around possible competition for the health system. The city had been interested in the land anyway, she said, so the Northside rumor did not affect her decision.
“We really want some good development to come across the bridge, so we were trying to have a situation where we could get the property,” Bruner said. “…This is such a prime location for the downtown.”
Wangemann said hearing about possible interest from Northside brought to mind NGHS’ status as a fixture in the community. But ultimately, competition boosts local economies, he said.
“The hospital has been here a long time. … They’ve been good for the city and I am trying to look out for their interests as much as I think is proper from a citizen’s point of view,” Wangemann said. “I have to remember that it’s not my government. The government belongs to the people of this city.”
Councilwoman Barbara Brooks, whose ward includes the property, was not available for comment last week.
Through negotiations, the city offered the health system the option to purchase another tract of land at Jesse Jewell Parkway and West Academy Street, the current site of Engine 209 Park. That site is about 1.8 acres, Lackey said Tuesday.
The health system and the city are still working to enter a contract for that land, pending due diligence, Couch said Friday.
Staff writer Joshua Silavent contributed to this report.