Mall plan vindicates city, lawyer says

Milwaukee Journal Sentinel, June 22, 2006

By AMY RINARD
arinard@journalsentinel.com

Oconomowoc Plans announced last week for a shopping mall on the site of the proposed Aurora Health Care hospital in Pabst Farms vindicates the city's action in blocking the hospital five years ago, an attorney representing the city said Wednesday.

"What it does is vindicate what they did in 2001," attorney Lisle W. Blackbourn said of the retail center plans, which he termed a "wonderful development proposal."

The project illustrates what was originally intended for that land in Pabst Farms, he said.

General Growth Properties Inc., the nation's second largest operator of shopping malls whose holdings include Mayfair in Wauwatosa, announced plans to develop a 110-acre, open-air retail center at the northeast corner of I-94 and Highway 67 in Pabst Farms on land that includes the 43-acre site of Aurora's proposed hospital.

Blackbourn said that such a shopping mall development was always envisioned by city officials for that land. He also said that a hospital there was not consistent with any land use plan presented to the city and that it would not fit in with the city's own master land use plan for that area.

In addition, he said, a tax-exempt, non-profit hospital was not compatible with the city's creation of a tax financing district intended to speed development of that area of Pabst Farms through the use of tax subsidies.

The city borrowed $24 million to pay for the construction of roads and sewer and water lines as well as other development expenses within the tax financing district of Pabst Farms. Until all those costs are paid, all property tax revenue generated by new buildings in the district goes to pay off the initial debt.

In 2001, only a few months after Aurora announced its plans to build an 88-bed hospital on a site in the tax financing district, the Common Council rezoned the site so that a hospital could not be built there.

At the time, aldermen said they did not want a tax-exempt hospital built in the tax financing district because they feared it could slow repayment of the $24 million debt.

Aurora had offered to pay the city $313,000 a year on payments in lieu of taxes and noted that parts of the hospital complex, including an expanded Wilkinson Clinic, would be fully taxable.

After the rezoning vote, Aurora officials and supporters of the proposed hospital said the Common Council had bowed to pressure from Oconomowoc Memorial Hospital, located just three miles from the Aurora site, whose corporate officers strongly opposed the construction of a new hospital.

Aurora sued the city over the rezoning action and has filed a claim for $59 million in damages allegedly incurred as a result of not being allowed to build a hospital on the site in 2001.

Late last month, a preliminary ruling in the case declared the rezoning vote illegal and zoning of the site, known as Parcel 5, reverted to its former classification that permitted a hospital. Aurora immediately refiled its application to the city to build there, and city officials are reviewing that application.

Meanwhile, the city has appealed the ruling and, at the same time, Mayor Maury Sullivan has said he is willing to talk with Aurora officials about settling the lawsuit. Aurora officials responded that they have always sought to settle the suit out of court.

City Administrator Diane Gard said Wednesday that there were no new developments in those talks.

"Nothing formally has taken place," she said. "But, as the mayor has said, we're leaving the door open."

Blackbourn said the city continues to leave all its options open.

Announcement of the shopping mall plan, which requires land that Aurora controls, is not a signal that a settlement of the case is imminent, he said.

The city could use its state-granted authority to zone and designate land use of properties three miles outside its borders in neighboring towns to rezone land in the Town of Summit, where Aurora proposed to build a hospital after the city blocked it efforts.

Summit officials backed the plan, but the County Board last year refused to give its required endorsement. If the city rezoned the Summit site, the action would not need county approval. Aurora officials have said they would rather build in Summit.

"We have long emphasized that our preferred site for the medical center is in the Town of Summit," Aurora spokesman Jeff Squire said Wednesday. "But the only clear path for construction at the moment is in the City of Oconomowoc. In the meantime, we are hopeful the litigation with the city can be settled out of court."