Oconomowoc will appeal Aurora ruling

But city leaves open possibility of settling suit over hospital zoning

Milwaukee Journal Sentinel, June 3, 2006

By AMY RINARD
arinard@journalsentinel.com

Oconomowoc - The city will appeal a court ruling that cleared the way for construction of a new Aurora hospital but also will open channels to discuss a settlement of the five-year-old lawsuit with the health care company, Mayor Maury Sullivan said Friday.

"We stand ready to negotiate," Sullivan said.

An Aurora Health Care official welcomed the offer to discuss a settlement.

"The reasonable and prudent path toward resolving this matter lies in settlement talks," spokesman Jeff Squire said Friday. "We encourage city officials to begin the discussions soon."

Aurora sued the city in 2001 after the Common Council blocked construction of a hospital on a 43-acre site in Pabst Farms by rezoning the land. Aurora is seeking $59 million in damages from the city over delays in construction.

City officials said the rezoning was done to stop the non-profit, tax-exempt hospital from being built in a tax incremental financing district where the city had borrowed $24 million to pay for roads, sewer and water lines and other public infrastructure to speed development of the 1,500-acre Pabst Farms.

An Aurora hospital would not help the city retire its debt, city officials said.

But Aurora officials and supporters of the hospital plan have contended the city acted to protect Oconomowoc Memorial Hospital from competition. Oconomowoc Memorial is about two miles north of Aurora's proposed building site in the city.

Opponents of the Aurora proposals have argued that the hospital would unnecessarily duplicate services performed by Oconomowoc Memorial and lead to higher health care costs locally and across the region.

In March 2001, Aurora officials announced plans to build a hospital in Pabst Farms, along the north side of I-94 east of the Highway 67 interchange. At the time, the projected price tag was $85 million for the 88-bed hospital. More recent estimates to buy land, build and equip the hospital put the cost at about $166 million.

Waukesha County Circuit Judge James R. Kieffer, the third judge to preside in the long-running civil case, reversed a decision by a previous judge when he ruled May 25 that the city did not follow its own rules and procedures when it voted in favor of the rezoning without first having had an application asking for the action.

Within hours of that ruling, Aurora filed the necessary paperwork to begin development of the hospital. Those plans could get an initial review by city staff as soon as June 14.

In a statement issued by Sullivan announcing the appeal after a closed-door meeting of aldermen and their attorneys Thursday night, Sullivan reiterated the city's contention that a tax-exempt hospital was never envisioned by city officials within the tax financing district of Pabst Farms.

In an interview, Sullivan said the city also would ask Kieffer to reconsider his ruling because lawyers representing the city believe the judge did not fully understand the city's zoning ordinance.

"We thought we did right, and we still think so," Sullivan said.

"Our attorneys believe there is a good chance for the ruling to be modified by the judge or overturned through an appeal."

Still, with Sullivan's allusion to possible settlement with Aurora, the prospect remains that an Aurora hospital could wind up at a parcel in neighboring Summit.

Aurora turned its sights to the Summit location - south of I-94 and with better freeway access - while its lawsuit against Oconomowoc worked its way through the courts. Summit town leaders embraced the proposal but county officials eventually voted it down.

Oconomowoc officials could exercise the city's authority to use "extraterritorial" zoning power to clear the way for a hospital on the Summit parcel - an action that could not be reversed by county government.

Aurora continues to prefer the Summit site and Sullivan has said Pabst Farms officials prefer a commercial development in Oconomowoc.

Town Chairman Len Susa said Friday he was glad to hear the city and Aurora are willing to discuss a settlement.

"Once we accept the fact that another hospital is going to be built in western Waukesha County, now let's look at where's the best place for that hospital," Susa said.