Hospital followed law buying Bayview property without appraisal, state says

Whidbey General Hospital did not have an appraisal done before it spent $2 million on a property in Bayview valued at $618,000 six years ago, and it turns out they didn’t have to.

Whidbey General Hospital did not have an appraisal done before it spent $2 million on a property in Bayview valued at $618,000 six years ago, and it turns out they didn’t have to.

State officials confirmed this week that while Washington law does require multiple appraisals to be performed before a public agency sells property, there is no such mandate when it comes to buying.

“The answer is ‘No, there is no requirement,’” said Thomas Shapley, a spokesman for the Washington State Auditor’s Office.

Shapely was posed the question by The Record in the wake of a recent public records request to the hospital district, which yielded no appraisal for the January 2008 land purchase and a subsequent assertion by hospital staff that one wasn’t legally necessary.

When asked to verify the claim, Shapely seemed surprised such a law did not exist and had to check with agency attorneys to be sure.

Also surprised was South Whidbey’s state lawmaker. In an interview Monday, Rep. Norma Smith, R-Clinton, said she doesn’t know all the specifics of the hospital’s purchase, but vowed to look into the broader issue concerning the state’s apparent lack of safeguards when it comes to taxpayer-bought properties.

“That is definitely something I’ll be taking back and doing some research on, because if that is indeed the case, it needs to be evaluated and a potential legislative remedy found,” Smith said.

The property in question concerns a 4.5-acre parcel of undeveloped property in Bayview, which is located across Highway 525 from The Goose Community Grocer.

Purchased from Verlane Gabelein, it was meant to be the future building site of a new South Whidbey hospital clinic, replacing an existing facility in Clinton.

Changes in the economy, affecting the district’s ability to acquire revenue bonds, and laws surrounding critical access hospitals that reduced reimbursements for outpatient services, have put those plans on hold and the commissioners are now considering selling the property.

The circumstances surrounding the purchase are somewhat unclear. All the commissioners and leading hospital officials involved in the deal — then chief executive officer Scott Rhine and then chief financial officer Doug Bishop — are no longer with the district.

Attempts to reach Rhine by press time Tuesday were unsuccessful, and Bishop did not return calls for comment Monday.

Hospital spokeswoman Trish Rose, who was employed at the district in 2008 but was not involved in the decision-making process, said meeting minutes in 2007 indicate the hospital was initially looking at another property nearby when it stumbled across Gabelein’s land.

There wasn’t a lot of land available in the area that fit the hospital’s needs, she said, and the decision was made to buy it. Rose speculated that the board believed this was a good buy at a time when land values were at their peak prior to the real estate crash later that year.

“I think they were acting in a very good faith effort to improve service to South Whidbey, which is something we’ve wanted to do for years,” Rose said.

“I think they thought they were making a good purchase,” she said. “In hindsight, it wasn’t.”

Whether the hospital will sell the property also remains unclear. The board did discuss the issue this month, but agreed only to discuss the possible sale again at a future board meeting.

Rose could not say whether the situation would spark any new policies concerning future land purchases, and attempts to reach Anne Tarrant, president of the hospital board, were unsuccessful for this story.

There may be good reasons not to shackle a public agency hands when it comes to buying property, such as instances when quick action is required for preservation, but Smith said laws can always be tailored to address special circumstances.

“You can always create formulas … for moving forward with these properties that safeguard the public interest,” she said.

And whether the hospital makes any internal policy changes or not, the Clinton lawmaker said she will be looking into the matter carefully.

“I’ll certainly be following up,” Smith said.