Staunton Council one step closer to Western State construction

STAUNTON — Staunton City Council unanimously adopted a memorandum of understanding at its meeting Thursday. The deal to build a new, smaller Western State Hospital — and thereby free up more than 250 acres along Interstate 81 and Route 250 for a land-locked city to develop — brings the project one key step closer to fruition.

The memorandum of understanding outlines the basic terms of the deal to locate the new Western State Hospital on 70 acres within the city’s Crossroads Business Park. Gov. Timothy M. Kaine announced in December 2008 that the new hospital would be built in the business park.

In exchange for the city’s Industrial Development Authority deeding the city property in the business park, which is located along the city’s eastern limits adjacent to I-81, the Virginia Department of Mental Health, Mental Retardation and Substance Abuse Services will deed 266 acres of the existing Western State Hospital campus – excluding 31 acres now occupied by the Commonwealth Center for Children and Adolescents – to the IDA for future private redevelopment. While the new hospital is being built, the IDA will lease back the hospital’s current site to the state until the new facility is completely built.

The city is required to contribute $15 million toward the construction costs for the new hospital, but the money is not likely to be needed before 2011, according to Economic Development Director Bill Hamilton. The General Assembly approved more than $110 million for the new, 250-bed hospital last year.

Vice Mayor Dave Metz said the prime location of the project – where I-81, I-64 and Route 250 meets – would help it to succeed.

“I think the issue for the city is how to keep the burden of taxes off the residential taxpayer,” Metz said. “The only way we can do that under the way the state is structure is to somehow create more of the sales tax revenue. And this project, I think, gives the city a long-term look at how to create some more sales tax revenue.”

City leaders said they hope the project will be a mixed-use development that would include retail, offices, food and lodging, entertainment and educational departments.

“For the future, it will bring in revenue,” said Councilwoman Andrea Oakes. “It will also bring in jobs.”

Metz said that while the timing of the announcement looks coincidental to recent mixed-use projects announced for Augusta County and Waynesboro, the deal was a long-time coming.

“In essence it looks like it’s keeping up with the Joneses, but this has been underway for four years,” Metz said.

Hamilton said the council would need to adopt a more formal agreement for the land sale contract. That, he said, should come before the council within the next two months.

Once a deal is done, Hamilton said construction of the new hospital would take two to three years.

The IDA has already begun soliciting private development firms to serve as the future master developer of the existing hospital campus. The city will use proceeds from any future land sale to offset its $15 million commitment for a new hospital.

Hamilton said the current hospital land, which sits along nearly a mile-long stretch of I-81, would be developed in two phases. About 150 acres, he said, would be available for the first phase of the development once all the agreements are finished and land transfers have taken place.

Once the new hospital is finished, the 110 acres where the old hospital is developed could be developed in the project’s second phase, Hamilton said.

Council members praised Hamilton for his work on the deal.

“Nice job,” said Councilman Bruce Elder.

Said Hamilton: “We’ll celebrate in three years.”