Kaleida Health wants to quickly select a developer and complete the transfer of its Women & Children’s Hospital within six months – and lease the hospital building back for another two years until the new facility on the medical campus is finished.
The region’s largest health care system is hoping to issue its request-for-proposals to the development community within the next two months, so that officials can make a final decision soon, said CEO James Kaskie.
Kaleida would like to capitalize on the interest generated by the selection of a developer for the Millard Fillmore Hospital at Gates Circle site announced Monday, he said.
The goal is to get a head start on what can otherwise be a long process, so that there’s no time gap in which Kaleida would have to carry and maintain a vast empty facility. That would only drive up the long-term expenses for Kaleida, as it did with the Gates Circle hospital.
Kaleida doesn’t expect to make money on any sale in Buffalo the way a hospital real estate transaction might be profitable in a market like New York City, Kaskie said. That’s because the market dynamics are not as strong here, and the costs that accompany a vast hospital reuse project outweigh the value of the real estate.
“This is not ‘monetize the asset.’ We’re facilitating the transaction by investing in the community,” Kaskie said. “There’s not a market value to it. Buffalo isn’t going to support a real estate transaction like this. The economics of making it site-ready offset the value of it in a transaction.”
Kaleida is building a new $240 million hospital on the Buffalo Niagara Medical Campus to replace the aging Women’s & Children’s facility on Bryant Street in the Elmwood Village. The new 380,000-square-foot hospital is slated to be completed by early 2016.
But rather than wait, Kaleida is seeking to pull the trigger on Children’s much faster and earlier than it did with Millard Fillmore Hospital at Gates Circle.
Officials went through two rounds of soliciting proposals and a long consultation with the community before selecting and announcing the winning plan for Gates on Monday. While clinical care ceased at the Gates Circle complex March 20, 2012, the building isn’t expected to be transferred to its new owners – led by TM Montante Development – until Dec. 20. That project will include a satellite campus for the Canterbury Woods retirement community.
In the interim, Kaleida had to pay to take care of the property. And it now also must pay the $1 million bounty it promised for the winning proposal.
“It’s been a long haul. It has been nerve-racking,” Kaskie told The Buffalo News Editorial Board. “The lessons we’ve learned in the process – and we learned it with Deaconness (Hospital) , too – is that if we start earlier in these processes, we’re better off.
“The day we move out is the day the wrecking ball moves in. That’s the biggest lesson.”