If Southland clinic doesn't open, developer could be only winner

mmeehan1@herald-leader.comApril 24, 2013 

HealthFirst had planned to raze this building at 496 Southland Drive in Lexington and replace it with a clinic.

PHOTO BY PABLO ALCALA | STAFF — Lexington Herald-Leader Buy Photo

If Lexington loses the proposed Southland public health clinic, the biggest potential winner could be developer Ted J. Mims, who already has earned $120,000 as property project manager and could potentially benefit from more than $320,000 in tax-financed studies on the property.

Mims said he owns a 10 percent interest in the property at 496 Southland Drive, or about a $90,200 stake based on the current value assessed for tax purposes. Any prep work that has been done — including architectural work, storm water abatement plans and environmental assessment studies — and paid for with tax dollars by HealthFirst is "of no value" to him, he said Wednesday.

The board of HealthFirst Bluegrass voted last week to give itself 30 days to resolve lingering financial woes or end efforts to build the clinic, which is being funded by an $11.7 million federal grant.

That move raises the questions of whether HealthFirst would have to pay back the federal money it has already spent on the clinic project and what would happen to about $320,000 spent on site prep work.

HealthFirst executive director William North said the federal government allows for prep work to be done before construction begins and, if the project does not proceed, the costs would be covered and would not have to be reimbursed.

Mims, who as project manager is required to prepare monthly reports on the project, said the completed studies on the Southland Drive site are "specific to the project, not specific to the property."

That might be true for some of the work that has been done, but any property owner could benefit from the research on the existing hydrology of the property, which includes classifying the type of soils on the property and the slope of the land, said Ken Cooke, vice president of the Friends of Wolf Run, who has been a community adviser on the project.

Cooke, a supporter of the project, said if the federal government pays for the project reports and the project doesn't go through, the reports would become part of the public record and anyone, including Mims, could request access to them.

According to documents from HealthFirst, EOP Architects of Lexington has completed a design for the two-story, 34,000-square-foot building and have billed HealthFirst $239,000. Strand Associates created a site plan and stormwater plan for $75,400. Cultural Resources Analysts has been paid about $18,500 for historic preservation research.

According to his contract, Mims works 40 hours a week and is paid $15,000 a month. His contract was signed in August 2012, bringing his salary to $120,000 so far. Since March, HealthFirst has paid a monthly lease of $23,000 on the property partially owned by Mims, North said. That fee had been deferred for several months to help the project remain viable, North said.

Mims, operating as the limited liability company 496 Southland, paid $625,000 to buy the building out of foreclosure on May 17, 2012. HealthFirst announced that it would move the clinic there on May 29, 2012. Although no construction has begun, the Southland Drive property is now valued at $902,000, according to property records.

Mims said Greg B. McDonald, a co-owner of Empire Coal, is the majority owner of the property. PMM Southland Investments, for which Mims is a registered agent, also owns a $2.9 million property at 442 Southland Drive.

If the HealthFirst Board ends its efforts to build the clinic, there will be an audit to determine whether HealthFirst spent the money appropriately or whether the government must be repaid, according to Elizabeth Senerchia, a spokeswoman for Health Resources Service, the federal agency overseeing the grant. Any cost deemed inappropriate would have to be paid back, she said. That could include the costs of the site plan and other studies, she said.

North said all HealthFirst actions to date have been reviewed by the federal government, and there has been no indication that there was a problem. He said HealthFirst has a three-year option to buy the property at a set price.

HealthFirst's decision last week emerged after more than a two-year effort to spend federal grant money on a clinic to serve the poor and those without adequate insurance.

In a separate issue, the federal government has given HealthFirst until Sunday to resolve technical issues involving its independence from the Fayette County Board of Health or lose a separate $2.4 million operations grant. Part of the problem has stemmed from rocky communications between the boards of the two groups.

The Board of Health and the HealthFirst board have both called special meetings for Thursday at the Lexington Fayette Health Department at 650 Newtown Pike to deal with that issue. The HealthFirst meeting begins at 5:30 p.m.; the Board of Health meeting, at 6 p.m. The meetings will be held on the same floor but in separate rooms.

Mary Meehan: (859) 231-3261. Twitter: @bgmoms. Blog: BluegrassMoms.com.

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