Published February 2005

Providence growth
necessary for community

In the 1970s, Houston, Texas, experimented with zoning laws by more or less throwing them out and letting market forces determine what property owners were allowed to do with their properties.

For the most part, the experiment failed. Houston ultimately moved to more traditional zoning and land-use policies. Practical issues of how roads, utilities, schools, etc., would support the archaic uses ultimately outweighed the noble, but apparently impractical, goal of giving property owners absolute right to use their land how they saw fit. The experiment proved that some control over property rights is necessary.

Outside the city of Everett, the debate between some of the Donovan District homeowners and Providence Everett Medical Center over plans to expand the hospital probably is not headline material. But it is a good example of different uses clashing in the same neighborhood, so it has application to readers of this column no matter where one might live or invest.

Some members of the residential neighborhood surrounding the hospital — part of a group of homes referred to as the Donovan District — are against Providence Everett’s proposed master site plan because it will require removal of homes on a city block adjacent to the hospital in order to begin expansion.

The neighborhood includes many homes that have a similar look and style, built by a man named Donovan over 70 years ago. Using the leverage of the Donovan District’s historic designation, the homeowners opposing the hospital’s expansion have been encouraging city officials to consider alternatives or vote against the proposed change of use on the subject property, effectively blocking the hospital’s growth.

But this is not the typical “Little Guy vs. Corporate America” story. In fact, from a purely real estate perspective, the Donovan District neighbors working against this expansion should be so lucky as to have a neighbor such as Providence.

In 1994, former competitors Providence and then General Hospital merged. Prior to the merger, General Hospital operated at the Donovan District location for 80 or so years. Providence and its affiliates are major employers in Everett, providing jobs at every end of the pay scale. Indirectly, their positive economic impact is enormous and spins off benefits just like the Boeing jobs we spend so much time and money coveting.

Everett homeowners and businesses benefit from having doctors, technicians, administrators and nurses as neighbors — neighbors solely because Providence is located there.

Most other medical groups not directly employed by Providence nonetheless depend on the hospital as their patients’ 24-hour care facility. They, too, are in Everett largely because Providence is in Everett.

Beyond the direct and indirect employment base, Providence folk are major contributors to the community through various foundations and other meaningful endeavors, including effectively gifting another adjacent property to the neighborhood that is now a park for residents’ use.

Of course, that’s all the nonclinical side. One day, you might actually get sick or hurt. That’s when you really see how valuable a well-run, quality local medical center like Providence is to your community.

Through a purely real estate examination, the Donovan District homeowners opposed to the hospital’s plans could be missing the bigger picture. Providence actually owns the homes they will need to remove in order to begin the proposed expansion. There’s no “taking” action occurring here.

Providence is a private entity, not a government. Consequently, Providence isn’t going about their plans like some Houston developer in the 1970s or a government with ultimate condemnation powers. Hospital officials have been listening, talking and doing their best to be a good communicator with their neighbors.

The fact is, Providence has owned all but four of the 22 homes on this block for more than a decade. As a good neighbor, the hospital has been maintaining these homes and renting them back to the original owners or other families in need of affordable housing at below-market rents for years while it land banks the block and acquires the last few homes at fair-market value.

The argument that home values will be negatively impacted by this expansion is one that other real estate owners can sympathize with. But in this case, it’s not that simple. Setting aside for the moment the testy philosophical argument of property rights vs. treating people with serious or life-threatening ailments, the loss of hospital jobs if Providence were ever to move to accommodate health-care needs in the region would cause a vacuum of demand that would do damage to values by itself. Imagine trying to sell a home next to a now vacant hospital facility or whatever use might fill in its place. Homeowners would be begging for the hospital to return.

Property rights issues are sticky and emotional at their core. In Houston, common sense planning won out, and we learned that property owners cannot be allowed carte blanche to do anything they want. But Donovan District homeowners opposed to the hospital’s plans may have suffered from unintentional myopia or got caught up in the negativity directed at Providence officials in some of the neighborhood meetings they hosted.

All Providence and their physician partners want to do is ensure their ability to meet the health-care needs of a growing community by expanding onto property they bought and paid for in a neighborhood where not a single homeowner is old enough to say they were there first.

Regardless of who was there first, the argument that home values will be diminished because 22 Donovan-built homes will be removed from the neighborhood doesn’t pass the real estate test.

Tom Hoban is CEO of Everett-based Coast Real Estate Services, a property management and real estate advisory company specializing in multi-family and commercial investment properties. He can be contacted by phone at 425-339-3638 or send e-mail to tomhoban@coastmgt.com.

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