City sued over former Natchez General Hospital decision

Published 12:26 am Wednesday, October 17, 2018


NATCHEZ— On Sept. 11, Natchez aldermen agreed, contingent on certain restrictions, to transfer the former Natchez General Hospital building and property at 601 W. Oak St. to Magnolia Medical Foundation at no cost.

Magnolia Medical Foundation plans to transform the property into a retirement facility.

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The move has prompted a lawsuit filed by Natchez attorney Paul Sullivan on behalf of 42 plaintiffs, and revived a lawsuit that had been filed and withdrawn after the board considered transferring ownership of the property last year to Magnolia Medical Foundation.

After the city entered negotiations to sell the former hospital property to Magnolia Medical Foundation in October last year, Natchez businesswomen, Ginger Hyland, owner of the Towers of Natchez, and Charlotte Copeland, a local realtor, represented by Natchez attorney Joe Meng, filed a lawsuit against the City of Natchez.

That lawsuit was later withdrawn at the request of the plaintiffs because it was premature, as the board had taken no action. Hyland and Copeland both own properties that adjoin the old hospital property.

Last month, however, the city voted 4-2, with aldermen Dan Dillard and alderwoman Sarah Carter Smith voting against it, to award the property to Magnolia Medical Foundation at no cost, if the company meets certain criteria.

The motion made by alderwoman Joyce Arceneaux-Mathis, is as follows:

“I’m going to move to accept the offer of Magnolia Medical Foundation to acquire the old General Hospital on Oak Street contingent upon Magnolia Medical Foundation investing the funds in the building as set forth in their proposal as further subject to certain restrictions and requirements to be included in the deed of acquisition as well as agreeing to pay ad valorem taxes and not to apply for tax exempt status, both with restrictions and requirements being established by the Public Properties Committee. So they have to go forth and I’m moving that at this time.”

After the Sept. 11 meeting, attorney Sullivan filed a lawsuit appealing the city’s decision on behalf of 42 residents, and on Sept. 19 Meng filed an appeal of the city’s action on behalf of Copeland and Hyland.

Meng’s appeal states the city did not follow proper procedure in the request for proposals or obtaining a financial plan or obtaining a $5,000 deposit from Magnolia Medical Foundation.

Both cases seek to overturn the city’s action in transferring the property to Magnolia Medical Foundation and Hyland and Copeland’s case seeks all court costs and attorneys’ fees.

Natchez City Attorney Robert Latham said he believes the lawsuits are still premature.

“This is still not a final decision by the board,” Latham said. “Other restrictions would have to be met before it would be finalized.”

Latham said the board must determine acceptable use of the property and MMF must meet those, as well as zoning restrictions.

“The RFP didn’t say you had to comply to a certain degree,” Latham said. “We’re just trying to get as much information as we can and see who has the best proposal.”

Erica Thompson, MMF executive director in Jackson, said MMF’s plans for the property are to renovate the building to become a senior living retirement area, but declined to answer any additional questions about plans for funding.

MMF’s stated proposal to the city is for one-bedroom, efficiency apartments for seniors 55 or older, with a maximum of 30 living spaces. It also promises more than $3 million in renovations and amenities inside and out. MMF’s stated financial plan is to fund the renovations through tax credits and federal Housing and Urban Development agency and bond financing.

Latham said MMF’s funding proposals warranted further discussion.

Sullivan’s case lists the following grounds is seeking to have they city’s decision overturned:

  • Residents are adversely affected.
  • The city’s decision is unsupported, arbitrary or capricious, beyond the scope of the city’s powers, and violates citizens’ rights.
  • The city’s 90-day window to approve any offer is in this case exceeded at nearly 18 months.
  • The earnest deposit of $5,000 also was not paid in a second proposal considered by the city.
  • No business plan was submitted by MMF.
  • No proposal for a business plan was submitted (although required by the city’s own request for proposals) by MMF.
  • Any allowed acceptance by the city was required by the city to be based on two requirements, neither of which was met by MMF. The first was that any proposal show securing of funding (not met by either of the two aforementioned proposals) and that there be acceptance by the neighboring community. Objections of citizens were recorded at city meetings.
  • Notice of the hearing for an RFP was not properly submitted by the city.

The board violated procedure in order to consider the motion

  • The transfer of property is not a “sale,” as per the RFP, but rather an “illegal gift.”

Latham said the city didn’t balk when Magnolia Medical Foundation didn’t meet the $5,000 deposit because MMF was offering a $3 million renovation in lieu of purchase.

Latham said discussions were worth pursuing because a positive agreement between MMF and the city could turn the unused property into an “economic driver” for the city through construction and employment, in addition to putting the property back on the tax rolls.

Dillard said he voted against the measure because the city asked for buyers and only received two offers, neither of which wished to purchase the property.

“Neither offered to pay for the property,” Dillard said. “They were nonresponsive in the city’s request to sell the property, so neither one of them should be considered.”

Meng said he believes waiving the deposit for one group was unfair to anyone else who might have applied if knowing that was a possibility.

“You can’t waive that because if people had known, there might have been 100 other proposals,” Meng said.