High Country development havoc
By Mark Wilcox
November 1, 2012 --
EVANSTON — Mayor Joy Bell of Evanston is happy — now. But a couple weeks ago, her aggravation took center stage.
"There's no doubt about it. I was a frustrated woman at a point in those negotiations," Bell told the Business Report. She was referring to economic-development challenges in a joint venture between the city of Evanston, High Country Behavioral Health and the Wyoming Business Council. The building was to be a medical spec building leveraged by High Country as an anchor/investor tenant.
While the Wyoming Business Council had already ponied up a $1 million Business Ready Community Grant and Evanston had committed $300,000 for general infrastructure improvements, High Country was playing coy with their $1 million commitment to the project that would allow them to "option up" to ownership of the building after a five-year lease period. Bell said until recently that things had stalled, saying she had pushed the envelope in the negotiations as far as she was willing to go and didn't hear back from High Country for at least two weeks. She voiced her grievances in multiple city council meetings.
"They wanted to see changes," Bell said. "We made changes and we just weren't hearing from them."
But by Oct. 16, the city had received a letter of commitment from High Country to move ahead with the project, according to city council meeting minutes. But while she was waiting, Bell had $600,000 in contracts to approve that couldn't go anywhere without High Country's stamp of approval. During the wait, at least one bid expired.
"I have people that are waiting, wondering what's going on," Bell said. "It was just slow. It was like 'You know, what's your problem?' It appeared they didn't have one. I don't know exactly why the delay."
Bell's not the only one that has had trouble getting answers from High Country. After multiple phone and email queries as to the state of the deal after High Country had written its letter of commitment, the Business Report received the following message from Director of Operations Carl Harris: "Until we clear a few more hurdles I cannot comment at this time."
But according to public record, the hurdles had been cleared, leaving questions in the air as to the legitimacy of High Country's letter of commitment. To understand where the company is coming from, it's best to work backwards.
The company, which has five Wyoming offices, has had a presence in Evanston for a couple years, but has had to move several times between growth and being kicked out of offices as other medical providers expanded theirs. It was this frustrating scenario that led the company to look for a building it could anchor, but pickings in Evanston are slim for such buildings, even with the presence of the Wyoming State Hospital, which in less politically correct times was called "the insane asylum."
This led to High Country's partnership formed with the city and the Business Council. But as negotiations progressed, High Country's growth took a serious hit when the state withdrew several regional contracts the company had been filling. According to Chris Newman, senior administrator in the Behavioral Health Division at the Wyoming Department of Health, the company lost its regional contracts for crisis stabilization, therapeutic living environments and the supported independence program, which were instead awarded to a Rock Springs company. The last two programs are designed to help patients transition out of the state hospital.
"I imagine they are trying to make some decisions to downsize," Newman said of High Country's loss of the contracts. "There are just some business changes that have to occur."
The losses don't put the company completely off from state contracts. The business retained its $976,000 contract for local outpatient mental health services and continues to receive quality of life funding of about $129,000. Meanwhile, the breakdown of contracts lost is as follows: crisis stabilization, $490,000; group home: $396,000; and supported apartments: $266,000. Totaled, the contracts High Country lost are worth more than the contracts it kept. And with the $1 million commitment required of them for the new building, it's easy to see why there would be some hesitancy at going forward with such a big commitment.
Perhaps worse for High Country, it lost the funding on application errors. The state, Newman said, gives preference to the current contract provider, and it is possible High Country simply got lazy in their application.
"Our rules dictate the criteria and I have the final authority to apply those criteria," Newman said. "It's good to have, it obviously keeps it very much subjective."
According to Newman's rejection letter, High Country failed to demonstrate its levels of staffing, budgets and cost effectiveness while blending information on staffing and budgets "across regional services."
The only one of three applicants that met the application criteria, Southwest Counseling Services in Rock Springs, got the contracts. So High Country was not alone in submitting a criteria-deficient application to provide regional services.
"They weren't prepared to lose that contract," said Elaina Zempel, director of the southwest region at the Wyoming Business Council (WBC). "I knew they were a little panicky about what they were going to do when they lost Evanston regional (contracts)."
While the panic set in and High Country became elusive at the negotiation table, Evanston started seeking other options to anchor the building. Knowing High Country was only one of several medical related businesses looking to find space in Evanston prior to the WBC grant, the city wanted the $2.3 million building with or without High Country's $1 million. The companies, Zempel said, had essentially said, "Barring [anything] like a Frankenstorm, yes, if you had this facility we would come."
During the Oct. 9 city planning session, Bell brought up the idea of the city's entering economic development by chipping in the extra $1 million itself. At the time, the Uinta County Herald reported Bell was not comfortable with High Country as a business and was on the verge of yanking the deal to pursue the edifice by itself. She voiced the possibility of political fallout from the decision to become builders, but said the city could potentially pay off its $1 million investment with seven years of tenants.
Since the city had gone after the Business Ready grant instead of the Business Committed grant, the grant money wasn't bound to High Country from the WBC's perspective.
"Whether High Country is in or High Country is out we still need medical space in town," Bell said.
And while most conservative Wyomingites don't feel it is government's place to build buildings and Bell said she would agree in "an ideal capitalistic world," things happen differently in Wyoming because of economies of scale.
"In a lot of cases the Business Council proves to be the venture capitalist in Wyoming as funny as that sounds," Bell said.
But from Zempel's perspective, all the ups and downs in a case like this are just part of economic development.
"It's never as easy as 'Let's just build it,'" she said. "Can't one of these just go smooth?"
Despite the bumps in the road and unanswered questions, for now most signs, like construction signs directing traffic on a one-lane road, have turned from "Stop" to "Slow."
"I'm really glad we got through the process," Bell said.
Wyoming Business Report staff writer Mark Wilcox lives and works in Jackson.