Parkland Hospital's Land Grab

Dallas County's public hospital is using eminent domain to buy up real estate in hopes of flipping it for a profit. But one homeowner is holding out.

Eminent domain, the principle that allows government to force a landowner to sell, is usually thought of as serving public purposes, like building new highways. But in the last two years Dallas County's public hospital district has been adventuring in a new version — eminent domain for profit.

Acting on a 2008 consultant's proposal, Parkland Memorial Hospital has been acquiring far more land than it requires for its new $1.3 billion hospital building and campus, some of it as far as half a mile from the construction site, which sits two and a half miles northeast of downtown on Harry Hines Boulevard.

Why? So when the value of the land goes up, Parkland can make money.

None of this is clandestine. When I asked about it, Parkland was candid. The hospital's leaders hope their own new campus and a nearby DART station will drive up the value of some of the land they have acquired, including land taken by eminent domain, creating an opportunity for the hospital to get some needed income — the basic idea behind the 2008 consultant's recommendation.

For example, Walter Jones, a senior vice president of Parkland in charge of the hospital's building campaign, says some of that land could possibly be used for retail development, though "not necessarily being developed by Parkland in the sense that we would pay to build retail.

"But we would certainly encourage a compatible retail development," Jones adds, "if it would help to support the hospital campus."

He calls the idea a way of "looking at our property holdings and expanding or encouraging the new campus development and then in some way, shape or form being able to accommodate the draw we would have, as well as DART, of the community to this location."

Location, location, location. On the one hand, if Parkland is creating a more valuable location all around its own new campus, the reasoning goes, why shouldn't Parkland get some of the gravy? On the other hand, seizing property by eminent domain as part of a sheer real estate play does stretch the concept, some experts say.

Lynn E. Blais, a professor of real property law at the University of Texas, tells me she thinks the concept of condemning land with a specific strategic aim of profiting from enhanced value later may go too far.

"To think of this another way," she writes in an email, "if the hospital had the power to acquire 'surplus land' during an expansion project, why would that power be limited to land around the hospital or to the time frame surrounding the expansion project?

"Why wouldn't the power extend to the hospital's desire to simply condemn land for speculation anywhere in Dallas (or anywhere in Texas for that matter)? There is nothing in the text of the code that would offer a limiting principle."

But that's exactly what is happening. Jimmy Swift, a retired high school shop teacher, owns a small lot on Redfield Street that wasn't included in early maps of the proposed new campus but is now. In fact, Parkland has bought his entire block.

Swift says he told Jones in a meeting, "Why don't you stick to your subject and build your damn hospital? Don't be going out here in the weeds and buying all this stuff."

Jones insists the hospital must acquire Swift's land and the entire block around it, but he's a little vague on why: "In the long-range planning, basically it's surface parking and an expansion base. What we're using it for now, it has become a very vital piece for staging and storage and the like. Whatever."

Matthew Festa, an associate law professor at South Texas College of Law in Houston and an expert on eminent domain, says Parkland's eminent-domain-for-profit idea probably has some law going for it, especially in the federal courts, but may also have some law going against it in Texas.

In its last two sessions, Festa says, the Texas Legislature has enacted reforms seeking to firewall Texas landowners from a 2005 U.S. Supreme Court decision that greatly expanded the ability of government to force the sale of land for nongovernmental purposes. But he says those reforms have been "largely a failure" and are mainly "toothless."

Maybe the Parkland plan will give Texas the court case it needs, he says, to settle where we stand. "Texas could use a good test case to see what the limits of eminent domain are going to be in the future and whether the recent reforms really have much of a bite," Festa says.

Stephen I. Adler, an eminent domain defense lawyer in Austin, says the basic underlying idea — taking land for the purpose of a pure real estate play — is dicey. He cites a number of circumstances under which Parkland could get away with it — if it were part of an effort to eliminate "urban blight," for example — but I had already asked Parkland people about that, and that is not what they are doing.

What they are doing goes back to what Jones of Parkland told me about "being able to accommodate the draw."

That's simple. Take the land. Drive up the value by building your hospital nearby. Find a way to make money off the enhanced value.

"It's clear that they just can't do that," Adler says. "So, ultimately there will have to be a trial."

Sure. If somebody wants to sue. I suspect that by the time this story appears, Jimmy Swift will have accepted an offer for his land. For the taxpayers' sake, I hope the price for his lot won't have been inflated too much by the calls I have been making to Parkland in recent weeks.

LAZ Parking, a national company, is in court against Parkland over an eminent domain taking, but I wasn't able to get them on the horn in spite of multiple tries. They must see my role as possibly driving down their price instead of inflating it. Hey, I just do my job.

The 2008 study was carried out by HDR, the firm that later became the principal architect for the new Parkland campus. Called "Reality Test Findings," the 46-page document analyzed an area between the existing hospital and Maple Avenue, most of it later acquired by Parkland, and divided it into three broad categories. Some of it, where buildings are now under construction, is labeled "Clearly Hospital" in the report.

A plot along Maple next to the new DART station is labeled "Clearly TOD," or transit-oriented development. The report suggests the "Clearly TOD" area, most of which also is now in Parkland's hands, will bring in high dollars as residential and retail property benefiting from the proximity of the new rail station. The report advises Parkland to buy that area and hold it until the effect of the rail station kicks in, then sell or partner in the development of it.

A middle zone of property, which includes Swift's house, is labeled "Overlap Zone." It could go either way. Maybe Parkland does decide to keep it and use it for even more hospital construction. Or maybe instead the TOD zone grows larger than expected, and Parkland peddles or partners on some of the land in the overlap zone for TOD projects.

Most of the land Parkland has acquired since 2008 in the TOD Zone is now in use as a nicely finished, 1,800-space surface parking lot for employees, which Jones says the hospital needs and puts to good use.

"It's the nicest parking lot I've ever built," he says.

Jimmy Swift is a single man who inherited his modest little house some years ago from his father and was in the process of remodeling it as a home and machine shop. He says he didn't need to sell and didn't want to sell.

"I've got teacher's retirement pay and Social Security," he says. "I don't need their damn money."

I can also read that as saying he has the means to hold out for a better price. In any event, Swift strikes me as someone who will be able to take care of himself.

Here is what's interesting to me. Dallas is a pretty conservative place. What do you think would have happened if this idea ever had been put to the public? How would we even have proposed it?

Let's give the hospital district $1.3 billion in public money to spend, arm it with eminent domain and then turn it into a going and blowing player in the local real estate market. Hmm?

Parkland can't be separated from its own history or context. Thanks to a ghastly panoply of medical horror stories unearthed by The Dallas Morning News over the last two years, the public hospital portion of Parkland is in danger of being closed by the federal government.

Meanwhile, some of Parkland's tonier sister institutions have an unseemly history of lavish excess — red carpet treatment for big shots and a scandal, also unearthed by the News, over the baronial lifestyle of former U.T. Southwestern president Kern Wildenthal.

The chairman of the Parkland board committee overseeing the new campus project is Louis A. Beecherl III, scion of a family long involved in land-use issues along the Trinity River.

For a place that can't keep its patients alive on the psych ward, Parkland sure draws an awful lot of interest from the silk-stocking set in this city. Not saying that has to be a bad thing. Maybe it's just a splendid example of voluntarism.

But are we sure we know what's going on over there? Do we even have the slightest idea? Aren't we supposed to have the slightest idea? That's an awful lot of power and glory in some very quiet hands.

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