VA may have paid $3 million too much for Louisville hospital sit - WDRB 41 Louisville News

VA may have paid $3 million too much for Louisville hospital site, report finds

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The old "Midlands" property before sale to VA in 2012 The old "Midlands" property before sale to VA in 2012
Site of future VA hospital at 4906 Brownsboro Road Site of future VA hospital at 4906 Brownsboro Road

LOUISVILLE, Ky. (WDRB) – The U.S. Department of Veterans Affairs may have overpaid by $3 million for the site at 4906 Brownsboro Road where it plans to build the new veterans hospital, according to a report by the VA's inspector general released Thursday.

The VA bought the suburban site – an empty field along the Watterson Expressway at the U.S. 42/Brownsboro Road exit – in 2012 for $12.9 million from a company controlled by Louisville private equity investor Jonathan Blue.

The price was based on a February 2012 appraisal by Ronnie Galloway of Galloway Appraisal – but less than two years earlier, the same appraiser valued the land at only $9.85 million in an earlier assessment for the VA.

The VA should have gotten a “review appraisal” to address the differences between the two reports before paying the higher price, the inspector general found.

The agency ended up getting the review appraisal – but only after the sale was complete and it was too late. The $2,447 spent on the review appraisal was therefore “a waste of taxpayers’ money,” the report says.

U.S. Rep. John Yarmuth, a Democrat from Louisville, called for the VA's inspector general to examine the land sale last year after The Courier-Journal revealed the existence of the earlier, lower appraisal.

The newspaper first raised questions about the sale price in August 2012, noting that the investment group that owned the property -- Midlands-Louisville LLC -- got $7.9 million more than they paid for the land in 2004 despite having built nothing on the land. 

The investors -- then a partnership between Blue Equity and former co-developer Fenley Real Estate -- had the property rezoned to accommodate a commercial development that never materialized.

Blue Equity -- which Jonathan Blue chairs -- became the sole owner of the Midlands company before the sale to the VA. 

The hospital's construction has been delayed over the years. The current plan calls for work to begin in 2017, with the hospital opening in 2023 or 2024.

Some eastern Jefferson County residents who have long opposed the hospital being built near their homes say the inspector general's report should prompt a reconsideration of the entire plan.

Years ago, former Louisville Mayor Jerry Abramson and the University of Louisville argued that the hospital ought be downtown in the city's medical district.

But the VA, in its formal response to the report, gave no indication that the planned location is up for debate. A spokesperson for the agency did not immediately return a requst for comment on Friday.

Yarmuth's spokesman Christopher Schuler said the congressman "does not believe that this (inspector general's report) alone is enough to warrant reconsideration of the location" of the hospital.

U.S. Sen. Majority Leader Mitch McConnell, a Kentucky Republican, has for years said that the hospital should be built as soon as possible, but the location is up to the VA.

On Friday, McConnell's office issued a statement: “The VA has mismanaged this project from day one and the IG’s report is just the latest example.  The men and women who served our country so bravely deserve to receive quality health care in a new, modern facility and they have been waiting since 2006 for this medical center to be built.”

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