Hospital demolition put on hold after bankruptcy filing

Hospital demolition put on hold after bankruptcy filing

The construction site of a hospital in Peoria, Arizona, has been inactive for five years.

October 11, 2017
CDR Staff
Demolition Legislation & Regulations
A demolition in Peoria, Arizona , was put on hold after the property owners filed for Chapter 11 bankruptcy in federal court, a report by says. The partially built Peoria Regional Medical Center has been inactive for five years.

The city’s attorney advised staff to delay demolition until the court decides on the claim, the report says. There is currently no timeline for when that will happen.

The Peoria Police Department’s code enforcement division ordered the owners to fix code violations, including overgrown weeds and unsecured fencing. The owners, known as Peoria Regional Medical Center LLC, fixed the violations and claimed they were looking for funding to finish the project. The group never followed up with a timeline for the project.

In August 2016, the city ordered the group to demolish the structure. According to the report, the city took over efforts in late September when the hospital group did not pull a demolition permit ordered by the Peoria Building Code Board of Appeals by its deadline. The group still claimed it was trying to secure funding for the project.

An engineering firm, commissioned by the city, inspected the property in 2016 and discovered hazards such as construction debris, open elevator pits, exposed electrical materials, unsecured stairways and unstable fencing around the site. The report says Peoria spent $5,000 in September to install better fencing in the area and contracted a company to demolish and clean up the site for $210,000. The costs would be placed as a lien on the property to reimburse the city.

A few days after the demolition contractor secured demolition permits on Sept. 29, Peoria Regional Medical Center filed for bankruptcy. In the filing, the report says, the group estimated its liabilities ranged from $1 million to $10 million with less than $50,000 in assets.

Timothy Johns, manager of the hospital group, has been involved in two other hospital groups’ Chapter 11 bankruptcy filings; the Florence Hospital at Anthem in Pinal County in 2013 and the Gilbert Hospital in 2014. According to the report, Gilbert Hospital investors sued Johns in 2012, accusing him of divert hospital funds to the Florence Hospital and Peoria Regional Medical Center. The parties settled in 2013.

A trustee filed another lawsuit against Johns in January asking Johns to reimburse the transferred money to Gilbert Hospital. The report says the case remains in litigation.