Efforts to demolish a north Peoria eyesore ground to a halt after the company that once planned to build the city’s first hospital filed for bankruptcy on Oct. 3.

Peoria was weeks away from demolishing the partially built hospital when Peoria Regional Medical Center LLC filed for Chapter 11 bankruptcy in federal court. 

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The project had sat inactive for five years, the two-story rusted steel skeleton towering above Lake Pleasant Parkway and surrounding homes in the rapidly growing area.

The $30 million hospital had broken ground in 2011, but work stopped a year later due to lack of financial backing.

“We began to look at it, instead of a hospital that’s being built, it was an abandoned construction site that was a hazard to the public,” said Jay Davies, deputy director of the Peoria Police Department. 

The city attorney advised staff to hold off on demolition until the court makes a decision on the bankruptcy claim. There is no timeline for when that will occur.

Dr. Timothy Johns, listed as manager of Peoria Regional Medical Center in the bankruptcy filings, and the company’s legal representatives did not respond to requests for comment. 

‘Another empty promise’

In early 2016, the Peoria Police Department’s code enforcement division ordered the property owners to fix code violations such as overgrown weeds and unsecured fencing.

The owners fixed the violations and met with Peoria’s Economic Development Department to say they were still looking for funding to finish the project, Davies said. But they never followed up with a timeline, he said.

“They never showed the ability to have the funding or wherewithal to do that; it was another empty promise,” Davies said.

A city-commissioned engineering firm inspected the site last year and concluded the structure is a “public nuisance” detailing such hazards as construction debris, open elevator pits, exposed electrical materials and unsecured stairways that give easy access to the second floor.

The report also noted unstable fencing around the site that could “be breached with little effort.” 

Across from the unfinished hospital is the Basis Peoria charter school, which has students in grades 5th through 12th. Residents worry kids and teenagers are attracted to the abandoned structure, risking injury.

Peoria resident Casey O’Connor, whose backyard faces the rusted steel skeleton, said he sometimes spots kids standing on top of the structure. 

In August 2016, the city ordered property owners to demolish the structure. 

Demolition stalled

The city took over demolition efforts in late September after the hospital group failed to meet a deadline to pull a demolition permit ordered by the Peoria Building Code Board of Appeals.

At the time, owners continued to tell city officials they were trying to secure funding to finish the hospital, Davies said. 

Peoria spent $5,000 to secure the area with better fencing. They also contracted a company to demolish and clean up the site at an estimated costs of $210,000. The costs would be placed as a lien on the property to reimburse the city, Peoria spokeswoman Jennifer Stein said. 

But a few days after the company secured demolition permits on Sept. 29, the hospital group filed for bankruptcy. 

A financially troubled group

In a U.S. Bankruptcy Court filing, Peoria Regional Medical Center LLC estimated that its liabilities ranged from $1 million to $10 million with less than $50,000 in assets.

Johns, manager of the group, has been involved in Chapter 11 bankruptcy filings of at least two other hospital groups, the Florence Hospital at Anthem in Pinal County in 2013 and the Gilbert Hospital in 2014. 

In 2012, Gilbert Hospital investors sued Johns, the hospital’s founder, and accused him of diverting hospital funds to two other hospitals, Florence Hospital at Anthem and Peoria Regional Medical Center. The parties settled in 2013 but terms of the settlement were not disclosed.

Another lawsuit was filed this past January by a trustee as part of the reorganization plans in Gilbert Hospital’s bankruptcy case. The complaint asks Johns to reimburse money to Gilbert Hospital transferred to other hospital businesses. The case remains in litigation.

Residents concerned as they wait

Dave Kaiser can see the rusted skeleton from his driveway, calling it an eyesore. 

Kaiser said he and his neighbors were excited that the city had secured permits to demolish the unfinished building. Now with the demolition on hold, he is again concerned.

“It’s a safety issue,” Kaiser said. “It’d be tragic for some kid to get injured or lose his life because of the bureaucracy.”


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