The VA Maryland Health Care System will open an annex next spring in the former world headquarters of Catholic Relief Services in Baltimore to help keep up with an increase in its patient population, fueled largely by a new generation of veterans returning from the wars in Iraq and Afghanistan.
Health system officials said the eight-level building on West Fayette Street in downtown Baltimore will be renovated starting later this summer or early fall and will contain a mix of outpatient services for veterans and administrative offices for the health system.
The project, less than four blocks east of the Baltimore VA Medical Center on North Greene Street, marks the center's first expansion since it opened in 1993 and is intended to help alleviate a space shortage there. It will bring about 250 VA employees to the Fayette Street property.
"We are decompressing our overcrowded facility on Greene Street so we can provide proper care for our patients," said Regina Litvin, a space planner for the health system.
The Fayette Street property has been vacant since Catholic Relief Services moved to the former Stewart's department store at Howard and Lexington streets in 2007. The health system, an affiliate of the U.S. Department of Veterans Affairs, intends to lease the bulk of the building for five years, rather than purchase it.
Besides the 137-bed medical center on downtown Baltimore's west side, the health system has inpatient facilities at the Loch Raven VA Community Living and Rehabilitation Center on Loch Raven Boulevard in Baltimore and the Perry Point VA Medical Center in Cecil County.
The downtown center, which employs about 1,780 people, is the busiest facility in the Maryland system. From October 2009 through June 2010, the downtown center admitted 4,636 inpatients and had 312,343 outpatient visits. By contrast, the Perry Point center admitted 758 inpatients and had 93,884 outpatient visits during the same nine-month period, officials said.
Since 2001, 2.1 million service members have deployed to the wars in Iraq and Afghanistan, according to the Department of Defense. Of those, 40,000 have been wounded in combat. And according to a study by the RAND Corp., a think tank, nearly one in five of them may be returning home with depression or post-traumatic stress disorder.
Representatives say the health system needs additional space close to its Greene Street medical center to serve its growing patient population, including veterans returning from recent wars and older veterans with ailments.
They say the health system also wants to accommodate advances in medical technology, support research, and to provide more outpatient services and clinics as well as specialized services, such as those for women.
The health system sought proposals more than a year ago from developers who could lease space close to both the downtown medical center and the University of Maryland Medical System and selected a proposal from 209 West Fayette LLC, a business group that had purchased the Fayette Street building from Catholic Relief Services.
The project almost unraveled earlier this year when the business group faced the prospect of losing the building to foreclosure after defaulting on a loan from PeoplesBank of York, Pa. An auction of the building was canceled at the last minute to give both parties more time to work out a way to accommodate the health system.
The project was revived this summer after 209 West Fayette LLC surrendered the property to PeoplesBank and the bank formed a subsidiary to hold the building and serve as a landlord to the health system. The bank's subsidiary hired a development company to oversee a $2.5 million renovation and is leasing the property to the health system.
The lease calls for the health system to occupy 56,000 of the building's 70,000 square feet of space. It will also get 100 parking spaces in a nearby garage. The health system plans to begin a second round of renovations and "tenant fit-out" work after it takes possession of the building in early 2011.
About half of the leased space will be dedicated to clinics for outpatient services such as rehabilitation therapy. The rest will be for administrative departments, including human resources. The renovated building is expected to be ready for occupancy by late March of 2011, several months behind the previous schedule.
"There's been a little bit of a delay, but otherwise it looks like it's going to turn out pretty well," said George Szwarcman, director of real property services for the Department of Veterans Affairs.
Harry Swift, general counsel for PeoplesBank, said the bank doesn't typically hold and renovate investment properties, but this arrangement was the best way to keep the project moving ahead.
"We're a bank," Swift said. "It's not our general business to renovate an eight-story building in downtown Baltimore, but at this particular time it was an opportunity that presented itself … and we took it."