A proposal to build a $15-million hospital in downtown Alexandria is encountering a cool response from city officials and from the regional agency that oversees area health-care services. o

At a city Planning Commission meeting this week, representatives from Circle Terrace Hospital outlined a proposal to purchase the Parker-Gray school site, near the future Braddock Road subway station, and construct a new hospital there.

Planners for the hospital, a 127-bed surgical facility in the Northridge neighborhood, say they want to leave their current building because they "are desperate for space."

But Engin Artemel, city planning director, said the city's position is "thanks, but no thanks."

Mayor Charles E. Beatley Jr. earlier this week scoffed at the proposal and said the majority of the City Council opposes the plan.

"The basic resentment stems from the inappropriate use of the land by bringing in a hospital. I don't know who ever heard of bringing patients in on Metrorail," he said. "We want something that relies entirely on mass transit for its living."

The Parker-Gray school sits on seven acres at Madison and N. Fayette streets. The school was closed last year because of declining enrollments, and currently houses the city Juvenile and Domestic Relations Court along with various senior citizens' programs.

The hospital plan also prompted criticism from officials at the Health Systems Agency (HSA), the regional health care board that must approve any changes in health services or capital improvements exceeding $100,000.

"They've got a tall bill of goods before them in trying to relocate," said HSA Executive Director Dean Montgomery. "The general feeling is that there is not a need for a hospital in the downtown section."

Downtown Alexandria has been without a hospital since Alexandria Hospital moved to Seminary Road in 1974.

Officials at Alexandria Hospital say they oppose the Circle Terrace move because it would add to Alexandria Hospital's financial problems.

"We are greatly concerned about it," said David Norcross, Alexandria Hospital's public relations director. "We are experiencing a severe financial strain."

One of the hospital's primary concerns is Circle Terrace's proposal to include an emergency room in the new facility. Norcross said one reason for Alexandria Hospital's $83,000 deficit last year was the declining number of emergency cases.

"Before Mount Vernon Hospital opened in 1977, we handled nearly 60,000 emergency calls annually," he said. "Now that number has dropped to less than 45,000."

Circle Terrace officials, however, said they are willing to amend their plans if the city will approve the proposal.

Clair Schwob, administrator of Circle Terrace, said he is aware of the opposition from the city and health care officials.

"We wanted to make the planning commission aware of our plans," he said. "Now we are going to make a concerted effort to bring our case to the people through meeting with church groups and civic associations."

Circle Terrace officials say the primary reason they want to move is that they are restricted from expanding at their current site because of legal agreements with surrounding homeowners."We are locked in as long as we are here," Schwob said.

Before any expansion plans can begin, the hospital must obtain permission from the City Council and a certificate of need from HSA. Circle Terrace is owned by the Hospital Corporation of America, a Tennessee-based firm that owns hospitals throughout the country.