In The News

TriHealth to build medical center in West Chester

June 22, 2017  |  TriHealth

Cincinnati Business Courier

TriHealth intends to buy 9 acres to build a medical center in Butler County’s West Chester Township instead of the original plan to acquire 33 acres spanning both West Chester and Liberty Township, CEO Mark Clement said.

“We’ve had a little bit of a curveball thrown at us based upon the taxing authority in Butler County imposing a special assessment on property owners in that Liberty Center area to help fund and finance redesign and reconstruction of the on- and off-ramps at I-75,” Clement told me during an exclusive interview. “And that occurred after we made the decision to purchase a large parcel of property."

Apparently, it would cost $1 million annually to cover the assessment on a 33-acre parcel, which would have tipped the project from being economically viable to being marginal.

“We’re working with the developer (Miller-Valentine Group) to finalize the purchase of the smaller parcel in West Chester, which is adjacent to the Liberty Township property,” Clement said. “By scaling back the land, we’re going to be able to reduce the tax assessment, making the project much more manageable financially.”

The TriHealth site is across Interstate 75 from the enormous Liberty Center mixed-use development.

While TriHealth originally intended to acquire three times as much land, “we knew that was more than we needed,” Clement said. “We knew that we needed to grow into the 30 acres or sell some of it back to the developer. (Now, TriHealth will build near the) same location but it will be a smaller footprint.”

However, engaging Butler County in talks about reducing or eliminating the assessment lasted more than six months, and that delayed the start date of the project. The Cincinnati-based hospital system expects to break ground early next year. Originally, construction was to start this year.

The medical center will encompass 50,000 square feet in the first phase, which is to be completed in about two years, Clement said. A second phase could involve expanding the center to a total of up to 100,000 square feet.

While nonprofit hospital systems such as TriHealth might be used to property tax exemptions, a tax increment financing district near the Liberty Center interchange requires payment of a fee from medical facilities and other businesses, said Butler County administrator Charles Young.

“We are not imposing a new tax,” Young told me. “The purpose of tax increment financing is that there would not be property taxes but service payments to pay for infrastructure improvements to benefit the development.”

The Liberty Way interchange was paid for with a bond issue of more than $40 million, Young said. The TIF, which is to end in 2031, helps pay down that debt.

However, additional funds will be needed because major road improvements are expected to be needed as additional development occurs, Young said.

“I hate to use the term we are a victim of our success,” Young said. “Hospitals are great creators of jobs. And with the Steiner development of Liberty Center, traffic will soon exceed the design and challenge the interchange to handle it.”

A firm estimate on the cost for Phase II hasn’t been determined, but Young estimates it would be up to $50 million.

“There is definitely a need for the TIF service fees to continue,” Young said. “The cost of this will exceed what the county TIF can produce to cover it. We’ll need to look to other sources of revenue. … We will be looking for more money wherever we can find it – federal, state perhaps even private when needed.”

Within the last month Butler County commissioners approved spending just less than $1 million for a consultant to take the design work beyond the concept and get a firmer idea of what the ultimate cost will be, Young said.

Both Children’s Hospital and UC Health’s West Chester Hospital, which have medical centers near where TriHealth intends to build, have agreed to make TIF payments, Young said. In addition to discussing such payments with TriHealth, Butler County officials also are in talks with Christ Hospital, which also plans to build a medical center in Liberty Township.

TriHealth’s outpatient center will anchor a 90-acre, mixed-use development by Miller-Valentine Group. The West Chester center will be modeled after TriHealth Kenwood, which involved consolidating physician offices and other sites of care into one location in northern Hamilton County. The Kenwood location provides primary care, medical or surgical specialties and important ambulatory services such as cancer care, imaging and laboratory.

“It’s really important to point out TriHealth owns and operates a number of smaller facilities and physician practices in that general area,” Clement said. “So our intention isn’t to just build a big box and then hope to grow into it. Our intention is to do something very similar to what we did with TriHealth Kenwood.”

The 112,000-square-foot medical center along Interstate 71 in Sycamore Township, which opened in 2015, “is a model for how we are evolving,” Clement said. About 300 people work at the five-story building in the Northcreek Office Park.

“What we intend to do with (West Chester) is what we have already done with Kenwood, which is something we are doing with other major ambulatory sites,” Clement said. “Bringing together the three or four physician primary care practices that operate out of a 5,000-square-foot facility or the five orthopedic surgeons who operate out of another facility or the four obstetricians. We’re going to co-locate those existing practices in one large ambulatory facility that will allow for that team-based approach to delivering care.”

http://www.bizjournals.com/cincinnati/news/2017/06/16/exclusive-trihealth-to-scale-back-land-buy-for.html