In May this year, at the corner of Curry Pike and State Road 46, Ernest Health might be able to start building a $20-million inpatient rehabilitation hospital. And if construction goes as planned, the multi-state health care company could be treating patients there as soon as a year later.
That depends in part on getting a tax break from Monroe County.
The project took one step towards getting that boost from the county council of Monroe County, at its regular meeting on Tuesday night. With a unanimous vote, the seven-member county council gave preliminary approval to a tax abatement for Ernest Health.
The abatement would allow the health care company to pay an estimated total of $3.1 million less in property taxes over the next 10 years. [Link to tax abatement material in the county council meeting packet]
County councilors will need to take a second vote, scheduled now for its next regular meeting on April 14, for the tax abatement to win final approval.
Each year the amount of the abatement would decrease by 10 percent, starting in the first year at 100 percent, or full abatement. So over the 10-year period of the abatement, Ernest Health would also pay about $3.1 million in new taxes. The parcel where the hospital is planned is split between two townships, Bloomington Township and Richland Township. So the abatement schedule has to be analyzed township by township.
Clark Greiner, business development director for Bloomington Economic Development Corporation (BEDC), gave Tuesday’s presentation about the project to the county council on Ernest Health’s behalf. Highlights included the kind of patients the 40-bed facility would treat—those who are recovering from highly-acute cases, including traumatic brain injuries, spinal cord injuries, stroke, orthopedic, and neurological injuries.
Another highlight was the fact that by the third year the hospital is operating, there are supposed to be 110 jobs new provided at the facility, with an average salary of $64,000 a year. The 110 figure for the number of jobs drew some scrutiny at Tuesday’s meeting from councilor Geoff McKim.
McKim pointed out that Indiana University Health’s rehab unit would be closing, when Ernest Health’s hospital opens—because IU Health has selected Ernest as its provider of inpatient rehabilitation services. So McKim wanted to know if some of the “new” jobs that Ernest is counting might be old jobs previously counted at IU Health.
Greiner told McKim he did not know the exact number, but allowed there would likely be some “absorption” of jobs from IU Health. County attorney Jeff Cockerill said that IU Health wold be giving its employees the option of integrating elsewhere into IU Health, but said, “It’s not an answerable question at this point.”
Another highlight from Greiner’s presentation was that 80-90 percent of Ernest Health employees would come from the 11 counties considered to be the “market” for local jobs. About 10-20 percent of jobs would be recruited from outside that market.
Asked by The Square Beacon how that hiring split stacks up against BEDC’s economic development goals, Jennifer Pearl, whose president of that organization, said that BEDC is typically agnostic on that question. Pearl said the question is whether the positions are “quality jobs for our community” and whether the proposal reflects a net job gain.
Ernest Health already has 28 hospitals across the country, most of them in a swath of states from Texas up to Montana. One standard argument for offering a tax abatement translates, in the case of Ernest Health, to the claim: Ernest Health would not build its next new hospital in Monroe County, but for the tax incentive.
McKim said he felt the “but for” test was well addressed in the notes that Cockerill had provided to the county council about a meeting of the Monroe County Economic Development Commission.
One wrinkle involved in the proposed Ernest Health tax abatement is the fact that the property is located in a tax increment finance (TIF) district. That means the property taxes on the “increment”—the difference between the assessed value of a property before and after new construction—go to the TIF fund, not the jurisdictions that levy the taxes.
The TIF is administered by the county’s redevelopment commission (RDC). So the taxes to be abated would not, in any case, go to the jurisdictions that levy them. It’s a point drawn out at Tuesday’s meeting by councilor Marty Hawk.
The final vote on the Ernest Health tax abatement is scheduled for April 14, at the next regular meeting of the county council.