Chesterton Tribune

Hospital wins tax abatement

Back to Front Page






Porter Health System will get a 10-year tax abatement for its new hospital in Liberty Township, but under the conditions that it continues the countywide ambulance service, forge an agreement with the construction trades, and pay an annual fee intended to boost the redevelopment of the U.S. 6 corridor.

The Porter County Council unanimously approved the tax abatement, and the three conditions, following a public hearing Thursday attended by more than 75 people. The audience broke into loud applause after the decision.

Representatives of the Duneland community -- where the tax benefits of the new hospital will be felt the most -- split on the issue, with the Duneland Schools opposing the abatement, and the Liberty Township trustee and fire chief in support.

The new Porter hospital is projected to have a total assessed value of about $173 million. With the tax abatement, that assessed value will gradually be phased in; in the second year of the abatement, for example, the hospital is projected to pay property taxes based on about $6.5 million worth of real property and about $22 million worth of personal property. The assessed value will increase each year until the abatement expires after the tenth year, when the full assessment, and full taxes, kick in.

Hospital projections show that without an abatement, the tax bill over the 10 years would total $29.1 million, but that with the abatement, the taxes will total $16.7 million.

Porter Health System President and CEO Jonathan Nalli said the abatement would allow the hospital to continue its investment in Porter County as it strives to become the top tertiary medical facility in the region. In addition to the estimated 600 construction jobs needed to build the new facility, he said the hospital expects to increase its current workforce of 1,930 by 126 full-time positions.

That job potential was cited several times by council members in their support of the abatement.

Council member Dan Whitten, D-at large, said he’s generally not a fan of tax abatements, but that county officials made a commitment to the public to get the best, most advanced new hospital possible. He said the council has refused so far to tap into the hospital sale proceeds until it gets assurances that that promise will be fulfilled.

Contrary to those who say the abatement will result in a tax shortfall, Whitten said the abatement actually translates to an investment in Porter County. “This is our future, and I’m excited to be a part of it,” he said.

Council member Rita Stevenson, D-2nd, called the hospital construction Porter County’s own stimulus project, saying that it “can put Porter County back to work” not just with the hospital construction and new health care jobs, but also with spin-off development such as motels and restaurants. Stevenson also cited the controversy over the council’s decision to leave the Northwest Indiana Regional Development Authority, by saying that unlike the RDA, the promise of new jobs by the hospital is a guarantee.

Similarly, council member Laura Blaney, D-4th, said the hospital represents smart growth, with its high-paying jobs in a high-tech industry. She, too, made the comparison between the huge job claims promoted by the RDA with the firm commitment of new construction and high-tech jobs that will be brought by the hospital.

“It’s real and it’s tangible. They’re not fairy tale jobs,” she said.

Council member Karen Conover, R-3rd, whose voting record on the council has been in support of abatements, said she actually planned to vote against the hospital abatement but changed her mind during Thursday’s hearing. She said the hospital has already demonstrated that that it has gone beyond its original commitment to Porter County and called the new hospital project “above and beyond our wildest dreams.”

The abatement will kick in once the new hospital is constructed and its assessement determined, likely for tax bills payable in 2012 or ‘13, said hospital attorney James Crawford.

Ambulance Service

Despite the enthusiasm expressed by some council members, the tax abatement won’t come without strings.

Porter County Council President Robert Poparad, D-1st, pushed for language committing Porter hospital to continue ambulance coverage after the current contract expires in 2011. The idea was advanced last week by North Porter County Commissioner John Evans.

“We can’t lose sight of the EMS,” Poparad said. If the county has no back-up plan for the ambulance service once the current contract expires, “we’d have a mess on our hands.”

Poparad noted that if the hospital doesn’t provide ambulance coverage, the responsibility could fall onto the fire departments in each township.

“It scares me to death,” Liberty Township Volunteer Fire Department Chief Bill Branham said in response.

The council agreed to add the ambulance service as a condition of the tax abatement, though it didn’t address the ambulance subsidy, which is currently $500,000 annually. Poparad said it’s critical to at least get the hospital’s commitment to continue to provide the service pending the outcome of the subsidy negotiations.

The other two conditions -- for a Project Labor Agreement with the construction trades and an annual tax abatement fee -- were proposed by council member Michael Bucko, D-at large. Bucko countered those who say that when the county sold Porter Memorial Hospital, there was no talk of a tax abatement. He said that the hospital sale was just that -- a sale of a county asset -- and that it would not have been appropriate to mix abatement as part of the sale. Still, Bucko said, the council is within its rights to ask for additional conditions in exchange for the abatement.

A number of those in the audience represented labor unions who spoke not only in support of the abatement, but also for the need for a PLA, which presumably will be favorable to the union workers who build the hospital.

Duneland Views

Representing the Duneland School Corporation, attorney Michael Harris spoke against the tax abatement, saying that when Community Health System purchased the county hospital two years ago, it agreed to build a new state-of-the art hospital without saying it needed a tax abatement. Citing the technological advancements and other improvements planned by the hospital, Harris said the hospital is proposing the “add ons” because of market research.

“They are a profitable institution,” he said.

Harris also argued that the tax abatement amounts to a shift of the tax burden onto other taxpayers, which he said is unfair. “It’s not something Bethlehem Steel ever did,” he said.

Speaking in support of the tax abatement was Liberty Township Trustee Margaret Ruge. She said the township needs the added assessed value that will come even with the abatement, while also noting that more and more subdivisions have been “popping up like mushrooms” in the township.

Branham also spoke in support of the abatement, saying that the new hospital will bring in needed jobs and infrastructure. “We have to look at the long term.”

Other opinions expressed by Dunelanders were mixed.

Like a number of other speakers, Jackson Township resident John Rittel praised the quality of care provided by the hospital, but said the Ind. 49- U.S. 6 site suffers from drainage problems. Still, if the abatement goes through, Rittel urged that the hospital give most of the new jobs to Porter County residents. “I’d like to see them (the jobs) right here,” he said.

Liberty Township resident Gerald Hebert said businesses that get tax abatements pay less in taxes than they normally would, though they still get full government services. He also said that when CHS bought the county hospital, it already committed to building a new hospital in the county. “Porter County has no reason to grant such a tax abatement,” he said.

Similarly, Liberty Township resident J.F. Schrader said the hospital site is a bad location, since it’s “wild wood in the swail.” He said with the new hospital, the LTVFD would need a new aerial truck and new firehouse, a cost likely to be borne by Liberty Township taxpayers.

Other Views

Most of the others who spoke at Thursday’s public hearing supported the tax abatement. Several speakers praised Porter hospital as a good corporate citizen deserving of tax abatement, while others praised the care they received at the hospital. Others touted the need for quality jobs. Several supporters live in or work in Valparaiso, but appeared to not be bothered by the relocation of the hospital outside the city limits, including several former hospital board members.

One was former Valparaiso mayor David Butterfield, who said the construction jobs are very much needed in Porter County right now. The tax abatement sought by the hospital meets all the abatement criteria, he said. “It does what tax abatement is supposed to do.”

Similarly, Jeff Chidester, financial secretary at Ironworkers Local 395, said unemployment among ironworkers is now running about 50 percent, with many younger workers on the brink of leaving the area due to the lack of jobs. He noted that once they’re back at work, the workers will pay the county income tax, in turn generating more revenue for the county and municipalities. Like other union representatives, he put in a plug for a PLA as a “win-win situation.”

Rex Richards, president of the Greater Valparaiso Chamber of Commerce, presented a chamber resolution in support of the abatement. He noted that at a time of a sagging economy, Porter Hospital is making a commitment to invest more than $200 million in Porter County. But he cited substantial expense to be incurred by the hospital for developing the site.

Similarly, Vince Galbiati, president of the Northwest Indiana Forum, said the tax abatement will help Porter hospital become a dynamic health care institution. He said the caliber of the medical arts and facilities in any area is at the “top of the list” when promoting economic development for other businesses.

In addition to Butterfield, other former hospital board members who spoke in support of the abatement were Barb Young, Jim Spanopolous, and Mary Beth Schultz.

Spanopolous, a pharmacist, said discussions about building a new hospital began about 10 years ago, but the hospital board ultimately determined that the county-owned facility didn’t have the revenues needed. He called the abatement one of the last hurdles needed to get a state-of-the-art hospital.

Young, executive director of the Porter County Foundation, said that tax abatements aren’t just for new and relocating businesses, but also for those already here. She said any community in Porter County would love to have the new hospital and would surely offer whatever tax incentives it could, just as what the county was considering.

Schultz, executive director of The Caring Place, said the abatement will help the hospital continue to invest in new technology and services. She compared the hospital to a vital organ that serves as the pulse of the community.

“Like any vital organ, we have to keep it strong,” she said.



Posted 9/11/2009