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HomeMy WebLinkAboutIR 8371 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8371 Date: 12/11101 To the Mayor and Members of the City Council Page 1 of 2 SUBJECT: Tax Abatement Agreement with Plaza Medical Center ' r of Fort Worth Purpose This Informal Report presents an overview of the tax abatement application (Exhibit A) submitted by Plaza Medical Center of Fort Worth, which will be discussed in Pre- Council on December 11, 2001. Background Plaza Medical Center of Fort Worth which is located in the Central City, the South Enterprise Zone and, the Medical District `-IF is a for-profit, acute care hospital that specializes in caring for patients with cardiovascular, neurosurgical, orthopedic diseases and disorders. Plaza Medical is requesting consideration of tax abatement on real property to help offset the substantial costs associated with an expansion and renovation that company representatives feel will allow the Center to better serve their patients and the community and that will help Plaza Medical maintain a top 100- heart care program. The Economic Development Committee (EDC) at the November 27, 2001 meeting reviewed the abatement request. In light of the possibility of perceived competition from other health care facilities, staff presented the EDC with an abatement range of 30% to 50% for consideration. The EDC recommended that the request be presented to the full Council for consideration with a variety of possible abatement scenarios, starting at 50%. Proiect Information Plaza Medical is planning to renovate 52,000 square feet of existing area and add 7300 square feet of new space. The estimated cost of the renovation is $9.2 million, and the new construction is estimated at $13.8 million for a total investment of $23 million. Plaza Medical expects that it will take three years to complete both the renovation and new construction. In addition, Plaza Medical is planning to add a minimum of $10 million in personal property which is not included in the abatement request. As a result of the expansion and renovation, Plaza Medical Center is expected to add 150 new jobs within 10 years. The majority of these jobs have a wage range of $8.80 to $22.53, plus a comprehensive benefits plan for employees and their dependents. Additionally, it is expected the expansion will increase the hospital's ability to receive emergency room patients. Abatement Structure The abatement structure will provide Plaza Medical with the opportunity to receive specified percentages for performance in the areas of construction contracting, % supply and service spending, and employment up to a maximum abatement ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8371 Date: 12/11/01 To the Mayor and Members of the City Council r Page 2 of 2 I� SUBJECT: Tax Abatement Agreement with Plaza Medical Center &� of Fort Worth percentage the Council feels will be most appropriate. "fhe proposed structure is more fully described in Exhibit B. Additionally, as requested by the Economic Development Committee, Exhibit C is a matrix of three possible maximum abatement scenarios for the Council to consider. Gary W. Jackson City Manager Orr— ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS Exhibit A l EXHIBIT A k City of Fart Worth CfJMl'"VIERCIAL/INDUSTRIAL Tax Abatement Application February 1999 T Office of Economic Development City Manager's Office Fort Worth, Texas 76102 (817) 871-6103 1. Applicant Information Name: Columbia Plaza Medical Center of Fort Worth, Subsidarv,L.P., d1b/a Plaza Medical Ors Center of Fort Worth Address 900 8h Ave. f 161 Humbolt Street] City, State, Zip Code Fort Worth, Texas 76104 Telephone(817) 347-5857 ext. Fax (817)347-5796 ext. Internet E-mail addresses(if available) Contact Person (include title/position): Stephen Bernstein,President/CEO 2. Property Description Attach legal description or surveyor's metes and bounds description See attached Tax Information for description 3. Current Appraised Value of Property Attach latest copy of property tax statement from the County Appraisal District See attached Information 4. Attach a brief description of the project including: services provided or products manufactured, major customers and locations,etc. See Attachment A 5. Project Description A. New Facilities 1. Size 7,300 ._sq.ft. New 52,000 Renovated New Modernize %( Phase 1 9.0 .6 2. Cost of Construction.$23,000 OOOW Phase 11 4.8 8.6 Total 13.8 4( 9.2 V B. Site Development(parking, fencing, landscaping,etc.): 1. Type of work to be done - repair and replace parking lots, increase water main size 2. Projected costs- $600,000 C. Personal Property: I. Value of: a. Inventory $N/A b. Supplies $N/A 1 Percent of inventory eligible for freeport exemption(inventory, exported from Texas within 175 day) N/A % 3. Value of equipment, machinery, furnishings,etc. $10 000 000 estimated 6. Project Construction: A. What percent of the constructions costs(5A&B above)will you commit to spend with: �1 1/ � l. Fort Worth businesses? O / � 2. Minority and Women owned Business Enterprises? 2 B. When will construction start? January 2002 x C. How many construction jobs will bccreated? D. What iothe estimated payroll for these jobs? 7' Employment: A. If this project is an expansion or modernization ufuu existing facility: l. How many persons are currently employed? 942 V 2. What percent of7./\above are Fort Worth residents? w/ 3. What percent of7.A above are Inner City residents? V B. Please complete the following table: First Audit Year Fifth Year Tenth Year New Jobs to be Created 36 147 150 Less transfers* 0 0 Net Jobs 36 147 150 %of Net Jobs to be filled by 38 24 38 Fort Worth Residents % of Net Jobs to be filled by 38 24 24 Inner City Residents • If any employees will be transferring,please describe where they will be transferring from. • Must hvm least z5m C. Attach a description of the jobs to be created(technician, engineer, manager, etc), tasks to be performed by each classification. D. Attach u brief description Of the employee benefit paCkago(n) offered (i.e. health insurance, retirement, public transportation assistance, day care provisions, etc.) including portion paid by employee and employer respectively. 8. Regarding supply and service expenses (i.e. landscaping, office or manufacturing supplies,janitorial services, etc): A. What is the amount of non-sole source supply and service expenses? $1,100,000.00 B. What percentage will be committed to Fort Worth businesses? 50% V C. What percentage will be committed to Minority and Women Owned Businesses? 10% 0' 9. Is the property appropriately zoned for the project? Yes 10.1s the property platted? If yes, will replatting be necessary? Yes/No 11.Attach a description of any environmental impacts associated with this project. None 12.Attach a description of any environmental impacts associated with this project. None 13.Do you intend to pursue abatement of: County taxes - Yes School taxes - No 14.What level of abatement do you request: Years? 10 Percentage? 100 15.1s nay person or firm receiving an form of compensation, commission or other monetary benefit based on the level of incentive obtained by the applicant from the City of Fort Worth? If yes, please attach details. No , 16.On an attachment, explain why tax abatement is necessary for the success of this project. Include a business pro-forma or other documentation to substantiate request. On behalf of the applicant, I certify the information contained in this application (including all attachments) to be true and correct. I further certify that, on behalf of the applicant, I have read the Policy Statement: "Tax Abatement for Qualified Development Projects" and agree to comply with the guidelines and criteria stated therein. Stephen Bernstein President and CEO Name Title . November 20 2001 Date ATTACHMENT A 1. PROJECT DESCRIPTION The project will affect several areas of the hospital. To facilitate the construction and renovation the project will be conducted in two phases. These are: A. Phase One a) Renovate approximately 13,500"Square feet of existing space on the fourth floor. This area is currently not in use. The area will provide an additional 8 bed cardio-vascular intensive care unit. b) When the cardiac operating rooms are completed and services moved from second to fourth floor, other programs will receive an upgrade. The approximate 1,200 square feet currently used for our cardiac program will be utilized by our neuroscience program to enlarge the capacity for that portion of our business. I/ c) Add approximately 3,600 square feet of new space and renovate 2,000' square feet of existing space in our diagnostic area. The new area will be divided as: 1) Cath Lab will be expanded by 2,500 square feet. This will allow the construction of two additional labs. By adding these labs, we can then upgrade our existing service to. allow for the electro physiology program, a new state of the art diagnostic procedure. 2) The radiology area will be expanded by 1,000 square feet, and the existing space will be renovated. The CAT Scan units will be relocated into this area. d) Emergency Room will be expanded by approximately 1,000 square feet. The existing 8,500 square feet of Emergency Room and the existing 900 square feet of adjoining space currently used for CAT Scan will be renovated. This renovation will allow expansion of the service area from 12 to 14 emergency beds and add an 8-bed clinical decision unit., This addition is required to support both the cardiac and neuroscience programs. B. Phase Two a) There will be additional 2,700 square feet added to the first floor. This space will consolidate square and out patient testing. b) Renovation of 8,600 square feet on the first floor will allow for relocation of outpatient surgery, endoscopic laboratory, and upgrading of our cafeteria and public res rooms. c) Renovation of 13,000 square feet of the third floor will allow for: 1) An additional 8 bed critical care unit. 2) Relocation and expansion of clinical laboratory services. 3) Relocation and expansion of pharmacy services. 4) Relocation of respiratory therapy services. 5) Relocation of physical therapy services. rr ", d) Renovation of 5,500 square feet of the second floor. This renovation will allow: 1) Expansion of sterile supply services 2) Relocation and expansion of the short stay unit. 3) Expansion of the surgery holding area. 2. PROJECTED DATES OF COMPLETION With the complexity of the areas involved, each portion of each phase will have unique starting and completion/occupancy dates. These are: A. Phase One 1) Cardiac Operating rooms/CVICU—start January 2002 Complete August 2002 2) Cath Lab and Radiology— start January 2002 Complete December 2002 3)Emergency Department—start June 2002 Complete April 2003 B. Phase Two 1) First Floor—Outpatient—start September 2002 Complete March 2003 2) First Floor - Endoscopic/Outpatient Surgery/Cafeteria. — start November 2002— Complete June 2003 3) Third Floor—start April 2003 — Complete August 2003 4) Second Floor—start July 2003—Complete November 2003 r 3. PROJECTED EMPLOYMENT As the various aspects of this project are completed, there is a corresponding expectation of increased volume of services. This increased volume will create additional employment opportunities in the hospital. Because the volume will grow over time, the employment opportunities are projected over time. These projections are based on one-year increments after completion. It is anticipated that growth from expansion will maximize in five (5) years. The anticipated employment over this time frame is: Year Additional FTE Total New FTE Projected Annual Payroll Impact 1 36 36 $1,572,500 2 35 71 $3,175,000 3 31 102 $4,773,600 4 28 130 $6,219,200 5 17 147 $7,338,240 4. WORKFORCE DIVERSITY The diversity of our workforce, as reported by our Human Resources Department is: 71% Female 15%African American 3% Hispanic 2% Asian I% American Indian 51% Caucasian 29%Male 6%African American 3%Hispanic 2% Asian 1%American Indian 18% Caucasian Overall Ethnic Diversity 69% Caucasian 22%African American 6% Hispanic 4% Asian 1 % American Indian The Department Heads and Managers at Plaza Medical Center of Fort Worth is: 33 total 82%Female 11%African American 11%Hispanic 8%Asian 74% Caucasian 18%Male 17%Hispanic 83%Caucasian Overall Ethnic Diversity of Department Heads and Managers 79% Caucasian 6% African American 12% Hispanic 3% Asian The Senior Management Team is comprised of 9 Total 55%Female 80% Caucasian 20%African American 45%Male 100% Caucasian The overall diversity of the Senior Management Team is: 89% Caucasian 11%African American /ron/letter/Attachment a abatement no country.doc Plaza Medical Center of Fort Worth is a 320 bed tertiary acute care hospital specializing in the care of patients with cardiovascular, neurosurgical , and orthopedic disease and disorders . Plaza has developed a reputation in the communities we serve as a leader in the above named product lines. The hospital has been recognized for two consecutive years as a Top 100 Heart Hospital by Solucient (formerly HCIA) , one of the nation' s leaders in quality data benchmarking. As PMCFW has carried out its vision to become a healthcare leader in Tarrant and surrounding markets served. In order to continue to service the healthcare needs of the community, Plaza Medical Center must expand. Our request is simple; we need a tax abatement to assist us with our needed expansion. Plaza Medical Center of Fort Worth is a part of a publicly held company. As such, we compete with approximately 200 hospitals owned and operated by HCA, but more specifically ten (10) sister facilities in the Dallas/Fort Worth Metroplex for capital funding. To maintain a Top 100-heart care program these improvements must be made . It is the hope of Plaza Medical Center to increase heart-related procedures and to include transplants that are not currently available locally. To successfully compete in this market PMCFW must provide high quality care while being exceptional financial stewards . Obviously, any relief related to taxes would only strengthen our position in Fort Worth and continue to be attractive to our stakeholders. Plaza Medical Center is proposing a $57 million project . The project is inclusive of construction and equipment necessary to provide needed services . The construction portion of the project is estimated to create 150 new jobs and add $3 . 2 million in payroll over its two-year completion period. For the hospital itself, an anticipated 147 new jobs will be created with a corresponding five year payroll estimate of over $7 million. Clearly, the creation of new job opportunities and payroll will be beneficial to the local economy. Perhaps even more advantageous is the resultant potential spin off business for the community. Our projections indicate that within five years of project completion these improvements will allow PMCFW will see additional 8, 754 admissions . Historical data shows that 31%, or 2 ,714 of our admissions come from outlying rural areas (e .g. Stephenville, Granbury, Mineral Wells, Weatherford, and Decatur) . The average length of stay for patient population is 5 . 5 days. Combining the average number of admissions with our average length of stay results in 15, 000 potential patient days . Thus 15, 000 potential days where family members need to access local restaurants, lodging, service stations, and shopping centers . Plaza Medical Center possesses an intern/residency program with the University of North Texas Health Science Center. This program provides opportunities to these students that creates a natural awareness for permanent location in Fort Worth. This in turn assures long term high quality , physicians for our community. Plaza Medical Center prides itself as an institution providing care for a diverse population by a diverse medical team of physicians and staff . Plaza ' s defined $57 million construction project makes sense for the hospital, but it also makes sense for the community. The City of Fort Worth and Plaza Medical Center of Fort Worth need to partner through this tax abatement in order to secure a brighter future for all . Your sincere consideration of this request is most appreciated. Stephen Bernstein, FACHE President & CEO Plaza Medical Center of Fort Worth IF o r P, 0 ca 42 0 0 () U) o ts 0 44) --Z, C> u WO (,=, 4 01 or- Zu Z 0 0 4 C13 - 9 —4) Z� 0 co 00 0 On s fit 0 -rj .0 (U 0. cd 4) 0 cl (13 0 CIS ti g4 m 0 •iy+ d7 2 '. cn -0 44)• a z .4 1 0 Cd Z u o 9 E :3 40. 7, o 4) V) V (n DO aai 00 0 0 0 4) .0 10. 0 00 0 U 0 co OJ 04 0 0 0 S. co 'S 0 0 zi — Cd 0 0 4) 00 0 EA (n 0 o CA 0 > cl �D 000 . 9 0 - 0 Cd 0 t3 ca ca cts C,3 4z� - r. cn 0 Q .0 0 M 0 -0 0 0 to 0 U ca y -0 m 44 ru co ca (L) X Cd W U w C: 10 C4,00 " 0 0 ed > 2 CJ COQ oii 0 3 a rx o .9 - , CN C> C) 0 C) — > C> 6 0 0 4 z C) C> 4) C) CD c, o C/) c> 0 00 00 00 lzt CA tl- IC� ll cn 00 110 r- r- IT C) 00 00 q "It 'Itt Oli CA 65 oq oq 69 6R (oq Q5 0 0 z UAte. U u 0 0 rJ O C. rA z 0 P", ca 43 to V 0 W 0 W2 Cd tu m Ei = w U C4 00 C4 A [-4 U 0. a� Cd w o Cj " a a Cd o U U o �rn a :J o a a a i i c a w `d `� 0a O bb a p 4- 4- to /) (n Ci" Ei U) ai N O X23 a) aa &k n bA� 0 bb xll� a a a o an aQ -0 `~ 42 a o u b o -�, � .� 44 u 'L' w ° 1 aA y �° as O o ai al 0� ~a a o u a a a �i U w t oo a w a p4 U U © ' coo U ., a a o a a a o o � E A U U v o H 0 a U c U pC, O cv o W+ o �o o ao a .� a o o a U o M o Q tsrU 4U U U U U � U `�? U .-� O° � U ,-+ U a W f O v C/) 4 4 O 'cl v a> W roll r. GO V) Cl) .o o G 'd ^ N CR N p cad . f" O O a rr) Q, v) a, rnZQU ,-� UZUv� UwwUcI� C7E-� z Response for Tom Higgins, . City of Fort Worth Economic Development 1. What percentage of construction dollars will be committed to Fort Worth vendors? Our general contractor,Bovis Lend Lease is committed to helping the local economy. They agree to establish a goal of 50%of the construction dollars to local vendors. They have requested that the hospital furnish the names of the vendors we currently use for their inclusion in their bid packages. 2. What percentage of construction dollars will be committed to North Texas Minority and Women Owned Business Enterprises? Our general contractor,Bovis Lend Lease is committed to utilizing minority enterprises. They currently are utilizing more than 25%MWBE in their current project in El Paso. They agree to establish a goal of 20%MWBE for this project. 3. Of the 147 jobs that are estimated to be created by this project, what will the proposed wage scale be? How many of these jobs will be filled by citizens living in the Central City area of Fort Worth? As we add the necessary personnel, there will be various skills and therefore a variety of wage scales. The table below supports our projections. Type of Job Number Mid Range Top of Range Nursing Includes scrub techs,Nursing Assistants,Surgical RN,Post 136 $8.80/hr $22.53/hr Anesthesia RN, Critical Care RN Cardiac Cath Lab Includes scrub techs, Cardiac 7 $16.01/hr $22.23/hr RN Support Services Includes Houskeeping, 4 $8.80/hr $15.01/hr Maintenance, Transport I I I We currently have 50 of our 942 employees, or 5.3%, that five in the zip codes completely within the central city definition. We have an additional 372,or 39.5 %, that five in areas that are in Fort Worth and may be included in the central city definition. Based on this history, we would assume that the percentages would be consistent as we seek to fill the positions created by this project. Because of the extreme shortage of healthcare workers, especially in the nursing arena, no qualified applicant will be denied employment based on where they reside. 4.How many people are employed at Plaza Medical Center of Fort Worth? We currently have 942 employees. These employees fall into the following Classifications: Full Time (At lease 64 hours per 2 week pay period) 590 Part Time(At least 40 hours per 2 week pay period) 30 PRN (Used based on need) 318 Season Plan (Used during the busiest months) 4 5. What are the wage rates for the various employees? Our annual SWB exceeds $40M with an average hourly rate in excess of$21.50 per hour. The attached table gives an overview of our classifications and rate structure. 6. Will this project include infrastructure developments? There will be a water main portion of the project that will increase the feed pipe size from 8 inch to 10 inch. In addition there will be some parking lot improvements and perhaps some additional parking spaces created. 7. What is the diversity of the management team at Plaza Medical Center of Fort Worth? The Senior Leadership Team is comprised of ten members. Six of these members are female and four are male. Two of these are minority. Of the 32 Director/Managers, six are male and twenty six are female. This group includes 4 employees that are considered minority. 8. How do the members of the management staff contribute to the community outside of the hospital? The Senior Leadership Team acknowledges their responsibility to serve the community in which we live and work. To help accomplish this goal, we have representatives serving on the following groups/organizations: a. Fort Worth Chamber of Commerce b. Fort Worth Metropolitan Chamber of Commerce c. Fort Worth Hispanic Chamber of Commerce d. Fort Worth Ballet e. Fort Worth Library f. Fort Worth Opera g. Leadership Fort Worth h. Fort Worth South i. BFJT j. American Heart Association k. Dallas Fort Worth Hospital Council 0 r, Plaza Medical Center of Forth Worth Summary & Highlights of Employee Benefit Program Employee Health Insurance V of month after 2 calendar months 3 O O Dependent Health Insurance is of month after 2 calendar months 3 O O Employee Dental Insurance V of month after 2 calendar months 3 O O Dependent Dental Insurance 1 s of month after 2 calendar months 3 1 O O Employee Life Insurance V of month after 2 calendar months 3 O O Dependent Life Insurance 15 of month after 2 calendar months 3 O O Long-Term Disability 1 S of month after 2 calendar months 3 O O Long-Term Care I"of month after 2 calendar months O 1 M, 401 (K)Plan 1 wofmonth after 2 calendar months 3 1 O O O 401 (K)Plan .50 cents for every dollar up to 3% X X X Retirement Plan 1,000 hrs worked during calendar yr X X X Employee Stock Purchase 3 months before stock period O O O Paid Time Off(PTO) Accrue immediately/use after 3 mo. X X Extend Illness Bank(ELB) Accrue immediately/use after 3 mo. X X Bereavement 3 months employment X X Jury Duty Immediately X X Leave of Absence 6 months of employment X X Cafeteria Discount Immediately X X X Kinder Care/La.Petite Immediately Discount MedicaUVision Spending St month after 2 calendar months 3 O Account Day Care spending Account is month after 2 calendar months 3 O Adoption Assistance 1 year employment X Employee Health&Safety Immediately X X X Education Assistance 1 year employment X X ConSern Student Loan 1 year employment X X Parking Immediately X X X Direct Deposit 2 pay periods after employment X X X Columbia Visa account Available upon Request X= Hospital Provides 0= Employee Contribution �` "' Revised 5/01 Exhibit B rv � f EXHIBIT B City of Fort Worth Proposed Tax Abatement Structure Plaza Medical Center of Fort Worth Assumptions: 1. Plaza Medical Center of Fort Worth to renovate 52,000 SF and to expand the facility by 7300 SF 2. Complete phase one by the fourth quarter 2002 and phase two by fourth quarter 2003 3. The proposed project will have a minimum investment as follows: a. Buildings & Improvements: $23 million (expansion $13.8 million, renovation $9.2 million) b. Personal Property: $10 million (at least) 4. Create 36 new jobs in year one, 147 new jabs by year five, and 150 jabs by year ten Structure: Plaza Medical Center of Fort Worth will be eligible to receive a 10-year abatement of up to % of the appraised value of the improvements on the real property. The actual value of the annual abatement will be based on constructing the facility (non-construction is a cause for default) and will be calculated on the basis of the following criteria: 1. % Construction: • Construct & renovate $9.6 million in facilities including site development by July 2003, and • Construct & renovate $13.4 million in facilities including site development by December 2003, and • Utilize Fort Worth companies for 50% of the cost of construction, and • Utilize certified Minority/Women-owned Business Enterprises (MWBE) for 20% of the cost of construction 1 _% Supply & Service Spending: • Spend $1.1 million on supplies and services • Spend 50% of the ongoing business expenses with Fort Worth companies, and • Spend 10% of the ongoing business expenses with certified MWBE companies (certified Fort Worth MWBE companies will receive 1.5 times credit) 3. _% Employment: • Maintain a total of 978 employees in years 1-4; 1,089 employees in years 5-9; and 1,092 employees in year 10 • Maintain a Fort Worth resident employment level of 38% (of total employment for the respective year), and • Maintain a Central City residents employment level of 24% (of total employment for the respective year) 4. _% Additional Employment For every 2% Fort Worth residents over 38% (of total employment for the respective year) or Central City residents over 24% (of total employment for the respective year), 1 additional percentage point can be earned, up to a maximum of %points 5. —% Additional Emergency Room Capacity For creating additional emergency room beds to better serve the community. 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