Carmel City Council poised to reject proposed specialty hospital if it won’t commit to permanent taxes


A proposal by Franciscan Health to build a specialty hospital on the southeast corner of Illinois and 111th streets met resistance from Carmel city councilors, who said they won’t even consider the project if the hospital won’t permanently contribute to the tax base.

Most hospitals, including Franciscan, operate as nonprofits and are exempted by law from paying property taxes. The proposed $110 million Franciscan Health Orthopedic Center of Excellence is on 17 acres along the Meridian Corridor, a site anticipated to give a nice boost to Carmel’s tax base if developed by a for-profit business.

Franciscan Health has petitioned for the rezoning of land at 111th and Illinois streets for an orthopedic specialty hospital. (Submitted rendering)

Robert Hicks, an attorney representing Franciscan, told the council at its Dec. 17 meeting that the hospital would commit to payments in lieu of property taxes, or PILOT, for 25 years. He suggested working with the Carmel Redevelopment Commission during that time to use tax increment financing to help pay for a parking garage requested by city planners.

For many councilors, including Ron Carter, that wasn’t good enough.

“I wouldn’t waste your client’s time even taking this any further if it stays the way it is,” Carter said. “Even if it changes, I don’t know that I could vote for this from the standpoint of whether or not it’s an appropriate development for that corridor.”

Carmel is already home to several other medical facilities, including the nearby St. Vincent Heart Center Carmel and IU Health North. Although it already has a presence in Carmel, Hicks said Franciscan’s new hospital would provide services that will be increasingly needed as the senior population grows.

“There is a need for this type of specialty hospital, and that’s because of the demand for hip and knee replacements between now and 2028,” he said. “The demand for those kinds of procedures will increase between 74 and 89 percent as the population of the over-65 segment will also increase fairly dramatically.”

Franciscan is asking for a zoning change for approximately six acres from residential to Meridian Corridor, the zoning designation along most of Meridian Street in the area, including 11 acres to the south that would also be part of the campus. The six acres were once planned as an expansion of Meridian Suburban, a 31-home neighborhood immediately east of the project. The expansion never happened, and instead a once-quiet neighborhood eventually became surrounded by commercial development.

Most Meridian Suburban residents acknowledge that the homes in their neighborhood will likely be purchased by a developer and transformed into something very different, but those who spoke at the city council meeting said every offer so far – including one tied to the Franciscan project – have been “lowball” offers.

Cindy Klebusch, who has lived in Meridian Suburban for 17 years, joined other neighbors in worrying that they might not be able to afford another home in Carmel if they take what’s been offered.

“I cannot find a house for what they’re offering me in Carmel with farmland behind me on a quiet street with no crime,” she said.

Meridian Suburban resident John Brehm lamented changes in the neighborhood, which he said is “old” and “decaying.”

“Right now it’s not a nice place to live. We have sirens all over the place. We have a freeway in the back of most people’s houses where we used to have a road,” he said. “Right now our poor neighborhood is taking it on the chin, and I’m hoping the City of Carmel and the hospital can do something to get us out of there.”

Council President Kevin Rider wasn’t pleased by the “lowball” offers made by developers who he said know the value of the land. He urged future offers to be based on the homes’ market values rather than assessed values.

“Don’t offend (the homeowners) again,” he said. “I won’t respond well to that.”

Hicks said he was sympathetic to the concerns of the homeowners but reiterated that Franciscan does not need to purchase any of the homes in the Meridian Suburban neighborhood to proceed.

“There’s enough goodwill I hope to go around and make something happen, but I don’t think it should hold up what we’re asking the council to do here, which is rezone the property,” Hicks said. “We don’t really need the 31 lots to do this campus.”

The council sent the matter to the land use and special studies committee. A meeting date has not been announced.

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