Franciscan, Carmel council at a stalemate over taxes 

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The City of Carmel and Franciscan Health remain at a stalemate over plans to build a specialty hospital on the southeast corner of Illinois and 111th streets.

Franciscan has proposed the $110 million Franciscan Health Orthopedic Center of Excellence on 18 acres along the Meridian Corridor, but unless the hospital agrees to pay taxes for perpetuity, several city councilors indicated at a Jan. 16 committee meeting that they would not support the project. Most hospitals, including Franciscan, operate as nonprofits and are exempt from paying property taxes.

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

Franciscan is asking for a rezoning of the northern six acres of the property from residential to Meridian corridor, which would match the southern 12 acres.

Franciscan has proposed paying taxes on the entire property for 25 years, and hospital officials said Jan. 16 that they would consider extending the timeframe on the northern six acres.

“Inasmuch as the 12 acres don’t need to be rezoned and isn’t part of this petition, we don’t think it’s appropriate to subject to longer than a 25-year commitment,” said Robert Hicks, an attorney representing Franciscan. “It’s not ideal, but we could look at doing the project on the 12 acres.”

Meridian Development Services, a for-profit business, owns the property, and it expects to lease space to Franciscan. Under this scenario, the entire site would be required to pay taxes. But city officials said they are concerned that Franciscan could purchase the property and take it off the tax rolls in one of the most desirable corridors in town.

“This is an extremely valuable piece of property,” said City Councilor Kevin Rider, who is not on the committee but attended the meeting. “City Center, Midtown and this (corridor) are the most expensive portions of our city, and for us to take a chance to give that long-term revenue away, it’s not happening.”

Councilor Ron Carter, who attended the meeting but is not on the committee, mentioned IU Health’s campus in Avon as an example of what Carmel is trying to avoid. He said the hospital in Avon opened as a for-profit – thus taxable – entity, but that it transitioned to a nonprofit two years later, leaving the Town of Avon out $250,000 a year in property tax revenue.

“That isn’t going to happen to us,” he said.

The committee will revisit the topic at a meeting proposed for 5 p.m. Jan. 30. The city council will have final voting authority.

Offers for homes on hold

Marty Rosenberg of Meridian Development Services, who is also CEO of Methodist Sports Medicine, said Jan. 16 that negotiations with the 31 homeowners in the Meridian Suburban neighborhood, which is just east of the proposed development, are on hold pending the rezone. The neighborhood is not part of the proposed campus, but if the hospital is built it will be completely surrounded by commercial development. Franciscan is offering to purchase the homes. As long as the homes are standing, Franciscan has committed to not build taller than two stories.

“We’d be happy to continue those conversations (with the homeowners) when and if we are able to get the rest of the project approved,” Rosenberg said.


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