To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Castle Rock EDC
Title
Resolution Approving the Economic Development Assistance Agreement Between the Town of Castle Rock, and Portercare Adventist Health System D/B/A Castle Rock Adventist Hospital
Body
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Executive Summary
The purpose of this memorandum is to introduce an economic assistance request made by Centura Castle Rock Adventist Hospital (Centura). Centura is requesting a permit and fee rebate of $367,182. These dollars along with an addition $14MM dollar philanthropic private sector raise will be used to improve the programing of the Medical Office Building #3 (MOB#3) to include a comprehensive orthopedic therapy center, outpatient surgery center, radiation treatment and medical oncology services. These services represent a significant opportunity, as they represent cancer treatment options currently unavailable within the Castle Rock market.
The Applicant
Castle Rock Adventist Hospital is a 90-bed acute care hospital and Level III Trauma Center providing comprehensive healthcare to the greater Castle Rock community and surrounding areas. The hospital was built in 2013 as a partnership between Centura Health and the Town of Castle Rock and supports our community with more than 600 employees on site making it Castle Rock’s largest private primary employer.
Following the completion of the hospital, Centura added two additional 60,000 SF medical office buildings, Alexander (2013) and Mary Briscoe (2016). Centura is currently under construction on MOB#3, which will ultimately feature four floors of medical care for the community with outpatient surgery services and is scheduled to open in spring of 2023.
The Project Opportunity
Centura is currently constructing MOB#3 and expects construction to be substantially complete by March of 2023. The building is 70,000 SF and was originally designed to serve as a third medical office building on campus with private sector medical programing similar to that of Alexander (MOB#1) and Briscoe (MOB#2). Following the groundbreaking of MOB#3, Centura was presented with an opportunity to program the 1st floor with an ambulatory surgery center, the 2nd floor with comprehensive orthopedics and therapy center, and finally, the ground floor and 3rd floor with medical oncology (cancer) services. To achieve this vision, Centura will need to raise $14MM in philanthropic donations, of which Centura is committed to accomplish. Of the $14MM to be raised, $9MM will directly contribute to a Linear Accelerator (LINAC) Vault on the ground floor and $5MM will be used to support the medical oncology infusion bays on the 3rd floor.
Radiation and medical oncology services represent a significant opportunity for the community as these types of cancer treatments are currently unavailable in Castle Rock. Each year 600 Castle Rock residents are diagnosed with cancer. On average, cancer patients will be involved in three different types of treatments averaging between 60 to 100 doctor visits over a 6-to-8-month treatment plan. By reprograming MOB#3 with this type of cancer treatment, it could save the average Castle Rock patient over 50 hours of additional travel time. This is incredibly impactful when most patients are unable to drive themselves and must rely on family and friends for help.
The requested $367,182 represents approximately 7% of the total cost of the medical oncology program. By supporting this request, Centura will be able to demonstrate to potential philanthropic donors that the Castle Rock community supports this project. Additionally, Centura has pledged that should Castle Rock support this request they will commit to raise the additional dollars necessary to see this project through.
Economic Impact and Recommended Structure (EDC)
The EDC supports the use of incentives to ensure that Centura can complete the project as proposed. In addition to the afore mentioned benefits (which may provide all the justification needed) the project will also add an additional 200 employees to the medical campus with an average salary $108k, which qualifies as a project of economic development significance. It also adds a suite of new services that are expected to attract additional private sector services, jobs and investment to the area.
Capital Allocation
The requested amount is more than reasonable and will allow the Castle Rock Campus to compete internally for capital investment within the Centura health care system by demonstrating strong community support that would likely influence Centura leadership to favor the Castle Rock investment verses the other two locations being considered. Centura has reported that they have paid $181,173 in permit and fees and an additional $480,538 in commercial use tax for a total of $661,711. Their request of $367,182, would allow the Town’s Development Services to collect the full amount necessary to support the construction of MOB#3 and the Town is able to collect $113,356 of the $480,538 of use tax for the benefit of future economic development activities. In effect the commercial use tax the project generates will be the source of the funds allocated to supporting this investment and no Town general fund dollar would be used.
Finally, this opportunity aligns with several initiatives associated with the Town’s Economic Development policies, as it continues to focus on the attraction and growth of high paying primary employment within the Town’s targeted industries, improves the market position of office development in Castle Rock and increases the number of people that live and work within the Town.
Incentive Request
Centura Health has formally requested assistance through the Castle Rock Economic Development Program. The requests are in line with the Town’s economic development policies and their request is supported by Castle Rock EDC.
The EDC recommends the following incentive structure.
1. Rebate the requested $367,182 of commercial use tax contingent on the following qualifications.
a. 1/3 of the request to be rebated once core and shell of MOB#3 has been completed and permits have been issued by the Town for tenant improvement.
b. The remaining 2/3 would then be rebated upon issuance of certificate of occupancy of the proposed project.
Centura Castle Rock Adventist Hospital has committed, that should the Town support their request they intend to meet with Centura management to highlight the towns support for the project with the intent to proceed with the project as presented upon final approval of the capital allocation and raising of the funds needed through philanthropy.
Attachments
Resolution
Economic Assistance Agreement