By Shereen Siewert
A signed development agreement is in place for the proposed Aspirus clinic, though details are scant on the potential financial impact the project will have on the city.
The development is part of a $40 million health and wellness campus partnership with the YMCA in downtown Wausau. Elements of the agreement were discussed June 11 in closed session, but neither the draft nor the finished product appeared in the council packet for public view.
Several council members, including Tom Neal and Dennis Smith, publicly voiced concern regarding the potential tax status for the project. Neal noted that the agreement does not contain any assurances that the building will be a taxable enterprise. Initially, council members were told that the development would result in hundreds of thousands of dollars in future revenue, though there is no mention of that in the agreement.
“It’s sort of like that initial happy piece of this proposal doesn’t seem to be in front of us anymore,” Neal said.
Smith indicated he was also concerned that the tax status does not appear in the developer’s agreement, asking for assurances that in a year or two the organization wouldn’t suddenly change to tax-exempt status, removing the property from the tax rolls.
Wausau Pilot and Review emailed all council members, along with Mayor Rob Mielke and Economic Development Director Chris Schock, inviting comment about the development agreement. Neither Mielke nor Schock responded. Of the council members, only Becky McElhaney and Lisa Rasmussen responded.
Schock, however, forwarded the inquiry to Public Works Director Eric Lindman, who responded by saying that clinics are a taxable entity, which is why the mayor and council pushed to make sure the language in the agreement reflected that.
“There are certain areas of Hospitals that are tax exempt or can be requested to be tax exempt, this is not the case with the clinic,” Lindman wrote. “Aspirus also came forward again publicly and addressed the Mayor and City Council regarding this issue and addressed the concerns. Aspirus has the right to come forward every year and contest their assessment, this is governed and a provision of the state statute, anyone has the right to do so. We have spoken with Aspirus and they did not want to commit to a construction value for the project since they are currently still in the design of the building. Based on the renderings and typical costs for these developments at ($250 to $300 per square foot), the construction value will be significant for downtown.”
But legal analysts say the law is anything but clear regarding taxable status of nonprofit-owned clinics in Wisconsin as several cases have made their way through the court system in recent years.
During the June 11 meeting Paul David, assistant general counsel for Aspirus, and Matt Brewer, vice president of Aspirus Clinics, addressed the council to assuage concerns regarding tax status and stated publicly that the building’s current intent is to be a taxable enterprise.
“We presently have no plans of changing that,” Brewer said. “To say that we would never change that, we are unable to say that…but it is not part of our current strategy.”
Lindman said the development agreement commits Aspirus to completing the engineering design to reroute a section of Hwy. 51/52. The design is required in order to receive a 90 percent grant to fund the reroute, Lindman said.
“The (development agreement) also puts the burden on Aspirus to complete all of the design and engineering in order for the DOT to consider approving the new Hwy 51/52 route,” Lindman said. “Aspirus is already moving ahead with this work.”
Work on Scott Street, which will correct identified safety issues and better accommodate bike and pedestrian traffic, will be completed through the grant, which is expected to be available in 2020, Lindman said.
Council President Lisa Rasmussen said officials would have requested more detail in the agreement if the project required taxpayer funds in a more traditional public/private partnership. Council members discussed the taxable value of the clinic project at length in their review of the agreement, Rasmussen said, noting that the agreement is simplified since the city is not incentivizing the project with taxpayer funded loans or grants that required detailed protections and clawbacks.
“The land transfer is simply one block of right of way in exchange for a building of a specific size,” Rasmussen said. “We discussed the taxable nature of the project also, recognizing that the use of the new building is to be clinic space, which is taxable, vs. hospital space that is not. Aspirus’ executive leadership was present at the council meeting where the development agreement was approved and again publicly assured leaders in open session that their intent is to pay property taxes on the building as they have represented to the council and the community in a number of public presentations leading up to this point.”
Aspirus paid for a traffic study and engineering work necessary to reroute the right of way, alleviating costs to the city and taxpayers, Rasmussen said.
“The city also will no longer need to maintain the section of roadway that is needed for the project, which is a small factor, but still a plus,” she said.Executed Development Agreement with Aspirus