Joey Garrison, The Tennessean
The nation's largest private hospital chain is close to landing
Metro's third-most-generous financial incentive package ever, totaling a
projected $66 million, in exchange for filling a prominent midtown
eyesore with headquarters offices and bringing 1,750 new jobs to
Metro Council is set to consider the arrangement between Nashville-based HCA
and Metro - one of Mayor Karl Dean's signature economic development
proposals - with a vote Tuesday on a trio of bills outlining tax breaks
and incentives key to the proposed office towers dubbed West End Summit.
Dean and HCA officials announced the project in late September
to great fanfare for solidifying Nashville as a "health care capital,"
the mayor said at the time, while producing the city's biggest jobs
announcement since the late-1990s relocation of Dell Corp. and erasing a
blemish on Nashville's central business corridor.
The towers, a
$200 million private investment, are to occupy an 80-foot-deep crater at
1600 West End that became known as "Lake Palmer" after developer Alex
Palmer abandoned a West End Summit concept six years ago.
HCA deal is headed before the council, which has historically signed off
on incentives offered up by Dean's administration in the name of job
growth. This one is expected to be no different.
"To have the
number of jobs anticipated that the deal is going to bring to Nashville
is a no-brainer," council Budget and Finance Committee Chairman Lonnell
Matthews Jr. said. "When you think about the amount of incentives, there
are also some pretty stiff penalties for not meeting certain benchmarks
on the positions and bringing the jobs."
Few question mayor's approach
For Metro, Dean's HCA incentive proposal ranks in scale only behind
then-Mayor Phil Bredesen's 1999 incentive package for Dell, $120
million, and his own administration's 2010 deal with Omni Hotels to
anchor Music City Center.
The latter gave the hotel chain a present value of $103 million in
incentives, plus tax increment financing that grew that figure even
Dean has aggressively pursued direct incentives to
companies during his time in his office, while his predecessor Bill
Purcell never executed the strategy. The current mayor's approach has
only a handful of council skeptics.
"I feel like a broken record,"
said Councilman Josh Stites, who has voted against tax breaks awarded
to LifePoint Hospitals Inc. and Ryman Hospitality Properties over the
past year. He intends to do the same with HCA. "You can look at downtown
and there are some buildings that shaped downtown, as this would do for
West End, that received zero tax abatements.
"It is a huge fallacy to say that we have to give tax abatements in order for these companies to come here."
the latest deal, two HCA affiliates would initially anchor more than
half the estimated 750,000 to 900,000 square feet of the approximately
20-story buildings' office space. Parallon Business Solutions,
an HCA subsidiary based in Williamson County that provides revenue
cycle and business process expertise, would bring 750 jobs across the
county border. The Sarah Cannon Research Institute,
which provides oncology research services, would take its 200 existing
jobs from a different West End location to the new West End Summit.
top of these figures, HCA's relocation and expansion are expected to
generate an additional 1,000 jobs by 2020. Salaries are estimated to
range from $80,000 to $85,000. Project leaders plan an early 2015
opening of West End Summit.
Metro would give HCA a 100 percent
property tax discount for 15 years, capped at $3 million a year, plus a
five-year extension if the company continued to occupy its share of
office space, under one ordinance going before the council. In separate
council resolutions, HCA would net a one-time $1 million payment to
cover relocation costs as well as a $500 incentive grant per employee
over seven years.
"The city's participation is an investment in
high-quality jobs, economic growth and an opportunity for infill
development along one of our most important economic corridors," Dean
said in a prepared statement.
The state has pledged kicking in a $7.5 million economic development grant for the HCA project.
According to a legal analysis by Metro Council attorney Jon Cooper,
the justification for Metro's $3 million annual property tax abatement
over 20 years is to match the cost of West End Summit's parking garage,
which would not be required were the company to build in Williamson
"I think in this instance we were in direct competition
with surrounding counties," Councilman Ronnie Steine said. "And it's
clearly, in this urban area, more expensive to build the parking than it
would be if they had decided to go to a surrounding county."
called the HCA incentive "amongst the best we've ever worked on." He
said that while it ranks "pretty high" in scale, it also ranks
favorably. On top of job creation, Steine said, "We're also going to
build on a space that is pretty crucial to the development of the city.
To get that hole filled up, I think that's going to spur a lot of other
HCA spokesman Ed Fishbough said the company wouldn't get
into specifics on where else it had considered building. "But we have
said we could have gone outside Davidson County, and the incentives were
vital, making West End Summit the right decision for us," he said.
Stites called the justification for the 20-year property tax discount "rubbish" and "great marketing by our mayor's office."
Metro-HCA agreement contains provisions aimed at protecting Metro if
HCA doesn't fulfill its job projections: 1,000 by 2016 and larger
benchmarks for each subsequent. For each 100 jobs the company failed to
produce in Davidson County, HCA's property tax discount would lower by
Metro is expected to collect a sliver of new property
tax revenues from the project, $17 million, over the 20-year life of the
abatement. The project's developer, Alex S. Palmer & Co., would be required to contract minority or women-owned businesses on at least 20 percent of its construction work.
is considered the largest nongovernmental hospital operator in the U.S.
In 2011, it produced more than $30 billion in revenue and a net income
of $2.45 billion, the council's legal analysis reads.