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Solon Retirement Village seeks TIF assistance from city

SOLON– The city is willing to sign away five years of revenue, but not 10.
At least that was the impression given after the Solon Retirement Village made application for 10 years of property tax reimbursement for the new Alzheimer’s and skilled nursing additions which are currently under construction.
At a July 19 city council meeting, Solon Retirement Village made formal application for Tax Increment Finance (TIF) assistance, seeking to have property taxes generated by the $2.9 million project reimbursed on a gradual scale over 10 years.
But the city is already in the midst of a current agreement with the care center for its independent living wing and is also planning to tap into TIF revenues in the future for a possible new city hall.
Which might leave the city’s TIF cupboards a little bare, especially if the care center continues its aggressive expansion schedule.
As a result, council members were reluctant to support the 10-year schedule proposed by Solon Retirement Village, but felt more comfortable with half that duration and a little juggling of the numbers.
No decision was made during the meeting, but the proposal is expected to be addressed again during an Aug. 3 regular session.
Solon Retirement Village received approval for the project in January from the Iowa Department of Public Health and broke ground June 5. The facility will add 24 beds; 12 certified for skilled nursing and 12 for a Chronic Confusion and Dementing Illness (CCDI) unit.
According to Solon Retirement Village Administrator Melissa Reed, the skilled nursing wing is anticipated to be completed in June of 2012, with the memory care section open two months later.
Currently, Reed said, there are only 25 CCDI certified beds in all of Johnson County.
“We’ve already started a waiting list,” Reed said of the 12 beds the care facility is adding. “We could fill them tomorrow if we were open.”
Solon Retirement Village is not equipped to deal with residents who suffer from advanced dementia, she noted. “We’ve had people that we’ve had to place anywhere from an hour to two-and-a-half hours from Solon to get the type of care that they needed.”
The demand for skilled nursing services has also increased, she added, with utilization up 50 percent from 2007.
“It would be even higher than that, but a lot of times if somebody needs short-term rehab, we’re not able to admit them because of the occupancy at the care center,” she observed.
The financial assistance from the city will be used to help keep patient costs down, she explained, offsetting low Medicare reimbursement rates and recently added quality assurance fees passed by the state.
The TIF request proposed by the care center seeks 100 percent reimbursement of new property taxes each of the first five years of the agreement, dropping incrementally in the last five years to a final rate of 50 percent. The total value of the reimbursement over 10 years, as estimated in the application, would be $629,245.
Council members, while supportive of the project, were concerned about potential overlap of the incentives for the assisted living facility (approved in December of 2009) and the new project.
“I never thought I would be faced with being in this situation,” said council member Cami Rasmussen. “I really didn’t forsee it would be the same council sitting here looking at a second possible agreement.”
While the reimbursement would not result in a drop in existing revenue, it would reduce the amount of new TIF revenues, and potentially restrict TIF spending in the years when the two agreements might overlap.
Council members and the mayor discussed a number of possible options, including combining the two agreements into one, making the agreements consecutive or altering the effective dates so two 100 percent reimbursements did not fall in the same fiscal year.
In general, the consensus among council members was to limit the new agreement to five years and structure it so the two agreements would not overlap at the highest incentive rate.
There was also some concern about being able to deal with any other TIF requests that might come forward over the next several years.
Reed said the care center is still looking at the possibility of offering adult day care in the future, a general remodel, and the potential to expand the memory care unit, although those are expected to be five years away.
“Any help you can give us obviously would help us with this project and any future projects,” Reed concluded on the care center’s behalf. “The TIF that was in place for the assisted living has helped us be able to move forward with this project so quickly.”
Council member Steve Stange didn’t feel the care center agreements set a precedent for the council, indicating he felt requests should continue to be considered on a case-by-case basis.
“It’s a major employer for this town, it’s going to bring some more opportunities for employment and it does serve our elderly community very well,” Stange said. Another business adding two jobs would be considered differently, he added. “You kind of have to look at each one and what it means to this town.”