DDA backs health center

July 10, 2009
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The Downtown Development Authority unanimously agreed last week to help finance the construction of a new $20 million-plus health center that is slated to be built on the city's near-southeast side.

Board members gave the project's developer the green light to collect reimbursements for public improvements and ADA-compliant items. The reimbursements will be made through the tax-increment financing captured by the DDA in the district and could total as much as $705,650.

Cherrystone LLC, named after Cherry Street Health Services and Touchstone innovare, which are partnering with Proaction Behavioral Health Alliance for the project, plans to put up an 82,000-square foot, multi-story, LEED-certified medical office structure on Cherry Street SE near Sheldon and LaGrave avenues. The building will be just north of St. Andrew's School and have parking for 400 above and below ground level.

Greg Dziadosz, executive director of Touchstone innovare, told the DDA that the project should create about 80 permanent jobs and retain another 190. He said the space will be filled by companies that provide pediatric and adult medical care, dental and vision care, and laboratory and pharmaceutical services. The clientele will be low-income residents and those who are under-insured or without coverage.

"It's not just a relocation of existing services; it's an expansion," said Dziadosz.

Dziadosz also told the DDA that there is a demand for the center's expanded services because of the recession and the fact that the metro area's unemployment figure tops 11 percent.

"There are more people in the service center that need service than we can serve right now," he said.

Although the Cherrystone partners are nonprofit organizations, the property will be placed on the ad valorum tax roll for a few years, which makes the project eligible for the tax reimbursements. Then the site will become exempt from property taxes.

"Right now, the prediction is this will be on the tax roll for seven years," said John Byl, an environmental attorney and public financing specialist at Warner Norcross & Judd. Byl added that he didn't think the property would be on the roll long enough to collect the entire reimbursement amount.

In addition to the reimbursement, Cherrystone plans to finance the project through brownfield tax credits, New Market Tax Credits, federal stimulus funds from the American Recovery and Reinvestment Act, a $3 million fundraising campaign and through Chase Bank.

"We will be able to carry a mortgage on the property," said Dziadosz.

Dziadosz said the application for the federal dollars is due by the end of this month.

The project, known as the Heart of the City Health Center, will go up on property that contains four buildings and a couple of surface parking lots. Dziadosz said two of the buildings are obsolete and two are partially occupied. One of those is the Cherry Tree Court Apartments, which has the dual address of 143 Cherry St. SE and 207 & 211 LaGrave Ave. SE. The plan is to raze the buildings.

"We own the structures and most of the parking lots," he said.

Dziadosz said groundbreaking is planned for mid-October and construction is expected to take 15 to 18 months.

Cherry Street Health Services has 11 health centers in the area and provides medical services to roughly 25,000 residents each year and dental services to another 20,000. The new center, Dziadosz said, would allow the organization to serve an additional 10,000 clients every year.

Touchstone innovare provides rehabilitative services to those suffering from mental illnesses and related disorders. Proaction Behavioral Health Alliance treats people with substance-abuse problems and addictions.

The reimbursement plan

Here is how Cherrystone LLC plans to spend the $705,650 in property-tax reimbursements approved by the Downtown Development Authority last week for the Heart of the City Health Center.

Public infrastructure
Landscaping, trees, sidewalks, pavers, etc.
Utility relocation and street lighting
Subtotal

ADA improvements
ADA-accessible elevator
ADA-accessible door operators (9)
ADA-accessible parking spaces (7)
ADA signage inside and outside
ADA restrooms (12)
ADA ramp
Subtotal

Contingency (10%)
Grand Total

Reimbursement amount
$150,000
$225,000
$375,000

Reimbursement amount
$120,000
$22,500
$63,000
$5,000
$36,000
$20,000
$266,500

$64,150
$705,650

Source: Downtown Development Authority, July 2009

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