Hospital's plans for Zionsville facility hit snag

June 18, 2013
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Lebanon-based Witham Health Services’ plans to build a medical facility at a key Zionsville intersection hit a snag Monday when the town’s Plan Commission refused to endorse a rezoning request.

Witham has a conditional contract to buy about 11 acres of undeveloped land at the northeast corner of 116th Street and Michigan Road from Christel DeHaan Investments LP, pending a zoning change that would allow for office and retail uses.

Attorney Kent Frandsen presented a preliminary Witham Health Complex site plan at the seven-member commission’s monthly meeting, calling it “purely conceptual.”

The map showed a pair of 30,000-square-foot medical office buildings on the eastern half of the property and three 7,500- to 10,000-square-foot “neighborhood retail” outlots to the west, along the busy roads.

The county-owned hospital likely would sell or lease the outlots, said Frandsen, a partner in the Lebanon firm Parr Richey Obremsky Frandsen & Patterson, but it has not started negotiations with potential occupants.

Commission members were put off by the lack of specifics, saying they didn’t have enough information about the project to recommend the Town Council rezone the property to allow retail uses.

“I’m not against the medical part of it,” Chairman Allan Rachles said. “But I would sure hate to see a strip center there.”

The DeHaan property falls just outside an area that Zionsville’s new economic development plan identifies as the Gateway District—62 acres at the southwest corner of the same intersection, where a $90 million mixed-use project is in the works.

The Plan Commission is expected to review the Pittman Farms proposal at its July meeting.

Officials are trying to ramp up commercial activity in the predominantly residential community, but they are taking care not to sacrifice the town’s charm in the process.

Town Council members have the final say on proposed development, and they could OK the hospital’s plans despite the negative recommendation from the Plan Commission.

Frandsen wasn’t immediately sure how Witham would proceed.

“We will revisit [the commission’s] concerns and either bag it or see if we can come up with something that will satisfy the Town Council,” he said.

The hospital also could withdraw its current request and start over.

Commissioners also raised questions Monday about potential property tax revenue from the Witham project. Because the hospital is county-owned, it is exempt from paying property taxes—far from ideal as the town looks to build its commercial tax base.

Frandsen said Witham leases space to for-profit entities and pays taxes on that portion of its Lebanon property, but he couldn’t say how much of the Zionsville site would be taxable.

"It is very unlikely that it would be entirely exempt" from taxes, said Stan Evans, president of Witham consultant RSE Realty Inc. of Indianapolis.

Other communities, including Noblesville, allow not-for-profits to locate in prime economic development areas only if they agree to make payments in lieu of taxes. Zionsville is “exploring the issue,” Town Manager Ed Mitro wrote in an email last month.

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