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Carmel gives green light for Franciscan specialty hospital

February 22, 2019

The Carmel City Council this week approved a rezoning request that paves the way for Franciscan Health to build a specialty hospital and medical offices at 111th and Illinois streets.

The seven-member board voted unanimously Monday night to approve the rezone after the land owner agreed to paying taxes in perpetuity on the property.

When the project—which actually spans 18 acres (12 acres are already zoned Meridian Corridor)—was first brought to the city council, a majority of members were unhappy Franciscan had agreed to a PILOT (payment in lieu of taxes) agreement for only 25 years.  

Franciscan Health, like most health care providers, is a not-for-profit and would be exempt from paying property taxes on the land. As a result, it is common for communities to initiate PILOT deals to protect their commercial tax base when tax-exempt make requests related to zoning.

The Mishawaka-based health system plans to build the 255,000 square-foot Franciscan Health Orthopedic Center of Excellence along the east side of North Illinois Street, between West 106th and West 111th streets.

About six acres of the 18 total acres are currently zoned single-family, low-density residential. Franciscan had asked that portion of the site be rezoned to the Meridian Corridor District to accommodate the project.

Currently, the land is owned by Meridian Development Services, a sister company of Methodist Sports Medicine. Meridian Development Services is not exempt from paying property taxes, but councilors feared the land would be sold to Franciscan, which could later apply for a tax exemption.

During a land use committee meeting last week, Marty Rosenberg of Meridian Development Service told councilors his company would agree to pay real estate taxes on all 18 acres in perpetuity. Should Meridian Development sell the property in the future, it would do so with a covenant that the tax commitment to Carmel transfer to any new property owner.

“The product that’s coming to the city council is the best solution for all of the parties,” city councilor Tony Green, who chairs the land use committee, said Monday night.

In addition to the tax issue, city councilors were also concerned about a subdivision that neighbors the land, which would become surrounded by commercial development if the Franciscan project gets built.

Meridian Development had begun discussing land acquisition with homeowners in the 31-lot Meridian Suburban subdivision, and some of those homeowners told city councilors they received “low-ball” offers.

To ease concerns from neighbors, Meridian Development has agreed to add $1.5 million to the neighborhood offer—increasing each landowners’ buyout by about $50,000—and to allow homeowners to live in their houses for up to one year rent-free after the sale.

Councilor Kevin Rider, who had been meeting with homeowners, said they now feel more comfortable with the deal.

“I think the neighbors are feeling good about the deal,” he said. “I haven’t heard any reservations.”

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