Mayor Glenn Elliott says Wheeling’s Return Will Exceed the $3 Million Investment to Satisfy Alecto
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WHEELING -- Mayor Glenn Elliott believes Wheeling will ultimately gain far more than the $3 million it plans to spend to upgrade or demolish Center Wheeling buildings to facilitate the sale of Ohio Valley Medical Center to Alecto Healthcare Services.
Elliott said OVMC's financial predicament, with more than 1,000 jobs potentially in peril, left the city no choice but to act.
"In my mind, cities have an equal obligation to protect existing jobs as they do to attract new ones," Elliott said. "And we were presented with the opportunity to facilitate a transaction that would put all of OVMC's properties on the tax rolls and generate future property and business and occupation tax revenues."
Furthermore, Elliott and Michael Garrison, the attorney for Irvine, Calif.-based Alecto, emphasize the city will have an additional $2 million for development through the tax increment financing bond sale the city will use to facilitate the Alecto deal, in addition to annual payments from B&O taxes Alecto will deliver.
"Alecto's cooperative agreement with the city of Wheeling does not cost taxpayers at all. In fact, this agreement, along with Alecto's status as a taxpaying organization, will create new revenue for the city of Wheeling and generate desirable economic development in the Centre Market area," Garrison said.
Alecto Agreement
On Tuesday, with Elliott out of town, fellow city council members voted 6-0 to enter a memorandum of understanding with Alecto. The agreement calls for the city to pay $1.5 million for upgrades and new elevators at the Center Wheeling parking garage, along with an additional $1.5 million toward the demolition of the former nurses' residence building at OVMC. Elliott and Vice Mayor Chad Thalman have said Alecto would not agree to purchase the financially troubled hospital without the agreement.
"Repeatedly, Alecto representatives made clear that obtaining control of the parking garage was an important deal point for them. In their eyes, the public associates the garage with the hospital, and therefore its condition is a direct reflection upon the hospital," Elliott said. "There is no dispute that this particular garage is in need of considerable upgrades, both cosmetic and functional."
The agreement states the city will create a new TIF district that includes OVMC and the garage, which is connected to the hospital by a skywalk over Chapline Street. Although officials at the West Virginia Department of Commerce remain quiet regarding the new TIF district, which they must approve, city leaders maintain they are confident it will move forward.
Using TIF is possible because Alecto is a for-profit company, while OVMC is now a nonprofit entity.
Once the TIF district is declared, the city will sell $5 million worth of bonds, with $3 million to be spent in Center Wheeling. The remaining $2 million will be available for spending at the city's discretion.
The city would ultimately transfer ownership of the garage to the Area Development Corp., which is a nonprofit entity that Wheeling uses to facilitate property deals. The ADC will then lease the 830-space garage to Alecto for $1 per year.
The city will use $1.5 million toward the demolition of the former nurses' residence at OVMC, as city leaders said Alecto plans to construct a new building on this site.
"Would OVMC have been acquired without any city cooperation? Perhaps, but I was not willing to roll the dice on 1,000-plus jobs and the associated economic and health care benefits that OVMC provides to our community," Elliott added.
Alecto also owns Fairmont Regional Medical Center, thanks to an acquisition out of bankruptcy in June 2014. Fairmont City Manager Robin Gomez and Garrison said the municipality has a "cooperative agreement" in place to grant Alecto relief on B&O taxes, although they did not specify the amounts.
"In the Fairmont transaction, which was subject to the approval of the bankruptcy court, the city, with the help of the state, was able assist Alecto in securing the real estate it needed to effectively operate the former municipal hospital," Garrison said. "The city leadership recognized the importance of the continuity of care to the local residents as well as the economic impact of an operational hospital."
TIF in the Northern Panhandle
The use of TIF dollars to facilitate private economic ventures in Wheeling and the Northern Panhandle is nothing new. TIF allows governments to perform improvements to a property by accessing the money that will result from the property's increase in value.
In 2003, government provided a total of $95 million in TIF revenue and grant funding to bring Cabela's to Ohio County, eventually leading to the large retail center at The Highlands.
Wheeling, meanwhile, spent $2 million to purchase and demolish a series of dilapidated and/or vacant buildings in the 1100 block of Main and Market streets several years ago. After that, the city spent another $3 million preparing the site for development, bringing the total to $5 million.
This site is now the future headquarters of The Health Plan. The insurance company paid nothing for the property, although the firm is paying for construction of a 53,000 square-foot building that will occupy it.
While campaigning for mayor last year, Elliott seemed to question the actions of former Mayor Andy McKenzie and council members.
"The decision to purchase these buildings was made nearly a decade ago, and the city has spent upward of $2 million since just to get to an empty lot that a business was willing to develop. After years of waiting, fortunately, The Health Plan reached out to (Regional Economic Development Partnership), and RED worked with city and state officials to make this happen," Elliott said in December 2015 after The Health Plan's announcement.
When asked if he considered the action he and fellow council members are taking with Alecto to be comparable to that scenario, Elliott said his main problem with the 1100 block action was that it took too long -- nearly a decade, he said -- to attract a developer.
"During that time, there was considerable city investment made without any immediate economic benefit. Obviously, in the end, we had a terrific success, and I am thrilled to have The Health Plan's grand opening downtown scheduled for later this year," Elliott said.