photo by: Photo courtesy of Dobski & Associates

Heartland Community Health Center plans to renovate and move into the space currently occupied by Anderson Rentals at the intersection of Sixth and Michigan streets.

City leaders will soon consider providing sales and property tax breaks for a building renovation that will allow for the expansion of a nonprofit health care provider.

As part of its meeting Tuesday, the Lawrence City Commission will consider an economic development assistance request from Alcove Development/T&M Properties LLC to redevelop the property at 1312 W. Sixth St. into the new location of Heartland Community Health Center. The clinic is requesting a $6.5 million sales tax exemption on construction materials and labor and a 10-year property tax abatement on the additional property value added by the redevelopment.

Heartland announced in February it had reached a deal to take over the building occupied by Anderson Rentals, 1312 W. Sixth St., with plans to rehabilitate the property, as the Journal-World reported. Heartland has historically played a big role in providing health care to uninsured and low-income residents, and the move to a larger space is expected to give Heartland more room to provide services for both uninsured and insured patients.

The clinic is currently operating out of a 12,000-square-foot building at 346 Maine St., and the clinic’s recent growth requires a larger facility to add providers, according to a city staff memo to the commission. The clinic has 88 employees and in 2019 served 7,342 patients, a 22% increase over the previous year.

“Heartland’s growth is no anomaly; we have seen double-digit growth each year since 2015, underscoring the need for high-quality, affordable, accessible health care in our community,” Heartland CEO Robyn Coventon said in a letter to the city.

Coventon’s letter also explains that Heartland uses a sliding fee scale where what a patient pays is correlated to their income. The letter says that on average, 45% of Heartland patients have no insurance, and that the clinic therefore has to keep its expenses as low as possible in everything it does, including the expansion project.

The new building will nearly double the space available. The proposed project calls for the complete renovation of the 23,000-square-foot building on Sixth Street. The renovation will add 14 dental operatories, offices for behavioral health and primary care providers, a pharmacy and an expanded food pantry. Those services will be in addition to the existing patient services already offered.

The development is requesting the issuance of up to $6.5 million in industrial revenue bonds, which will allow for the sales tax exemption on construction materials and labor. Also requested is a 10-year, 100% property tax abatement on the increase in assessed value of the renovated property, or an approximately 83% tax abatement of the total value of the completed project. The clinic is also requesting that the city waive the origination fee for the bonds.

City staff completed a cost-benefit analysis of the fiscal effects of the incentives, comparing 15 years of revenues and expenses for the project. Should the project be completed as predicted, the city staff analysis estimated a net public benefit of approximately $830,000 during that time frame. The city calculated a cost-benefit ratio of 1.44 for the project, meaning that for every dollar in incentives the project gets, the community will get $1.44 of public benefits. Normally, the city prefers that projects receiving incentives have a cost-benefit ratio of 1.25 or higher.

City staff is recommending the approval of incentives for the project, stating that the clinic is of great value to the community and provides enough benefits to the public to warrant approval of the request. The Public Incentives Review Committee also voted unanimously to recommend the request for approval.

The City Commission will convene virtually at 5:45 p.m. Tuesday with limited staff in place at City Hall, 6 E. Sixth St. The city has asked that residents participate in the meeting virtually if they are able to do so. A link to register for the Zoom meeting and directions to submit written public comment are included in the agenda that is available on the city’s website, lawrenceks.org.