Oak Ridge North City Council approved the modification of a sales tax preservation agreement with Townsen Memorial Surgery Center on July 13, after project representatives discovered inaccuracies in the previously estimated square footage for the center’s expansion.
How we got here
Community Impact previously reported on the council’s approval of the sales tax preservation agreement during its May 27 meeting.
The incentive was originally about $73,000 per year to be paid to the city in lieu of sales tax for five years, applicable to Townsen’s currently operating Building B.
Sarah McClure, Oak Ridge North’s director of economic development and community programming, explained to the council on Monday that this amount was based on their initial size estimate of 18,329 square feet for the building’s expansion.
However, upon further examination of the plans in the permitting process, McClure confirmed the building will actually occupy 19,686 square feet.
Why it matters
Agreement conditions state that, instead of sales tax, $4 per square foot of the building will be paid to the city for five years, before the payment increases by 3% during the sixth through 10th year of the 10-year agreement term.
The 1,357-square-foot difference between the estimated and actual measurements of Building B results in an increase of the incentive amount.
Per July 13 meeting materials, the new payment amount to the city now sits at $78,744 per year.
Prior to the council’s vote, project officials clarified that the amendment will not change any of the contractual terms of the agreement or the payment rate of $4 per square foot, only the square footage and the accompanying incentive of the project.
The council passed the motion unanimously.
One more thing
Also at the July 13 meeting, council members approved a separate sales tax preservation agreement involving a secondary building on the east side of Townsen’s property, Building C.
A dollar amount for the incentive was not discussed at the meeting, but agenda materials indicate it to be $56,888 based on an estimate of 14,222 square feet.
The new deal follows the same payment rate as Building B’s expansion project: $4 per square foot to be paid to the city in lieu of sales tax for five years. Payments issued during the sixth through 10th years of the 10-year agreement term will automatically increase by 3% each year, meeting materials show.
In a statement via phone call following the meeting, McClure said she expects these figures to also be revised after the building’s measurements are finalized with developers.
“[Building C] used to be a two-story building, but they’re actually taking the second story out, for a lack of better words,” McClure told Community Impact.
Diving in deeper
Earlier this year, the ambulatory surgery center opened for patients with its original space spanning about 6,000 square feet.
The expansion plans for Building B are slated to create two new operating rooms, adding to the existing four already in use, Rick Garcia, director of development with Townsen, told Community Impact.
Garcia added that Building C’s expansion will refit the facility as medical office space.
Townsen and its medical facilities are located at 26710 I-45 N., Oak Ridge North.
