SOLON– Just like that, it was done.
The Solon Retirement Village had been seeking property tax incentives for its new memory care and skilled nursing units from the Solon City Council, and the discussion rolled over to an Aug. 3 meeting.
The care center had asked for 100 percent of the new taxes generated by the facilities to be reimbursed through the city’s Tax Increment Finance (TIF) fund for five years, and another five years of gradually declining rebates.
Council members had expressed concern about the 10-year term, as well as the overlapping of a previous developer’s agreement for assisted living units.
Those items were being considered when council member Cami Rasmussen ended the discussion with a motion to restrict the agreement to five years, and reduce the rate to 65 percent.
With very little additional discussion, the motion was approved on a 4-1 vote with council member Sue Ballantyne dissenting.
It was a quick end to a lengthy discussion and a turnabout from the position taken by most of the same council members less than two years ago.
In December of 2009, the city approved a five-year TIF agreement for the Solon Retirement Village’s assisted living addition that provided three years of 100 percent reimbursement, then decreasing by 10 percent for each of the last two years.
The city subsequently also agreed to consider an extension of the agreement at the end of the five-year period.
At last week’s meeting, council members queried Solon Retirement Village Administrator Melissa Reed about the facility’s financial status, hinting perhaps the incentive wasn’t needed.
Council member Brad Kunkel acknowledged the facility’s value to the community, but questioned the need for the 100 percent financing request.
Citing a submitted narrative, Kunkel noted the care center didn’t anticipate an operating deficit and reported cash on hand for the start-up of the new additions.
“It seems to me like it’s doing well enough that 100 percent at any point is not necessary,” Kunkel observed. “You could get by with what you have and not have any further need for 100 percent at all.”
According to Reed, Solon Retirement Village currently employs 103 workers, with another 22 jobs to be added through the latest expansion. New nursing positions will start at between $22-23.70 hourly, she said.
The cost of maintaining competitive salaries, along with $90,000 in cuts in Medicare reimbursements and a new $83,000 annual assessment by the state, have put the care center at a financial disadvantage, Reed argued.
The center carries approximately $5 million in debt for land purchases and new construction, she added, although the assisted living wing filled to capacity in six months and its construction costs are expected to be paid off in nine years.
“It was basically set up to just be a service for the community– to pay its own bills,” Reed noted of the assisted living wing. “It really isn’t a money maker per se, but we knew that going into it.”
When asked by council member Steve Stange whether shareholders benefitted from a profitable year, Reed said profits are used to pay down debt and set aside to help offset bad years. Funds are also being put aside for an expected remodeling of the original facility, she added. In addition, she noted, the skilled nursing, memory care and other branches of Solon Retirement Village are operated as separate businesses.
Reed called the financial proposal cited by council members as aggressive and optimistic.