Nobody seems to have any money these daysincluding hospitals. But one thing hospitals do have is hundredsor often thousandsof employees who need places to live, shop, eat, play and relax. A growing number of cities are looking to leverage their healthcare employee base as the foundation of economic redevelopment projects.
Hospitals serve as linchpins for redevelopment
Its a pretty new concept, with cities being creative and looking at healthcare as an economic driver, says Paris Rutherford, president of Icon Partners, a Dallas-based real estate development company. Theyre saying: Heres a big, stable employer, and we can build on that.
Technically, medical districts are not a new concept. Chicago formed its in 1941 and Houstons dates back to 1945, but the concept is
re-emerging as a method for revitalizing older urban neighborhoods in decline. Cities that have established districts more recently include Springfield, Ill.; Grand Rapids, Mich.; Buffalo, N.Y.; and Oklahoma City.
For some, development and redevelopment involves formal plans that link neighborhoods and medical institutions as well as dedicating property for common uses such as parking shared between facilities. Elsewhere, multiple projects are springing up somewhat organically with no formal relationship, but with mutual support nonetheless. Also in the mix are isolated medical campuses where planners are hoping to get the employees who work there interested in the various communities in their employers neighborhood.
Rutherford says that is essentially whats happening at the campus of 875-bed Dallas VA Medical Center, where plans call for a mix of medical offices, retail and services as well as affordable residential property.
Thats affordable without a capital A something targeted for the 4,000 people who work on the campus, Rutherford says. Not only isnt there decent housing nearby, you cant even get lunch.
Though not formally a medical district, the city of Dallas last month created its first tax increment financing district, or TIF, that includes 559 acres that stretch along the rapid-transit line that serves the hospital. In a TIF district, the amount of property taxes that school and park districts, the city and other taxing bodies collect is frozen, and any new tax revenue generated through higher property values goes into a special fund for the life of the district.
Over the course of the Dallas districts 30-year lifespan, its estimated that about $328 million will be collected and, according to a news release, will be used for improving streets, sidewalks, lighting and other projects designed to create pedestrian traffic, open space activities and visitor attractions.
Elsewhere, in some older neighborhoods, hospitals are getting blamed for being a factor in their neighborhoods decline. Over the decades, different generations have watched hospitals snatch up adjacent properties leaving neighbors fearful of having their homes taken or being stuck living with a large-scale, high-traffic institutional building on the other side of their fence.
The result of this concernor paranoia, depending on ones point of viewis an environment where existing homeowners are reluctant to invest much in upkeep of their property and where newcomers are reluctant to enter.
That situation existed in Springfield, Ill., the states capital, where neighbors of healthcare institutions were reluctant to support the creation of a medical district because they were wary of a negative impact on property values.
That was our biggest challenge: the lack of trust between resident groups and medical institutions, says Michael Boer, president of the Illinois Medical District at Springfield Commission. Historically, hospitals had a reputation of buying every piece of property that came availablewhether they had an immediate need or not. Residents felt there was encroachment into the neighborhoods, but the plan drew hard boundaries, and while the neighborhood organizations used to roll their eyes every once in a while, theres now a feeling that were all in this together.
Boer, a former chief executive officer of the Greater Springfield Chamber of Commerce and now president and CEO of the Warren-Boynton Financial Center in Springfield, credits Daniel White, vice president of the architectural design and engineering firm RTKL Associates in Chicago, for building a positive consensus on the project.
White says that drawing those hard boundaries helped relieve peoples fears. We were able to say, if people were going to invest in a new house, here is where you might want to do that or where you might not want to, White says.
Boer says the city began discussing creating the district in 2002. A master plan, which was completed in 2005 and approved by the Springfield City Council the following year, involves a 1-square-mile area where some 4,000 people live and includes the Southern Illinois University School of Medicine, 446-bed Memorial Medical Center and 465-bed St. Johns Hospital.
At the time, Boer says that Springfields retail market had reached a threshold in its ability to attract outside dollars, and most of its leading employing industriesfinancial services, insurance companies and state governmentwere all downsizing.
Healthcare was the only industry that provided a significant growth potential in this area, Boer says, and thus, the Springfield medical district was born, which then led to the creation of a land-use plan and a marketing strategy to implement it.
The district has two purposes: to facilitate economic development associated with health and medical-care facilities already existing in the community and to stabilize and cause improvements to take place in residential areas located adjacent to the medical district, Boer says.
The medical district was launched with a $300,000 state grant, and $175,000 was paid to RTKL to develop a master plan. In 2006, the district received another $49,500 grant to conduct a traffic study. But funds have been scarce ever since, so the work Boer and his 11-person staff do on behalf of the district is now all-volunteer.
Until we get our own staff on a full-time basis, its going to be difficult to get a lot done, Boer says. Still the district has been buoyed by three new projects: the medical schools $21.5 million SimmonsCooper Cancer Institute, which was completed last year; Springfield Clinic 1st, a $27 million office building that Memorial Medical Center leases; and the $14.6 million Prairie Diagnostic Center, which is a partnership between physicians, Memorial Medical and St. Johns.
In Oklahoma City, creation of the 10th Street Medical Business District was spurred by the announcement in 2003 that its oldest hospital499-bed St. Anthony Hospital, established in 1898was considering a move to the suburbs. It worked and the hospital stayed, with the city agreeing to make infrastructure and public-safety upgrades. The district was formed, and a master plan developed.
The stated top priority of the district is to create an economically vibrant link between St. Anthony and the 11-bed Bone and Joint Hospital on the west and 27-acre Presbyterian Health Foundation Research Park and Oklahoma University Health Sciences Center, located one mile to the east. The center includes the 587-bed OU Medical Center and 205-bed Veterans Affairs Medical Center.
The goals and philosophy are that we wanted to stabilize the area around St. Anthony Hospital and bridge the gap between them and the university hospital, says Robbie Kienzle, the urban redevelopment division director of the Oklahoma City planning department.
Now Kienzle says the program has been successful, and we have activity going on in every area of the districtincluding a possible plan for 250 new residential units.
Like Springfield, Oklahoma City planners had to battle a lack of trust among hospital neighbors who felt institutions were responsible for keeping properties vacant, which contributed to neighborhood decline. Kienzle says a rule was instituted: If you take property, you have to use it. And, unlike Springfield, Oklahoma City has some money to spend on its district, as voters approved a plan to borrow $13.6 million through a 2007 bond measure. In addition, St. Anthony has committed to investing $200 million, while the University of Oklahoma Health Sciences Center and its partners have said they will invest $2.5 billion in capital improvements.
One hitch in the plan doesnt appear to be slowing things down. Kienzle says an old Red Cross facility was purchased with the intent of turning it into a park, but now the cost of safely disposing of asbestos, mold and lead-based paint has made the property too expensive for that purpose. So the city has applied for a grant from the U.S. Environmental Protection Agency to help pay remediation expenses, and she says the new land-use plan for the site is to entertain proposals for a spectacular medically related use.
In addition to Springfield and Oklahoma City, White says the medical district concept is being explored in Syracuse, N.Y., where planners are hoping to replicate the citys existing University Hill district. Other cities with established medical districts include Boston, Chicago and Houston.
Grand Rapids, Mich., Buffalo, N.Y., and Fort Worth, Texas, have newer districts. The Grand Rapids Medical Mile was never formally organized and has been evolving since the 1990s; the Buffalo Niagara Medical Campus was officially established in 2001; and the not-for-profit Fort Worth South Inc. was founded in 1996 to implement a plan to revitalize the citys Near Southside medical district, which includes five hospitals, several clinics and some 30,000 employees.
In addition to the urban medical districts, where planners hope to integrate and connect institutions and neighborhoods, self-contained healthcare villages are being developedusually on suburban green-field locations.
In Clarkston, Mich., White and RTKL designers are working on the $600 million McLaren Health Care Village on just under 80 acres. The first phase will include a
135,000-square-foot medical office building expected to open this year. The rest of the project will be done in phases over as long as five to seven years.
In Jackson, N.J., the Meridian Health Village is being developed by Meridian Health and Lillibridge, a Chicago-based healthcare real estate developer and manager.
Skokie, Ill.-based Alter Care, a healthcare real estate services group, created Harbor Town, an 86,000-square-foot healthcare village in Manitowoc, Wis., which it developed for 67-bed Holy Family Memorial Medical Center.
In Albany, N.Y., 600-bed Albany Medical Center is proposing a $360 million expansion that pleases city officials who are working to redevelop the adjacent Park South neighborhood, where a new office building is under construction and a new hotel is already expanding.
According to the Center for Economic Growth, a regional not-for-profit economic development program sponsored by Albany business, government and educational groups, these activities are happening simultaneously but not under the direction of a formal plan.
I dont know if you could call it organized as much as collaborative or cooperative, says F. Michael Tucker, the centers CEO, who adds that the medical centers neighbors include 137-bed Stratton VA Medical Center, 200-bed Capital District Psychiatric Center, and the Albany College of Pharmacy and Health Sciences. It was natural for those institutions to come together as neighbors, and so this partnershipinformal as it might beevolved.
White, however, says formal plans help eliminate dead zones where property remains vacant because of uncertainty or haphazard development elsewhere.
Without a plan, large institutions will want to land-bank property because they dont know what the traffic patterns will be, White says. As a result, a guy who wants to build a restaurant to take advantage of medical students may find himself a half-mile away on the other side of campus.
With a plan, White says small pocket parks can be developed, serving as buffer zones, as well to provide transitions and links between land uses. According to White, these are just some of the amenities that can be created by the planning and cooperation that goes on in medical districts.
What they all have in common is a fundamental belief that, to maximize the economic benefit, they need to have a collaborative environment instead of a competitive environment, White says.
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