GLADSTONE – During a special meeting Wednesday, the Gladstone City Commission approved the sale of property for the development of a new medical facility on Gladstone’s north shore.

“It’s close to a $5 million project,” said Kelly Jefferson, vice president of operations for OSF St. Francis Hospital and Medical Group.

Once completed, the new facility will house the services currently offered through OSF’s two Gladstone offices, as well as wound care and possibly an automated pharmaceutical dispensary.

“We will be expanding services on the rehab side (and) we are putting a wound care treatment room in that building – we don’t offer that service now, and wound care is huge in this area,” said Jefferson.

The property, which consists of 3.21 acres located across from the Gladstone Public Safety building on 4th Avenue, is being sold to OSF, Inc., the for-profit arm of the hospital’s parent company, and Cullinan Companies, a real estate development company based in Illinois.

Because the property is being purchased through OSF’s for-profit arm and not through the not-for-profit Catholic hospital itself, the resulting development of the property will not be tax exempt. The two buildings currently operated by OSF in Gladstone are both owned by the hospital itself and are not currently on the city’s tax rolls.

After the completion of the development, the city anticipates a tax capture of roughly $34,000 per year, but because the project is within the Downtown Development Authority district, the funds will be captured entirely through the DDA. If the DDA were not the tax-capturing body, a large portion of the resulting property taxes would be distributed to other entities like the Delta Area Transit Authority (DATA) or Bay College, and Gladstone would only receive about $18,000 annually for the general fund.

“I think that this is good development for the city. I just wish that the tax base was coming into the general fund where we need it, and to me that’s an issue right now because of how important our city needs additional revenue for this type of development,” said Commissioner Steve Viau.

Under the agreement entered into Wednesday, the city will sell the property to Gladstone MOB, LLC – the legal name for the joint venture between OSF, Inc. and Cullinan Companies – for $38,000 and the city will construct necessary infrastructure to connect to the site for roughly $70,000. The city intends to ask the DDA to fund the infrastructure improvements, as the authority will be the recipient of the development’s tax capture.

While there are no current plans – or adequate capital – for OSF St. Francis Hospital to buy the building from OSF’s for-profit arm, if the hospital were to buy the building the property could become tax free. To protect against a loss, the contract approved Wednesday specifically states that if less than $70,000 in taxes has been paid at the time the property becomes tax-exempt the purchaser would be required to pay the difference.

Regardless of whether or not the property becomes tax-exempt, the city is anticipating that the sale will lead to an increase in the amount of taxes collected by the city. OSF intends to sell both of the current OSF buildings in the city, and unless the properties are purchased by another non-profit entity that qualifies for tax exemption, the sales will return the buildings to the tax rolls.

Some commissioners raised concerns about the $38,000 sale price for the property, as the property was last appraised at $58,000. The lower sale price was agreed to early in the negotiations, and none of the seated commissioners nor Interim City Manager Eric Buckman were involved in the negotiations process at that time.

Still, the commission and the public present at the meeting felt that the overall benefits for future development and residents outweighed the difference in price.

“That land will probably be developed and probably inhabited mostly by seniors. There’ll be a lot of condos – that’ll eventually be the case. Having that facility right there is going to make it much more attractive for a senior to live there, which will make it easier to sell that,” said former commissioner and current planning commission member Dave Nemacheck.

Also during the meeting, the commission voted to move forward with a meeting with Jeff Ketchum, president of Lordstone Corporation, to continue the search for a new city manager. A date has not been set for the meeting.