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4.
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| City Council Regular Meeting |
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| BACKGROUND |
The Schertz Medical Building is constructing and operating a medical office building with an ambulatory surgical center located at 17766 Verde Parkway. The project consists of a 50,000,000 sq ft, two-story medical office building supporting no less than 20 new full-time jobs, resulting in a capital investment of over $9,000,000.
The anchor tenant will be an ambulatory surgical center operated by United Surgical Partners International (USPI) and a group of physician investors. USPI operates the largest ambulatory platform in the country and is a subsidiary of Tenet Healthcare, parent company of Baptist Health System. The group will have three operating rooms and one procedure room, and will focus initially on musculoskeletal surgeries, expanding to additional surgical specialties over time.
In July of 2021, the Schertz Economic Development Corporation Board of Directors approved an initial economic development performance agreement with the project to fund up to $30,000 for a culvert to provide access to the rear of the property. The project proceeded with construction, however, at the request of the developer, the SEDC held the project to confirm no amendments were needed in response to the developer communicating there may potentially no longer be a need for the culvert. In the course of the project development, the developer requested assistance with unexpected costs around the extension of power and wastewater infrastructure as well as costs driven by updates to roadway impact fees not forecasted as part of the development.
In August 2022, the SEDC Board of Directors voted to convert the original agreement to a reimbursement for investments in wastewater and power infrastructure as outlined in the agreement up to the same amount as was previously approved ($30,000). This action honored the original agreement amount that helped to support initiation of the project. Additionally, the substantial positive next fiscal impact of the project supported advancing the project for funding from the SEDC Reserve Fund.
In summary, this project represents an exception to incentive policy guidelines in support of an exceptional medical office project. Generally, projects are not funded if the project has begun construction. The project has begun construction, and the SEDC has agreed to convert the use of dollars approved by the SEDC Board in July 2021 from a culvert reimbursement for uses associated with power and wastewater. This flexibility is being provided in response to new operational standards associated with overhead power lines enacted in the past year and a half impacting developments that were ongoing in the industrial park as well as increases in roadway impact fees. |
| GOAL |
| To grow the Schertz economy through Projects that focus on the creation/retention of Primary Jobs and Infrastructure Improvements and/or support the Quality of Life for residents of the City of Schertz through access to more and better healthcare options. |
| COMMUNITY BENEFIT |
This Performance Agreement supports development of 50,000 square foot of surgical/office space and a capital investment of $9,784,585 and up to 20 full time jobs. The City of Schertz will enjoy a greater level of medical services, additional tax revenue, and continued momentum of diversified office space development.
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| SUMMARY OF RECOMMENDED ACTION |
| Approval of funding for a Schertz Economic Development Performance Agreement providing for an infrastructure reimbursement grant for qualifying costs up to $30,000 in support of a 50,000 sq ft, two-story medical office building located at 17766 Verde Parkway. |
| FISCAL IMPACT |
| Over a ten-year period, the estimated revenue to the City of Schertz is projected at approximately $297,000. With a total maximum reimbursement value of $30,000, this agreement will have an estimated fiscal impact of $260,000.The Schertz Economic Development Corporation (SEDC) will pay a reimbursement grant of up to $30,000 from an allocation from the SEDC Reserve Fund. |
| RECOMMENDATION |
| Staff recommends approval of Resolution 22-R-104. |
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