I write about cities and states doing all kinds of unsound things with their money, but I am shocked as I watch my own very small community get bamboozled by a local developer. Here is the story from our exceptional local paper The Observer:
The developer of a three-story addition to Northern Dutchess Hospital in Rhinebeck is seeking to make the expansion tax-exempt for its first seven years.
Developer Jeff Kane of Kirchhoff Medical Properties explained during a public workshop with village officials Feb. 13 that his company will lease part of the hospital campus from HealthQuest, which owns the hospital, while building the 75,000-square-foot, $30 million addition.
Once completed, Kirchoff plans to lease the second and third floors back to the hospital and lease the first floor to individual medical groups.
Because the hospital itself is structured as non-profit (it provides a minimal amount of charity care) the portion that it leases from a private developer would be tax-exempt. The remaining floor of the building would be retained as a taxable property, but the developer wants a payment (a PILOT) in lieu of taxes for it.