Monday, September 08, 2008
Editorial: Carilion's obligation
The health-care system should take the sting out of an agreement that leaves a new medical school in Roanoke tax-exempt.
From the RoundTable blog
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When Carilion sits down with Roanoke officials to work out "a mutually agreeable understanding" on the issue of taxing a new medical school, it should keep in mind city taxpayers' $20 million investment to acquire and redevelop land needed to make the hospital group's biomedical research park a reality.
The school is a critical piece of the project.
The city's investment was made with every expectation that the medical school would be covered by a 2001 agreement with the tax-exempt, not-for-profit health care system that it would pay taxes on "all tax-exempt property" in the redevelopment area owned or controlled either by Carilion or its Carilion Biomedical Institute.
The wrinkle is that Carilion has a partner in its new venture: Virginia Tech. But Tech, which as a state institution is also tax-exempt, was not a party to the agreement with the city.
Under a memorandum of understanding between these two regional powerhouses, signed just this spring, Tech will own and control the medical school. And, a spokesman said last week, it has no plans to pay city real estate taxes on the building.
At the least, Carilion should have kept the city informed. Roanoke will be hit with a significant loss in anticipated revenue if the situation stands. But the memorandum was news to City Manager Darlene Burcham last week when Roanoke Times reporter Sarah Bruyn Jones asked her about it.
At best, Carilion could offer the city a payment in lieu of taxes, which seems entirely proper in light of its earlier agreement and the city's steadfast and successful efforts to clear the way for the project.
Indeed, Burcham was surprised by the real estate tax issue, but still upbeat about the medical school -- with good reason.
The city is billing Carilion for taxes on the land for the bio-med park and an office building that, thus far, is the only completed structure on the site. But taxpayers undoubtedly would lose out on a more lucrative revenue stream if the Carilion Biomedical Institute ends up with no obligation to contribute to the city's coffers for a medical school loaded with high-tech equipment.
Taxpayers should not lose sight of the larger benefits the city hopes to reap, however.
At minimum, the institute and school will draw more medical school professors and students to the Roanoke Valley and create decent- to well-paying jobs for support staff. The economic spinoff will be good.
Over time, if the research park fulfills the vision, it will spawn high-tech, presumably taxable businesses that will locate on the site. The economic spinoff would be transformational.
None of that minimizes Carilion's obligation to live up to the spirit of its agreement with the city.
