Inverness hotel plans move forward but calls for financial brinkmanship
NOT FOR EXTERNAL DISTRIBUTION
SOURCE: Citrus County Chronicle
AUTHOR: Fred Hiers
Citrus Memorial Hospital in Inverness
A hotel proposed for downtown Inverness close to Citrus Memorial Hospital moved closer to becoming a reality this week when the property owner — the Citrus County Hospital Board — agreed to sell the land for the project.
But the deal is still going to involve some high-stakes horse trading.
The hospital board voted 5-0 to sell the 2-acre property during its regularly scheduled meeting this week.
The details of the sale are complex, but important.
Here are the players and the deal so far, which would involve the exchange of at least $570,000.
The Citrus County Hospital Board owns Citrus Memorial Hospital on behalf of Citrus County residents, along with the medical campus around the Inverness hospital and other satellite properties.
It’s part of one of those satellite properties that’s at issue now. The property is between South Seminole Avenue on the west and South Pine Avenue on the east and West Grace Street on the south in Inverness.
The hospital board leased the hospital and associated properties to the Hospital Corporation of America for $127 million. The 50-year lease began in 2014, with HCA having a 25-year lease extension option.
The property at issue currently is not being used.
Local physician and entrepreneur Dr. Paresh Desai wants to build a hotel at the site. He sees a ready market because Inverness doesn’t have a hotel. In addition, the hospital has started a residency program and uses traveling nurses and will need a place to house those new hospital staff. Desai said the hotel could provide that housing, along with rooms for the families of patients at the hospital.
The snag is that the property is being leased to HCA. Because it’s tied up by the lease, the hospital board can’t sell it to Desai outright. The hospital board will have to go to HCA and ask the health care corporation what it would cost to carve out that portion of the lease involving only the 2 acres.
In a November 2018 email to Desai, HCA executives said they would sell him that portion of the lease, for 46 years, for $580,000.
But Desai doesn’t want a lease. He wants to buy the property. That’s why he turned to the hospital board. The hospital agreed to sell it to him for the $570,000.
Now the hospital board has to approach HCA about ending that small portion of the lease. If HCA relents and agrees to carve it out of the lease for less than $570,000, the hospital board keeps the difference. If HCA agrees to end that part of the lease for $570,000 and the hospital board agrees, the board essentially transfers the property to Desai with no additional financial gain other than the original lease.
That means the lease money the hospital board already received for the 2 acre property would also have to serve as the sale price. Essentially, the hospital board takes the $570,000 from Desai and hands over the money to HCA.
But that won’t mean the county, the city and the public won’t see benefits, said hospital board trustee Rick Harper. Harper is also a real estate developer.
“Are we willing to sell this land for what we already received (in the form of the lease payment)?” Harper asked during the board’s regularly scheduled monthly meeting this week. “Then we do the deal.”
That’s because a hotel will add value to the county-owned hospital, the hotel will bring more tourists and business people to the downtown, and the hotel will add to the tax base, Harper said.
HCA would benefit from a hotel because it needs housing for its residents doctors and traveling nurses who help when there’s a nursing shortage at the hospital.
The hospital board hired Snell & Associates in Crystal River to determine the value of the property. The company reported it was worth $565,000.
But Harper warned that the $565,000 estimate and HCA’s $580,000 estimate are just that: estimates.
“Nothing is normal here,” Harper said.
That’s because there are no good comparisons in the city for such a piece of property, he said.
He also said that allowing the hospital to build could attract other businesses and investments to the area, increasing the city and county’s tax base.
Hospital board member Dr. Jeffrey Wallis said that to ask for more than what the board has already received in its lease payment “would be less than visionary.”
HCA has invested tens of millions of dollars in the hospital and upgrading services.
Wallis said the hospital is a better facility and operation following the lease and residents have benefited from it.
Along with the vote to sell the 2 acres, the board voted 3-1 for the board’s lawyer, Bill Grant, to negotiate with HCA and try to lower the lease carve-out price. Harper, who had participated in the meeting via telephone, had hung up.
Board chairwoman Debbie Ressler voted against negotiating the lease price down, wanting instead for the project to move along.
But all board members agreed that the hospital board should not incur any cost in the transfer.
Desai later told the Chronicle that $570,000 was his best offer and any additional costs, aside from surveys, contract work and closing costs, would sink the project.
“I want to close this,” he said.
Desai will now meet with city officials about his plans.
In unrelated hospital board news, the hospital board will recoup an additional $446,000 from Medicare & Medicaid Services.
The board announced last month it had recouped $2.65 million from CMS over billing disputes dating back to 2013 and 2014.
The additional $446,000 was unexpected, said Hospital board consulting lawyer Karen Schapira.
It was a reimbursement tied to helping hospitals transfer paper medical records over to electronic recordkeeping.
That money, along with the $2.65 million, will be given to the Citrus County Community Charitable Foundation, which uses it to fund local nonprofit organizations providing health care services, mostly to the uninsured and underinsured.