Kettering Health may get $2M to renovate former Dayco building
MIAMISBURG, Apr 14, 2012 (Dayton Daily News - McClatchy-Tribune Information Services via COMTEX) --
The city of Miamisburg is expected to buy the land beneath the former Dayco building for $2 million and lease it back to the Kettering Health Network to help pay for multi-million dollar renovations to the building.
In exchange, KHN -- the city's largest employer with 1,500 employees -- pledged to move at least 300 jobs to Miamisburg from other network facilities and retain 350 existing ones at an administrative services building at Sycamore Hospital in Miamisburg.
KHN approached Miamisburg "because of the significant capital outlay," as much as $8 million to acquire and renovate the building, Miamisburg City Manager Keith Johnson said in a memo obtained by the Dayton Daily News.
The cost of the building was about $4 million and the network is estimating renovation costs of up to an additional $4 million. The lease-back agreement would offset the costs of renovation.
"To me it's a no-brainer," said Miamisburg Mayor Dick Church. "It's a unique way of recouping your money, bringing jobs into the community and increasing your tax base."
KHN also committed to increase payroll taxes to the city from $1.3 million to $2.3 million annually for 15 years. If unable to maintain the employment targets, the hospital would cover the city's debt service on the purchase, according to the agreement. Title to the land would be turned over to the hospital at the end of a 15-year lease.
While no new jobs are part of the agreement, officials said up to 80 new clinical positions could be created at Sycamore Hospital.
"This project demonstrates our commitment to Kettering Health Network as our largest employer and it demonstrates Kettering's commitment to the City of Miamisburg as a community to invest in," Johnson said in the memo to city council.
On Feb. 2, the health network paid $4.05 million for the nine-story, 126,000-square-foot office building and six acres, purchased from a Miller-Valentine limited partnership, according to property records. Adminstrative offices would be consolidated in the building.
"It will help us to operate more efficiently by consolidating support services. It will also help us to save money," Elizabeth Long, spokeswoman for the Kettering Health Network, said.
The health network's executive leadership will remain at Ridgeleigh Terrace -- once the home of inventor Charles F. Kettering -- just south of Kettering Medical Center (KMC), according to Long.
Until ready to move in staff, the health network also would agree to keep existing companies in the building.
"In that case, KMC will coordinate with the City and its tenants to retain these businesses in the City," Johnson said in the memo.
On Tuesday, Miamisburg City Council is expected to consider the agreement, seen as crucial to keeping the hospital network's workforce in Miamisburg.
According to the memo, the health network also looked at office space in Dayton, owns more than 50 acres in Miami Twp. and is leasing 20,000 square feet in offices in the township at Austin Landing, the new development off the new interchange, one exit south on I-75.
The city and the network struck a similar lease back deal 10 years ago for an administrative office building at Sycamore Hospital. The Sycamore building is expected to be put to medical and other uses as the health network moves administrative services to the former Dayco office tower, visible from I-75.
The project also pumps needed reinvestment into the building, which had vacancy rates of up to 50 percent in recent years, according to the memo.
"The building has not received the capital reinvestment needed to keep it competitive in the office real-estate market," Johnson said.
The decline was spreading to surrounding developments. "As the occupancy has declined at the Dayco building, so has the occupancy and quality of businesses at the surrounding shopping centers," Johnson added.
KHN is expected to begin moving into the building this year.
Staff Writer Ben Sutherly contributed to this report. Contact this reporter at (937) 225-2261 or lbudd@DaytonDailyNews.com.
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