Aurora alleges misleading information in hospital debate

Waukesha Freeman, June 9, 2006

By Erik Brooks
Freeman Staff

OCONOMOWOC Aurora Health Care pressed its case for lawsuit settlement talks with the city Thursday while expressing concerns that city leaders are relying on misinformation to lay the groundwork for opposition to a new hospital at Pabst Farms.

An attorney with the city took issue with the characterization and said it is too early to say what the upcoming settlement discussions will focus on.

At issue is a press release sent out by the city June 2 a day after Oconomowoc leaders decided to appeal a judges ruling that declared invalid the citys attempts at using the zoning process to block construction of an Aurora hospital in 2001.

A portion of the press release refers to the citys obligation to protect the rights of its citizens by not allowing incompatible land uses, such as a not-for-profit institution in Oconomowocs tax incremental finance district No. 3 at Pabst Farms.

Under a TIF district, a community borrows money in order to fund improvements to an undeveloped piece of land, like roads and sewers.
Property tax money arising from the new development is then used to pay off the loans.

Nonprofit hospitals, however, do not pay property taxes, a fact city officials cited in 2001 as a reason for voting to rezone the Pabst Farms land in question from suburban commercial, which allows for a hospital, to suburban industrial, which does not.

City officials argued that taxexempt properties do not belong in TIF districts because they do not help pay back the infrastructure loans.

Instead, city officials have said the land northeast of Interstate 94 and Highway 67 planned for the Aurora hospital is better suited for other taxable uses, including retail.

Aurora argued then and again in a letter sent to Oconomowoc Mayor Maury Sullivan and all city council members May 31 that a portion of the 460,000-square-foot hospital development, a 100,000-square-foot medical office building, will indeed be taxable and beneficial to city coffers and the TIF payments.

In addition, Brad Hahn, Auroras vice president of finance and business development, wrote to city leaders that the hospital system would consider making annual payments in lieu of taxes (PILOT) for the tax-exempt portion of the 43.5-acre development.

Hahn wrote that the tax payments alone would measure about $570,000 annually, and the PILOT funds could make the project even more advantageous to TIF revenue.

Claims to the contrary by city officials are a falsehood, Aurora spokesman Jeff Squire said in an interview Thursday.

We dont want to hear it again, he said. There was a lot of misinformation in 2001, and we dont want to see that misinformation repeated five years later.

Squire said Aurora wanted to set the record straight as its prepares to enter into settlement talks with the city over the five-year-old lawsuit. No formal talks are planned.

Sullivan, Oconomowoc City Administrator Diane Gard and common council members did not return phone calls seeking comment for this story. In the past, Sullivan has raised concerns with the presence of a tax-exempt property in a TIF district but has also pledged that the city will keep an open mind in considering the Aurora development.

Attorney Lisle Blackbourn, who is handling the Aurora case for the city, said Thursday the concerns over Auroras nonprofit status was an important and legitimate consideration for the council in its decision to rezone the Pabst Farms property in 2001 and likely will be a part of the renewed debate.

The debate may also focus on how the hospital fits with the citys master plan, an issue that was also vital to the discussion five years ago, he said.