As reported by the New Britain Herald, February 19, 2007.

Health Center Expansion Could Boost Town Revenues

By Lisa Backus

FARMINGTON - Town officials are hoping that the state General Assembly will agree to a plan that would reclassify John Dempsey Hospital at the University of Connecticut Health Center to allow the town to receive a higher rate of state reimbursement in lieu of taxes.

But local legislators and hospital officials are conceding that it may be an uphill battle - one that may be best fought by supporting the facility's bid for a $500 million expansion that would update the hospital and double bed space.

"I want everyone to be realistic about this," said state Rep. Demetrios Giannaros (D-Farmington) "We've tried twice in the past few years to get the hospital reclassified and it has been turned down. It would take creating legislation and it would mean that some other town would lose funding or that the state would have to find more funding from somewhere else."

Giannaros and health center officials said Dempsey is in a unique position. The facility is the only state-run medical hospital in Connecticut.

But it's also the only hospital in Connecticut that isn't designated as a hospital for state Payment In Lieu of Taxes reimbursement purposes. All other municipalities in the state that have a hospital within their borders receive 100 percent reimbursement through the PILOT program.

The issue has been made more contentious because, in recent weeks, officials from the health center didn't reveal that they were planning to purchase the Farm Tech building on Route 4 until the sale was nearly complete.

Farmington Town Council members were outraged because the purchase takes the $8 million property off the town's Grand List since the health center is owned by the state.

Town officials have estimated that when the building is privately owned, the town receives about $130,000 in annual tax revenues. However, the town would be reimbursed at a lower percentage of the value for the property through PILOT funds. Town officials estimate that the town would receive about $70,000 a year in PILOT money.

Town officials said, depending on the timing of the sale which recently closed, it may take one to two years to actually receive the money - leaving the town high and dry for this year's and possibly next year's budget.

To mitigate the loss in tax revenues when, and if, the health center purchases more local property, town officials are hoping to have John Dempsey Hospital, and possibly the entire UConn campus on Route 4, reclassified from its current designation as a "state-owned building" to that of a hospital/college which would allow for 100 percent reimbursement in PILOT funds.

But, Giannaros concedes, the plan isn't without pitfalls. The reclassification requires a change in state law, approved by the entire state assembly and Gov. M. Jodi Rell. And it would require either a decrease in another municipality's PILOT funding or that the legislature dump more money into the PILOT program from somewhere else.

Giannaros along with state Sens. Jonathan Harris (D-West Hartford/Farmington) and Donald DeFronzo (D-New Britain/Farmington) and newly elected state Rep. Beth Bye (D-West Hartford/Farm-ington) are leading the charge to get the designation changed during this legislative session.

In the meantime, Giannaros and health center Chief of Staff Bruce Carlson stressed that the health center is planning to spend $30 million on the Farm Tech building to create a facility for stem cell and other biomedical research that will increase the value of the property and the town's amount received in PILOT funding.

"We're planning on having that complete in 2009 and we estimate that would bring in about $250,000 in PILOT money to the town," Carlson said. "Yes, it is a few years off, but it will more than make up for what's lost to the town now."

Carlson and Giannaros also agree that if the health center is allowed to go ahead with the plan to spend $500 million to expand, the town would automatically be the recipient of millions more in PILOT money since the project will take place on land already owned by the state.

"They are expanding on the site of their current facility, which is a big boon for the town," Giannaros said. "The property is already off the tax list, so any increase in value, just like the Farm Tech building, will automatically increase the amount in PILOT funding. But that's far from a done deal."

Carlson said the health center will be actively lobbying to get the $500 million expansion project approved by the state legislature, the governor and the state's Office of Health Care Access despite heavy opposition from other area hospitals which say the plan would siphon patients from their facilities.

"It's critical to get this passed this session," Carlson said.

"We know over the next couple of years we'll be out of capacity and have no revenue growth but we will still have expense growth. We have to get this done."