VA Butler project faces shortfall
A developer wants $3.2 million in property tax breaks to help pay unexpected costs on a $75 million outpatient center at the VA Butler Healthcare complex, casting a shadow over the project as county and federal officials prepare for the groundbreaking Friday morning.
Some officials balked at the idea for a project they thought was set.
“Certainly, from our perspective, this creates a significant hurdle for us to overcome,” Westar Development Co. President Sam Calabrese said. “At this point, we are very concerned. Our approach is that we will bear the majority of the burden of the shortfall, but this is a peace offering so we can make everything work.”
He said shortfalls on the project could reach $9 million.
The developer last month asked Butler County commissioners, Butler Township commissioners and the Butler Area School District to approve a TIF, or tax-increment financing district, which would use new property tax revenue the project generates for eight years to help finance work.
The school district said it could discuss the issue at Monday's school board meeting. County Commission Chairman Bill McCarrier said he didn't see a lot of support for the TIF among the three taxing bodies.
“I'm just not leaning toward doing it,” McCarrier said. “They are a private, for-profit corporation.”
When asked what would happen if the TIF isn't approved, Calabrese said, “I think there's the potential for there to be issues down the road, but right now, I can't say one way or another.”
Veterans Affairs officials said they expect the project to move ahead without interruption and that they will be in the building in 2015. The VA will lease the building from Westar for an average of $7.6 million a year for 20 years.
“Everything that was needed for this project was known,” said Kenneth Kalberer, VA health systems specialist. “We have full confidence everything will be done well and it will be something the (VA) and the veterans and the community can be proud of.”
Westar estimated the project would generate about $440,000 annually in taxes for the three taxing bodies for what was untaxed land, with the school district receiving more than 70 percent.
Calabrese said the unexpected costs include a $2.5 million drainage system, because water from a nearby property tripled the size of wetlands. Calabrese said developers have to spend at least $500,000 to upgrade the power grid and between $200,000 and $300,000 for traffic upgrades PennDOT requires.
“It does concern me a little bit because it was initially pitched to the township as, ‘Hey, this property is back on the tax rolls, and you'll get ‘X' amount of dollars each year,' and now they're going back on this position,” said township commission President Ben Simon. He added that he “will give them a little bit of sympathy” because he felt some of the issues, such as the drainage, were out of the developer's control.
“I wouldn't place the blame anywhere,” Calabrese said. “That's why we're saying we will bear the burden of the majority of the shortfall. It's to keep the project moving forward.”
Bill Vidonic is a staff writer for Trib Total Media. He can be reached at 412-380-5621 or firstname.lastname@example.org.