Columbus City Council voted to renew an agreement last week that gives Nationwide Children's Hospital up to $3 million a year in income tax incentives despite the nonprofit bringing in 10 times that amount in surplus revenue in recent years.
The hospital is already investing in a $1.27 billion expansion, including a new 14-story tower on its campus at the corner of Parsons Avenue and Livingston Avenue near its existing, decades-old main campus footprint. That new hospital is expected to open in 2028 and is already under construction.
Since 2020, the hospital has brought in at least $200 million in extra revenue a year, up to $440 million in 2022 according to the hospital's 909 reports. That averages more than 10 times the maximum amount that the hospital can expect to get from these city incentives.
This agreement is an extension of a preexisting agreement in place for the last 15 years. Under the previous agreement, the city was expecting over 1,000 new jobs.
Under the renewed agreement, the hospital expects to add 7,500 jobs over the next 15 years. The city will take 30% of the income tax it gets from the new jobs and send it back to the hospital in what essentially amounts to an indirect tax break.
The hospital expects the jobs to have an average salary of $67,000.
With the city's income tax coming in at 2.5%, that means the hospital can expect over $3 million a year once all the jobs are added. The agreement caps this at $3 million for the first five years and $3.5 million for the remainder.
Columbus Department of Development Director Michael Stevens said the city wants Nationwide Children's to continue to invest in the area even if the hospital isn't strapped for cash.
"This is to continue to encourage that investment and that job growth to make sure we see as much opportunity down at Parsons and Livingston as we possibly can. While it's not going anywhere, (that) doesn't mean that they would continue to invest," Stevens said.
Under the agreement, Nationwide Children’s will not only expand its pediatric care capabilities, but also will continue to make investments in early childhood education, housing and neighborhood revitalization in the surrounding community.
Nationwide Children's Hospital said in a statement this incentive package will significantly impact job growth positively at the main campus and the hospital's ability to grow employment more quickly.
"The new inpatient tower has been designed to accommodate future growth, but that growth is dependent on our ability to recruit additional staff, and that growth would be slower without the incentive," the statement said. "Once the new inpatient tower is open, we would anticipate that only 60% of the building will be occupied based on current staffing. The expanded job growth incentive will allow us to expand our patient care at the main campus by hiring more quickly and growing faster into the remaining 40% of the building."
The hospital said that by incentivizing growth through the new tower, it will be able to backfill older spaces once the building opens, and grow jobs at the main campus site.
"While we have no intention to leave our site of more than 100 years, our continued investments in the downtown location are significantly incentivized by our partnership with the City of Columbus," the statement said.
Stevens echoed that, saying the hospital has not threatened to leave the city. That happened in recent history with another hospital system when Mt. Carmel Hospital left Franklinton in 2019 to build its Grove City campus.
"They've never used it as a threat... as a community and as a city, we understand that there are always options to make investments in other parts of the region," Steven said.
Stevens explained that this isn't a tax break for Nationwide Children's Hospital. He pointed out the incentive is calculated as a percentage of income tax withholding on new jobs, actual payments are made from non-tax revenue sources – not from the city’s general fund.
"The income tax dollars aren't going back to Nationwide Children's Hospital. It's an incentive that is from our non-tax revenue funds," Stevens said.
WOSU asked Stevens about the significance of the hospital's surplus revenue.
Stevens said the return on the city's investment has been clear. He said the city has received more tax revenue under the original agreement than it projected and this extension is structured to keep that positive momentum going.
"This is an effective, strategic way to support high-quality job growth, protect public dollars and reinforce the strong partnerships that make our city more competitive and more equitable," Steven said.
Stevens said it is important the city continue to expand its hospital capacity as the region grows in population. He said he thinks the region is keeping up with demand.
