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Business

Wichita approves $35.5 million in incentives to subsidize creation of medical school

 

A multi-part public financing package worth about $35.5 million to help subsidize the creation of a medical school in Wichita has gained approval from the Wichita City Council.

The package approved Tuesday will use several financial instruments to provide the development company, Douglas Market Development LLC, with public assistance in a $90 million plan to redevelop four downtown buildings into a campus for training osteopathic physicians.

The new school — called the Kansas Health Science Center — will be built in the former Finney State Office Building — 130 S. Market and 230 E. William.

Once the center of state government in Wichita, it was abandoned during the administration of former Gov. Sam Brownback in favor of leasing privately owned office space across Wichita. The building was purchased at auction in 2017 by local investor Sudha Tokala for $710,000.

In addition:

The nearby building formerly known as Sutton Place, 209 E. William, will be redeveloped into 119 units of student housing.

A former Henry’s Department Store building at 124 S. Broadway will be converted into a dining hall and culinary school.

The fourth building in the project will be a 119-room Marriott AC boutique hotel.

Parking for the endeavor will come from a lease agreement for space in the city’s Market Street Garage. The school will have use of the garage’s skybridge to provide sheltered access between the garage, the medical school and the student housing building.

The city has agreed to lease as many as 500 spaces in the garage and nearby surface parking for school use. The city is also giving the developers a three-year option to buy the garage at appraised value after the school opens in 2022.

Public financing

The bulk of the public money for the development will come from tax abatements included with industrial revenue bond financing.

The IRB package will save the developers an estimated $26.7 million in property taxes over a 10-year period, along with about a $4 million sales tax exemption on the purchase of construction materials and supplies, according to an analysis by the Wichita State University Center for Economic Development and Business Research.

The package also includes approval of a Community Improvement District, which will levy a 2 percent sales tax on purchases made at the hotel for its first 22 years in operation.

That could generate about $3.2 million to help the developers pay for their project and $360,000 for the city to spend on public improvements around it.

The project will also use tax-increment financing, diverting an estimated $1.3 million of future property tax revenue from the development to pay for expansion and improvements at Chester I. Lewis Reflection Square Park, which will act as an entry plaza to the medical school.

Jobs and doctors

Once the private school is in operation, it’s expected to provide 324 new jobs with an average wage of $55,000.

Osteopaths are licensed to provide the same level of diagnosis, treatment and surgery as an MD, although there are some differences in their training and philosophy of practice.

Osteopaths can specialize, but a majority work as primary care physicians.

Establishing a new osteopathy school was a major priority for Brownback, as a way to train more doctors who could practice family medicine in Kansas’ underserved rural communities.

Wichita beat out Topeka and Manhattan as host city.

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