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Gordon, Scutari, Stack Bill To Help Convert Shuttered Hospitals Into Productive Health Care Facilities Advances

TRENTON – Legislation sponsored by Senators Bob Gordon, Nicholas P. Scutari and Brian Stack to incentivize the conversion of shuttered hospitals into productive health care facilities was approved unanimously today by the Senate Economic Growth Committee.

“A hospital closure can have a dramatic affect on the community, resulting in reduced access to health care services for residents and significant job and tax revenue losses in the area in which it was located,” said Senator Gordon (D-Bergen/Passaic). “Providing tax credits for the development of medical arts centers will help to encourage the redevelopment of shuttered hospitals, which will help ensure the continuation of vital healthcare services for residents and contribute to a more stable local economy.”

The bill (a Senate Committee Substitute for S-2122 and S-2131) would establish a corporation business tax credit for investments made to repurpose a former licensed health care facility as a licensed health care and health services support center. Specifically, the legislation would permit a developer, upon approval from the New Jersey Economic Development Authority (EDA), to receive a credit of 100 percent of its capital investment made for the purpose of renovating and redeveloping a formerly licensed health care facility as a non-acute health care and health support services center. The credit could be taken annually over ten years as a credit against its corporation business tax liability.

“When a hospital shuts it doors, it takes an enormous toll on the region. Health care access is reduced, jobs are lost and tax revenue to state and local governments is diminished,” said Senator Scutari (D-Union). “Providing incentives to repurpose vacant hospitals into new medical facilities will go a long way to encourage redevelopment of closed and partially closed facilities into productive health centers, which will improve local economic conditions as well as health care options for New Jersey families.”

This bill is intended to incentivize the redevelopment of those closed and partially closed hospitals into facilities that provide non-acute health care, such as primary care, wellness services, outpatient treatment, and imaging services. More than 25 hospitals throughout the State have closed. Many of these sites are currently vacant and are operating in economically depressed areas of the State.

“Economic pressures and other factors have led to the closure of more than two dozen hospitals in New Jersey. Unfortunately, some of those closures took place in some of our neediest communities, leaving residents with reduced access to health care services and cities and towns with the loss of a vital economic engine,” said Senator Stack (D-Hudson). “We have to do more to improve both health care access and the economic circumstances in areas where hospitals have shuttered and providing tax incentives for the revitalization of these buildings is a common sense way to do that.”

In order for the developer to receive the tax credit, the developer would be required to make or acquire capital investments of at least $10 million; the facility would be required to employ at least 100 full-time employees; and the developer would be required to demonstrate to the EDA that its proposed capital investment would not destabilize the supply and delivery of acute care health services in its market, will yield a net positive benefit to the State and local government, and that the repurposing is likely to be realized with the provision of tax credits at the level requested but would not likely be accomplished by private enterprise without the tax credits.

The committee approved the bill by a unanimous vote. It now heads to the Senate Budget and Appropriations Committee for consideration.