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Hospital repurposing could get assist through legislation

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When Barnert Hospital closed in 2008, it left behind 300,000 square feet of vacant space in Paterson. But since then, Community Healthcare Associates LLC has purchased, renovated and repurposed the facility, which may reach full occupancy within the next few weeks. More than 600 jobs have been created, and more than $600,000 in property taxes are being paid by the Barnert Medical Arts Complex annually.

Similar success is being seen at CHA's repurposing project at the former Kessler Memorial Hospital, where managing partner Michael Nudo said the company is finalizing a lease for nearly a quarter of the facility's 100,000 square feet. Nudo said the company's project in Jersey City, a joint venture with Jersey City Medical Center to reopen the old Greenville Hospital as an outpatient center, is on pace to open in 2014.

Nudo said former hospitals, like the long-closed United Hospital and Elizabeth General, could be transformed into revenue-generating medical facilities through refurbishment, but often, the price tag for the facility alone is prohibitive, let alone the redevelopment costs.

That's why CHA worked with Assemblyman Jerry Green (D-Plainfield) and Assemblywoman Shavonda Sumter (D-Paterson) to create a bill offering tax credits to developers that turn closed hospitals into multitenant health care facilities.

Nudo said the former Muhlenberg Regional Medical Center, in Plainfield, would be a $25 million renovation project, but the debt on the property and fees would add $20 million to the price tag.

"It doesn't make sense," Nudo said. "With this repurposing bill, it would allow you to sell tax credits for the project, which allows you to spend bigger dollars. But at the same time, the state of New Jersey is not taking a haircut on a lot of the financing that they provided when (the hospital) was open."

The proposed credit would give developers corporation business tax credits equal to 100 percent of the capital investment over 10 years, if the investment is more than $10 million and more than 100 jobs will be created. The bill is now in the state Senate after being approved in the Assembly on Monday.

The bill also includes provisions for refurbishing parts of facilities, to aid struggling hospitals that have too much space and too much debt. Nudo said that part of the bill was conceived while working with St. Mary's Hospital, in Passaic, on ways to repurpose part of the campus while reducing the hospital's debt. But without such legislation, Nudo said, St. Mary's could not complete the project, so its board instead sold the hospital to Prime Healthcare.

Nudo said the bill could potentially help facilities like St. Clare's Sussex campus, which in September ended inpatient services and has since been repurposed as a an outpatient surgical, diagnostic and treatment facility with a full-service satellite emergency department. St. Clare's declined to provide additional comment for the story.

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