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Affordable senior living facility deemed “not feasible” for former hospital building

Angel Medical Center moved to its new facility in 2022, officially opening their doors on September 18, 2022. After the transition to the new space, HCA Healthcare was then tasked with deciding the future of the former hospital building. 

As part of the consideration for what or how the former hospital may be used, the town of Franklin secured a grant from Dogwood Health Trust in the amount of $267,500 to conduct a feasibility study to weigh options for the former health facility.

In November of 2021 representatives from Given’s Communities began to earnestly look to connect with municipal leaders in Dogwood Health Trust’s (DHT) region. Through an introduction made to Town of Franklin’s city council members and Macon County’s economic development director, discussions about the potential for Angel Medical Center (AMC) to be converted into affordable senior housing began. During the spring of 2022 Given’s staff met with the town of Franklin’s council and supported the submittal of the DHT ARPA Challenge RFP for the AMC feasibility study. In August of 2022 the Town of Franklin was notified of the DHT feasibility study grant award. 

While the feasibility study provided an overview of the entire property and potential uses, the scope of the study consisted of a concentrated effort to evaluate the suitability of the conversion of the AMC building into affordable senior housing.

“It is through this lens and parameters that this team has determined this specific project is not feasible due to the financial burden required to adapt the hospital to apartments targeted to serve an affordable senior market,” reads the conclusion of the feasibility study report conducted by Given’s Communities.  “It is understood that this may not be the desired result of the study, however, it is worth noting that through this exercise valuable information has been compiled relating to the property; therefore, the robust evaluation of the property compiled in this report by a team of professionals should be a valuable resource during future considerations for the use of the AMC building.”

For HCA to be able to “gift” the former hospital property, by law, they need a partner that does not trigger their “potential referral source” definition to donate the property. A potential referral source is defined as any individual or entity in a position to make or influence referrals to, or otherwise generate business for, HCA. 

Because of this legal requirement, any potential housing provider who meets the definition as a potential referral source — which would include Given’s Communities, will have to lease or purchase the property for fair-market value. If Given’s Communities were to purchase the property, fair-market value is $130,000 per acre which would make the price between $1,300,000 to $1,690,000, depending on acreage, which is potentially cost prohibitive for an affordable senior project, according to the study. 

Teresa Stephens with Given’s Communities explained to the town council Monday night that funding options were explored as part of the study to make the project cost-effective. 

Due to the rich history and longevity of the AMC building, the team embarked on an effort to evaluate the eligibility of the building to be placed on the National Historic Register and subsequently qualify for additional funding for the re-purposing. Unfortunately, the feasibility study found that the former AMC property did not qualify to be placed on the Register. To be considered eligible, a property must possess architectural integrity, historic significance, and be of sufficient age to be considered historic, typically at least fifty years old. Although the hospital’s importance as the primary venue for Macon County residents to receive medical care over the course of its operations is indisputable, the study found that most of the existing complex was constructed as a series of additions between 1976 and 2002. The original 1925 building has been demolished and the 1957 building has been extensively remodeled. Therefore, the hospital did not meet criteria for a National Register listing. 

While the building itself is structurally sound and in good condition, the renovations needed to transform it into an affordable senior housing complex are too cumbersome. 

“One of the members of the team described the property so well by saying it was like a really old car that has been really well cared for over the years, but you can’t get all the parts for it anymore,” Stephens told the council.

The total estimated rehabilitation cost for senior housing would be between $50,800,000 to $63,500,000. Tax credit equity, HUD capital advances, and USDA loans could cover a maximum of two-thirds the rehabilitation costs and other funding sources would be needed to provide the gap funding, which the financial models show would approximately range between $23,200,000 to $28,800,000. There is potential to request more from HUD to lower the gap but that would also make the funding application less competitive.

What’s Next?

Although Given’s Communities determined the property was not feasible for senior housing, town leaders expressed interest in returning to the drawing board to look at other potential uses. 

As part of the student, community stakeholders met in December to discuss potential future uses for the former Angel Medical Center building. With community stakeholders offering input on Macon County’s most significant needs, concerns about access to affordable housing, senior housing, and childcare continued to surface to the forefront of issues plaguing the community. From the importance of housing to help those suffering from mental health or substance use issues to the economic importance of affordable childcare options to ensure a strong, sustainable workforce, the former Angel Medical Center facility was discussed as a creative solution to meet those needs. 

A housing provider or other entity that does not meet the definition of “potential referral source” could receive the property as a donation, rather than purchasing at the fair-market value. That would immediately reduce the investment by nearly $2 million. 

Possibilities for the property beyond the scope of the feasibility study that were also discussed during the stakeholder meeting as community needs included preserving the commercial kitchen and utilizing it for broader community services. The kitchen can be used to address food insecurity within the community as well as prepare meals for the county jail, which is currently being contracted out of county. Potentially allow local catering businesses to utilize space.

There is also the possibility of transforming patient rooms into Single Room Occupancy (SRO) spaces. SRO’s can be used for emergency shelters in cases of domestic violence, transitions from mental health or substance recovery. Additional research would need to be conducted to identify what services could be provided to not create a potential referral source issue or a conflict with HCA use restrictions for the property. 

The space could also be converted to provide additional Senior Center space to expand current services or provide a wider variety of services. Reviewing the facility for affordable childcare options was also identified as being a high priority. 

Lastly, there remains the possibility of demolishing the facility and building new on the site. For the town of Franklin to be able to do this, whatever is constructed would still have to adhere to the “potential referral source” restriction. However, the town could determine that it is not feasible for the town to accept the property from HCA at all — leaving it up to HCA to determine its future use and role in the community. 

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