Olney Hospital Eyes Restoring Old Building for Tax Credits
The Olney Hamilton Hospital Board of Directors is exploring the possibility of rehabilitating the old hospital building by leveraging historic tax credits and potentially generating revenue through the sale of those credits.
During its June 27 meeting, the board heard from Patrick Kennedy, executive chairman at TransPecos Banks and president of TransPecos Financial Corp., about the idea, which could provide a creative funding solution for repurposing the aging structure.
The proposed approach would involve applying for both state and federal historic tax credits, which could be sold to investors looking for write-offs, in exchange for capital the hospital could use. The effort would require the old hospital building to be designated as historically significant, Mr. Kennedy said.
“There’s a fairly straightforward path if we can establish eligibility,” he said. “We could be looking at a significant amount of money if we structure it properly.”
Mr. Kennedy urged the board to move quickly on the project to repurpose the old hospital as it completes the new facility across the street. The hospital could get a bridge loan for the credits, but it would not be paid until renovations on the old building are complete.
The board would go through the National Parks Service to have the building designated a National Historic Site, Mr. Kennedy said. Mr. Kennedy said his firm was involved in getting the Texas Legislature to pass a measure that would twin the state historic tax credit of 25 percent with the federal historic credit of 20 percent. “The state would provide a 25 percent credit on every expenditure,” he said. “There’s a great market for those credits because the hospital doesn’t pay taxes.” The return could be as much as 40-45 cents per dollar spent, he said.
TransPecos has formed a group to help with applications and historic plans, he said. He said the historic designation would require only that the facade be preserved. “You can completely gut it and get credits for rebuilding it,” he said. “I don’t think you will have any problem.”
Hospital administrator Mike Huff said the designation and credits “would be a great asset to our hospital.”
“This is very exciting,” he said. “It represents a lot of opportunity for us.”
The two-story brick hospital on West Hamilton Street, built in 1927, is the oldest continuously operating rural hospital in Texas.
At the time, it was “one of the most modern and best-equipped hospitals west of Fort Worth,” according to the OHH website. Patients listened with earphones to pipedin music and radio in the hospital’s 17 patient rooms. The old hospital boasts a surgery suite, delivery room, nursery, x-ray room, emergency room, kitchen, dining room, a dumb waiter, and nurse’s quarters.
The board agreed to take initial steps toward exploring the process, including contacting the Texas Historical Commission for guidance and evaluating what investments would be required to meet rehabilitation standards under the tax credit programs.
Board members floated Ideas for potential reuse of the old building, including administrative offices, outpatient services, specialty clinics, or rental space for medical tenants.
No vote was taken, but board members expressed support for conducting further research. Huff said he would reach out to potential legal and financial advisors and report back at the next meeting with a proposal for next steps.
The board is seeking funding to try to build out a second operating room required by state regulations to continue maternity services at a cost of about $9 million, board members said.
Olney Hamilton Hospital stopped delivering babies last month due to operational costs, but announced last year that the service would not be offered in the new hospital due to the cost of building a second operating room. OHH was the last hospital in Young County that still delivered babies.