Wichita approves Plastic Surgery Center’s $2.4 million in IRBs; 80% tax abatement

The Wichita City Council has authorized $2.4 million in industrial revenue bonds to Plastic Surgery Center, P.A. to remodel existing facilities and construct a same-day surgery center at their North Webb location.

The council voted unanimously Tuesday morning to grant the for-profit surgery center an 80% property tax exemption on real estate financed by the bonds. PSC estimates that this tax abatement will save them roughly $39,176 in the first full year.

Tim Goodpasture, the city’s economic development analyst, said IRBs are issued for a “five plus five-year period,” which mean tax abatements typically last 10 years but the council can modify or abandon them at the five-year mark.

PSC Holdings, a real estate entity owned by PSC physicians, will use the bonds to remodel 2,900 square feet of the practice’s 10,427-square-foot northeast Wichita facility, while adding an additional 2,740 square feet that will become the Ambulatory Surgery Center.

Goodpasture said that even if PSC fails to deliver on the job growth and other promises in their proposal, the city likely won’t claw back property taxes that had already been abated.

“If they are still in business, we typically do not claw back that first five years’ property tax abatement,” Goodpasture said. “You can modify what the second five years is, so if they create, call it 75% of the jobs that they were supposed to create, the city council could take the abatement from 80% down to 75% or whatever that ratio would be.”

A spokesperson for PSC did not immediately respond to an interview request Tuesday morning.

In addition to property tax exemptions, IRBs also include a potential sales tax exemption for construction materials, which could be particularly valuable after the pandemic throttled supply chains and inflated the cost of building supplies.

For-profit companies may be considered for IRBs if they are investing capital to develop new facilities, adding machinery and equipment and creating new jobs, according to the city of Wichita’s economic incentives page.

“To qualify, companies must generate the majority of their revenue from outside of Sedgwick County,” the city website states.

PSC estimates that “at least 50%” of its prospective patients will come from out of county. No further justification for this figure has been provided by the company.

Current economic development guidelines require that medical groups derive at least 30% of their patients from outside Sedgwick County.

PSC currently has three physicians and 16 other employees. They estimate that the IRB-backed projects will bring about 10.5 new employees over the next five years at an average annual salary of more than $100,000.

Sedgwick County Treasurer records show that PSC paid $54,270.65 in property taxes for its two Wichita facilities in 2020. Property taxes on pre-existing facilities are not affected by IRB tax abatements.

In their proposal to the council, PSC asserts that cosmetic and reconstructive surgeries carried out in ambulatory surgery centers yield higher patient satisfaction rates and lower post-op infection rates than procedures conducted in a regular hospital.

This story was originally published May 28, 2021 at 5:38 PM.