City approves property tax break to help east-side Plastic Surgery Center expand

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

Property tax revenue generally goes to the city, county and state government to fund public services such as schools, fire protection and roads. PSC estimates that the tax exemption will save them roughly $39,176 in property tax 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 means tax abatements typically last 10 years but the council can modify or abandon them at the five-year mark.

The bonds will be used to remodel 2,900 square feet of PSC’s 10,427-square-foot northeast Wichita facility, while adding an additional 2,740 square feet that will become the ambulatory surgery center.

Luke Wagle, a political science student at Wichita State University, voiced his frustration to the City Council about what he called a “pretty blatant misuse of funds” with regards to both the PSC deal and the approval of $10.2 million in STAR bonds to bring Topgolf to Wichita.

“It’s kind of insane that we’re spending all this money on a Topgolf and a plastic surgery center . . . and all this stuff on K-96 when there’s a lot of places in this city that really do need money,” Wagle said.

In an email Tuesday afternoon, Goodpasture said IRBs are a good alternative to offering cash incentives.

“This is a property that does not currently exist, therefore we are not currently capturing property taxes from it,” Goodpasture said. “By offering the incentive, they are able to expand services, and property taxes on the new expansion will be generated in 10 years that benefits all taxing jurisdictions.”

PSC estimates 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, and that “at least 50%” of patients who utilize the new facilities will come from outside of Sedgwick County.

Goodpasture said that even if PSC fails to deliver on the job growth and other promises in their proposal, the city likely won’t be able to recoup 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, suggesting that failure to live up to expectations could result in a slightly less generous tax exemption.

“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,” he said.

PSC representatives declined multiple requests for comment Tuesday, referring The Eagle to Ed Dunn of Koch Siedhoff Hand & Dunn, the consulting firm that negotiated with the city to secure the IRBs and corresponding tax exemption.

Dunn said the bonds were “absolutely necessary to even move forward with it,” and the upside of this deal for everyday Wichitans who aren’t in the market for facial rejuvenation or a breast enhancement procedure is that the same-day surgery center will stimulate the local economy by attracting out-of-county patients.

“It’s bringing in folks that would not necessarily come to Wichita, and they would have stays in hotels or go to the restaurants — spur on the economy in Wichita,” Dunn said.

He said PSC did a preliminary study on current patients and found that more than 50% come from outside of Sedgwick County.

For a for-profit medical company to qualify for IRBs, at least 30% of their revenue must be generated from out of county, per Wichita’s economic development guidelines. Non-medical for-profits must generate at least 50% of revenue from out of county to qualify.

Dunn said that if asked by the city council, PSC will be able to verify that they’ve stayed above that 30% threshold.

He said PSC’s IRB proposal has been several months in the making.

“We initially had a Zoom call meeting a few months ago with Tim Goodpasture of the city economic development, along with the IRB, the city’s bond counsel, Gilmore Bell,” Dunn said. “That was kind of the kickoff meeting to go through the potential of an expansion.”

Gilmore Bell, a public finance law firm with an office on North Main, did not return a request for comment Tuesday afternoon.