Win-win: Tax incentives lure a major employer to former MJH site

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Guy Williams, CFA Institute’s head of finance and risk management, oversaw the
approximately $37 million renovation of the former Martha Jefferson Hospital site that features a soaring glass atrium and the restoration of various historic elements in
the old Patterson building facing Locust Avenue.  Photo: Elli Williams Guy Williams, CFA Institute’s head of finance and risk management, oversaw the approximately $37 million renovation of the former Martha Jefferson Hospital site that features a soaring glass atrium and the restoration of various historic elements in the old Patterson building facing Locust Avenue. Photo: Elli Williams

From the outside, the changes to the old Martha Jefferson Hospital aren’t visually jarring. In fact, other than a new sign on High Street, a seven-story glass atrium soaring above the former emergency room entrance, and continuing construction around back, someone driving past the site might not realize that a building where thousands of babies were born is now a bustling hive of investment professionals.

In late December, after an approximately $37 million renovation to the historic property, the 400-plus employees of CFA Institute relocated to the company’s new north Downtown headquarters from three previous locations —two in Albemarle County and one in the city—thanks to various local, state, and federal tax incentives that helped Charlottesville beat out Albemarle County as the new home for the global association that awards professional credentials and champions ethical behavior in investment markets.

The location wasn’t an immediate choice, said Guy Williams, CFA’s head of finance and risk management, who oversaw the two-year renovation of the building and worked closely with the CFA board to select the right spot. The company considered both existing buildings in the area and “greenfield” sites, where CFA would have been able to build to suit.

“There were some extremely attractive options in Crozet,” he said, describing both the county and the city as eager suitors. “Everyone was extremely positive about welcoming us to the area, which made it difficult to choose.”

For city officials, wooing CFA with incentives was a no-brainer since the alternative was a massive, vacant structure and a loss of tax revenue that could have stretched on for years.

“Having the building empty was a considerable concern,” said Chris Engel, Charlottesville’s director of economic development. In other cities where hospitals have vacated buildings, Engel said, it has taken five to 10 years for a new tenant to move in. The time between Martha Jefferson’s move to its new digs on Pantops in 2011 and CFA’s occupancy of the old hospital site was just 27 months.

“We’re very fortunate to have had such a quick and smooth transition,” said Engel.

Among the tools at the city’s disposal for attracting CFA and other large corporations to locate within city limits is something known as Tax Increment Financing (TIF), which provides a property tax break to a corporation in exchange for meeting certain requirements. CFA agreed to hire 40 new employees and in exchange will receive a 50 percent break on the local property taxes assessed on improvements to the building for 10 years. At the building’s current assessment of just over $21 million, that would mean a total tax savings of close to $1 million over 10 years, but both Williams and Engel concede it’s likely to be much more than that since the assessment doesn’t yet reflect the full value of the renovation, which could be nearly double the current assessed value.

Correction: CFA Institute awards professional credentials and champions ethical behavior in investment markets. 

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“It’s an interesting incentive in that it happens after the fact,” said Engel of the TIF, which was also used to lure educational travel company WorldStrides to relocate from the county to the new Waterhouse building on Water Street. “They make the investment, bring the employees, and then we share a portion of the increment they’ve created.” The developer of the Martha Jefferson Hospital site, Octagon Partners, is still completing work on the former Rucker and Cardwell buildings, which will house several other businesses including biotech company Hemoshear. Octagon representatives did not return C-VILLE’s calls.

Williams said that while CFA appreciated the TIF incentive, it was not the organization’s primary reason for selecting the old hospital site. Instead, he said, it was the board’s belief that renovating an already existing building was the better choice from a sustainability perspective.

“It felt like the right thing to do,” said Williams, adding that the historic tax credits at the state and federal level were another powerful draw and could save the organization a total of $11 million.

Of course, receiving historic tax credits means heavy oversight on the renovation, and Williams proudly led a reporter on a tour of the new 144,000 square-foot headquarters, including the Patterson building built in 1929 that fronts Locust Avenue. In a historic renovation, walls and windows can’t be moved, and Williams pointed out the building’s preserved archways and the original Terrazzo floor as among the elements restored in order to receive the tax credits.

In addition to preserving the building’s history, Williams said the renovation focused on sustainable design and includes a “gray water” reuse system that will reduce CFA’s use of public water by 70 percent as well as various high efficiency systems that will allow the property to operate using 22 percent less energy than other similar sized offices.

The city has been delighted by the arrival of CFA, said Engel, who called it a “splendid corporate citizen.” And those who live nearby are pleased as well after initially expressing concerns about traffic and the possibility that CFA hadn’t planned for adequate parking. That’s not been the case, said Bruce Odell, president of the Martha Jefferson Neighborhood Association.

“It seems they have adequate parking on site, and anecdotally, we haven’t seen much difference in traffic impact from them,” said Odell, who expects other developments Downtown, including City Walk between Water Street and Meade Avenue, to have a greater impact.

“They’ve done a good job,” Odell said of CFA, expressing gratitude that the building was preserved and remembering the sounds of ambulances and the increases in traffic along High Street and Locust Avenue that occurred when shifts changed at the hospital.

“In many respects,” he said, “the neighborhood feels fortunate.”

 

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