New $42 million Daytona rehab hospital could get up to $1.5 million in property tax relief

DAYTONA BEACH — With an influx of retirees and a growing population, more of Daytona Beach's 77,000 residents are going to need the type of specialized medical care that's vital after a debilitating stroke, spinal cord injury or amputation.

That's where Encompass Health Corporation, the largest owner and operator of rehabilitation hospitals in the United States, is going to step in.

Encompass, an affiliate of Martin Health, plans to construct a 50-bed inpatient rehabilitation hospital on an8.8-acre parcel at the southwest corner of Williamson Boulevard and Strickland Range Road. The facility will be called Encompass Health Rehabilitation Hospital of Daytona Beach.

The 50,000-square-foot hospital will provide physical therapy, occupational therapy and speech therapy after life-changing injuries and illnesses to help patients regain their independence.

The Alabama-based company estimates it will spend $42 million on the new center, which includes $4.5 million to purchase the land, $33 million to construct the new building and $5 million to buy equipment.

The facility will complement acute care in local hospitals, and it will offer an alternative to the only other inpatient rehabilitation facility in Volusia County: The 40-bed Brooks Rehabilitation Center at Halifax Health Medical Center.

"This is something that's really needed in Daytona Beach," said City Commissioner Stacy Cantu.

Encompass Health will create 98 fulltime positions at the Daytona hospital by the end of its third year of operation. The jobs will include highly specialized nurses, therapists and physicians, and the staff will have an average annual salary of $65,000.

Property tax breaks offered to new rehab facility

In exchange for its investment, Encompass will receive city property tax breaks of up to $300,000 per year during its first five years of operation if it creates the number of jobs outlined in an agreement city commissioners approved Wednesday night.

The five-year incentive agreement calls for the company to create at least 54 fulltime positions in its first year, and then scale up to a total of 79 fulltime employees by the second year, and 98 by the third year. To keep receiving the tax breaks, Encompass will have to maintain a minimum of 98 fulltime employees in its fourth and fifth years.

The average annual salary for the full-time employees must also remain at or above $65,000.

If all of those goals are met, Encompass will get 100% of its city property taxes reimbursed in the first and second years, 75% in the third and fourth years, and 50% in the fifth year.

Construction is expected to start in about four or five months, and it's required to be complete by Dec. 31, 2025. It's anticipated the first city property tax grant will be paid in 2027.

Encompass will report its job and salary figures to the city manager every year, complete with a signed affidavit from the company's human resources director or payroll director detailing the jobs and salaries at the Daytona site.

If the city suspects anything is amiss, it can hire an independent third-party auditor. If the city ever determines any figures were reported incorrectly, it could demand the waived property taxes be paid under a clawback provision in the contract.

The agreement would allow the city to reduce the next year's property tax break by $500 for each employee falsely reported to exist.

Daytona Beach resident Anne Ruby said she doesn't have an objection to the project, but she urged commissioners to ask Encompass for the planned median salary of its Daytona Beach employees, not the average. The high salaries of a few top employees can mask low wages among many workers on the bottom of the company pay scale when an average is used, Ruby said.

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Jeff Brown, the city's director of Economic and Strategic Opportunities, told commissioners that even if the company's top two earners were removed from the calculation, the average would still be above $65,000 for the remaining employees. He said the majority of workers would also earn more than $65,000 per year.

City Commissioner Ken Strickland requested the meeting agenda item on the specialty hospital agreement be continued so commissioners could more closely examine salary numbers. Five of the seven city commissioners didn't want to delay the item, so the vote was taken.

Strickland cast the lone no vote.

You can reach Eileen at Eileen.Zaffiro@news-jrnl.com

This article originally appeared on The Daytona Beach News-Journal: Daytona Beach getting place for serious illness and injury rehab