City wants $7M refund for lost jobs at Mercy Health

The City of Cincinnati wants a refund on $7 million in tax breaks after the Bond Hill headquarters of Bon Secours Mercy Health failed to create enough promised high-paying jobs.

This is the second time this year the city has attempted to recoup money from incentives given to large employers who did not deliver on job expectations.

On March 7, the city modified its 2014 tax abatement deal with GE Aerospace with language that requires a $1.5 million payment to the Port of Greater Cincinnati Development Authority and $200,000 to Hamilton County.

In Bond Hill, the city gave Mercy Health 30 days to repay tax credits from a property investment reimbursement agreement signed in November 2014 and modified in 2019.

That agreement led to $7,037,174 in tax-credit refunds to Mercy Health between 2016 and 2020, according to the notice.

“If BSMH does not remit payment to the city within 30 days, the repayment sum will begin accruing interest at the rate of 8%,” City Manager Sheryl Long wrote in a June 20 demand notice letter to Scott Schitter, compliance director for Mercy Health.

The WCPO 9 I-Team obtained the letter in a public records request.

“Should the city be required to pursue litigation, the city reserves the right to pursue any additional outstanding fees, expenses and costs," Long wrote.

Mercy Health said it is "carefully reviewing all the pertinent details concerning the request from the city of Cincinnati and we look forward to working with the city on the necessary next steps," said Spokeswoman Lisa Dyson. "We continue to deliver high-quality, compassionate health care to our patients across Cincinnati with a network of nearly 10,000 associates."

In 2019 Mercy Health promised to expand a three-year-old headquarters complex that it touted as already employing about 1,200. The hospital system formed by Mercy’s 2018 merger with Maryland-based Bon Secours expected to add 500 jobs with average salaries of $100,000 by the end of 2024.

But city records reveal that Mercy Health fell short of its promise to employ an average of 1,250 employees in Bond Hill from 2019 to 2023 and maintain an annual payroll of $125 million from 2020 to 2023. It had only 172 employees in 2023 and annual wages fell $94 million short of the promised amount, according to a 2024 city default notice.

Mercy Health said blamed the shortfall on the increased popularity of remote and hybrid office jobs.

"In 2020, before the onset of the COVID-19 pandemic, nearly 1,400 associates were working daily at the Bond Hill office," Dyson said. The pandemic "necessitated a complete transition of how our office-based support staff works."

Mercy Health and GE both had tax-credit deals that enabled earnings tax refunds if job creation goals were met.

GE promised to bring 1,800 jobs to its office building at The Banks but never produced enough jobs to claim tax credits. So, the city terminated its tax credit deal and modified a second agreement for property tax exemptions to require GE's contribution to the Port and Hamilton County.

GE said it made the payments June 28. The Port's contribution will fund its initiative for bringing industrial development to Queensgate and Camp Washington. The county will fund a future urban design plan at The Banks with its contribution.

The revised agreement calls for GE to use its best efforts to bring tenants with at least 800 employees and $40 million in annual payroll to the building.

The city is seeking the Mercy Health refund as Hamilton County considers a deal to purchase the Bond Hill headquarters for $65 million, so it can relocate more than 1,400 employees to the site and sell five buildings in downtown, Over-the-Rhine, East Walnut Hills, Corryville and Madisonville.

The real estate shuffle was proposed more than a year after the I-Team reported that the county was seeking new office space to house 1,200 employees. The Mercy Health site was viewed as a likely alternative at that time.