Nationwide Children's Seeks City Tax Breaks On For-Profit Gene Therapy Facility

Feb 3, 2020

Nationwide Children’s Hospital is asking for tax abatements on a new for-profit gene therapy center. If granted, it would exempt the company from paying money to Columbus City Schools for 15 years. 

Andelyn Biosciences has been proposed as a for-profit company that would manufacture gene therapy products.

Those products would be developed and distributed to companies that sell them for medical treatment, explains Libbey Hoang, vice president of planning and business development with Nationwide Children’s. 

"Our focus will be to bring rare genetic disorder treatment for children to the market," Hoang says. "We believe that there’s a great opportunity for Nationwide Children’s to be the leader in that because of our transformational science that has occurred here." 

The center would be part of Ohio State University’s West Innovation Campus, at the corner of Lane and Carmac. Hoang says it will be specifically designed for biologics manufacturing.

That – combined with having to hire an expected 150 employees before they can turn a profit – is why they’re asking for a 15-year, 100% tax abatement. 

"The facility cost us about $64 million in improvements to construct," Hoang says. "Because the company will take approximately four years to actually then produce treatment, we will have nearly $30 million in taxable payroll with very limited income, so that’s the major reason we’re seeking the tax abatement."

However, Nationwide Children's ask is drawing criticism.

"Our stance has always been that we oppose tax abatements for corporations that don’t need them," says John Coniglio, president of the Columbus Education Association.

The teacher’s union has long opposed the city forfeiting tax dollars to spur development. He points to Nationwide Children’s hospital’s profit margin – an average of about $327 million per year. 

"The first thing that comes to my mind is: Does Children’s Hospital really need this tax abatement?" he says.

The hospital runs several programs in partnership with Columbus City Schools, including STEM programs and primary care services. Nationwide Children’s is also offering an estimated $53 million in health care services in the schools during the 15-year abatement period. 

"Children’s Hospital does do good things in Columbus City Schools," Coniglio says. "But my question would be: Are you doing this just because you don’t want to take the risk that regular individuals have to take every time they want to open a business or do something new?" 

Michael Stevens, interim director of development for the City of Columbus, says the land proposed for Andelyn Biosciences is owned by the state, so it’s not currently producing any tax revenue.

"Without this incentive there would not be the project," Stevens says. "And at this point this parcel does not generate any revenue for the schools or the city, and as a result of incentivizing and making this investment, then we’re going to see revenue coming into the income tax for the city that then we share with the schools over the 15-year period."

Stevens says the city and the schools will split land and income taxes from Andelyn Biosciences – projected to be about $2.5 million each. That price is still significantly less than would have been collected if the project went through without the abatement.

To receive the tax abatement, Nationwide Children’s needs approval from both the Columbus Board of Education and Columbus City Council. 

The proposal hasn’t been presented to City Council, yet so member Elizabeth Brown declined to make a judgement. But Brown says it’s important to consider the motivation behind Andelyn Biosciences.  

"The genetic disorders are so narrowly presented in the average population that pharmaceutical companies can’t make money on developing those things," she says. "Which is why Children’s Hospital is going after it, to my understanding."

The school board plans to take up the abatements on Tuesday. In a statement, board president Jennifer Adair says Nationwide Children's has a strong partnership with the district, and they are considering the abatement. Council will have the final say.