VALPARAISO | Shortly after Porter County sold Porter hospital two years ago, city officials added the hospital campus to an existing tax increment financing district.

That means when the hospital begins paying taxes this year, which will be the first time in the facility's 70-year history, the city of Valparaiso will divert a portion of the revenue for itself and away from other taxing units, said Stuart Summers, executive director of the city's Redevelopment Commission.

The same will be true if Memorial Health System, of South Bend, follows through on plans to build a hospital at the southeast corner of Ind. 49 and County Road 500 North. A TIF district was created at that site nearly two years ago, Summers said.

The 3D Plaza just east of the hospital, which the hospital uses, also is included in the TIF, but Porter hospital has other facilities around the city outside of TIF districts, Summers said.

It's unclear what percentage of the hospital revenue will go to the city for infrastructure improvements in the TIF district.

The city is able to collect just the real estate, or building portion, of the tax revenues and not the taxes collected on personal property or equipment, Summers said. He said he believes personal property makes up most of the tax bill.

But the opposite is true in the case of Porter hospital's pending application with the County Council for a tax abatement on its proposed facility in Liberty Township at the northwest corner of Ind. 49 and U.S. 6. The new building is valued at $139 million and equipment at just $41.6 million.

Summers said the city is interested in keeping Porter hospital in the city and preventing it from leaving for the targeted unincorporated area, he said.

Hospital attorney James Crawford said last week Porter hospital is expected to pay $1.3 million in taxes this year on its Portage hospital campus and other sites around the county.

Valparaiso's TIF districts remain in place for 30 years and currently are collecting $3.6 million a year, Summers said.

The county hospital was bought by Community Health Systems, of Tennessee, which is required to build a minimum 225-bed private room hospital within four years of the May 2007 closing date.

The project proposed by the South Bend-based Memorial Health Systems, which calls for a 100-bed hospital along with a 100,000-square-foot medical office building, was given a two-year delay earlier this year by the city when the poor economy caused financing problems.