The Mercury building, an 81,380-square-foot office building situated along the Animas River in south Durango, is one of the largest and most expensive real estate properties in Durango.
So how is it that Axis Health System, a nonprofit integrated health care provider serving an 11-county region in Southwest Colorado, came to purchase the massive structure for $18 million?
Axis spokeswoman Haley Leonard-Saunders said many residents know Axis Health only for its behavioral health work, but the health care provider does much more.
“We’ve been quietly in the background of the community serving people in different ways,” she said.
Axis not only offers behavioral health service but also primary care, dental care and now a pharmacy with the opening of the Mercury building in 2024. In addition, Axis offers cancer screenings, substance education/counseling and chronic disease management services.
The health care provider has a total of 430 employees with a $42 million yearly budget.
Axis’ plan for the Mercury building is to house three of the nonprofit’s patient care facilities in the building as well as its corporate office. This will include integrated patient care, oral care and behavioral health care. It will replace the Columbine Behavioral Health Care facility, Durango Oral Health Clinic and La Plata Integrated Health Care.
Leonard-Saunders said using the building to integrate services should serve as a sign that Axis is a diverse health care provider.
The Mercury building was built in 2014 to house Mercury Payment Systems, a credit card processing company that started in Durango and was eventually sold to a global company called FIS Worldpay. The publicly traded company eventually sold the building to James Coleman, managing partner of Mountain Capital Partners, which owns Purgatory Resort, in 2021.
In February, the building was sold to Axis Health System for $18 million in a deal between the two parties that did not use a real estate broker, said John Wells, real estate broker for The Wells Group.
Wells said the building is among one of the most expensive commercial real estate properties in Durango and to his recollection there’s only been a few apartment complex properties that have been sold for more.
Coleman purchased the building for $9 million with the intention of turning the building into a mixed-use commercial, office and rental space. In a previous interview, the La Plata County assessor characterized that as a “considerably” low price tag for the property.
La Plata County real estate appraiser Diana Cole said that Mountain Capital Partners likely was able to receive a reduced price on the building because in 2021 office buildings were not heavily sought after as many companies were working remotely.
Leonard-Saunders said it was the right time and opportunity for the purchase. Even though there was a substantial difference between what Mountain Capital Partners paid for the building compared to Axis, the health agency felt that based on its facility needs and what the cost would have been to build a facility, purchasing the building made sense.
She added that the cost of construction, labor shortages and timeline were all deterrents for building a brand-new building.
“Since our involvement with this property, our priority has been that this symbolic building is used to its fullest potential for Durango,” Coleman said in a February news release. “Axis’ centralization into the Mercury building is a win, certainly for their employees and patients, but also our community.”
Creating this integration has been a priority for Axis Health board members for almost 10 years.
“We serve about 10,000 people between those locations currently,” Leonard-Sanders said. “And we’re projecting that this expanded capacity should let us serve at least 2,000 additional new patients across those service lines, if not more.”
The new facility will likely house between 160 and 180 employees once it is finished being converted and will likely create 20 new jobs.
While Axis is a nonprofit organization, the health agency is using what is known as a new market tax credit to help pay for the building.
A new market tax credit program is a federal financial program that aims to stimulate business and real estate investment in low-income or rural communities via a federal tax credit. The federal government incentivizes the investments toward low-income communities by offering a 39-cent tax credit to investors for every dollar expended on the project.
Axis was able to obtain new market tax credit proceeds through the help of Community Healthcare Hospitality Services and Primary Care Development Corp.
The organizations seek out investments and help gain federal funding for infrastructure projects, hospitals, primary care clinics, emergency rooms, rural hospitals and mental health facilities in low-income or rural areas.
CHHS Executive Director Ben Cirka said his organization will generally try to provide funding for around 15% to 25% of the project cost.
Leonard-Saunders said Axis received $5 million from the two organizations and a loan from Community Development Financial Institutions Fund lenders to cover the building and renovation costs.
Through the U.S. Department of Treasury, the CDFI Fund helps promote access to capital and local economic growth in urban and rural low-income communities through monetary awards and the allocation of tax credits.
While no final cost has been set for the building’s renovation project, Axis estimates the cost of renovation will be around $100 per square foot. However, the health care provider is unsure how many square feet will need to be renovated because it may lease some of the unused space to private practitioners and other entities.
Axis is also pursuing other federal and state grants to help cover the cost of the project and the loan taken out on the building.
CHHS Executive Director Ben Cirka said the new market tax credit proceeds cover a funding gap that a borrower may need in order to get the project off the ground.
The building is currently undergoing renovations and is scheduled to be ready for move-in by early 2024.
tbrown@durangoherald.com
