INDIANAPOLIS – A top Indiana lawmaker, his family and investors in their company risked losing millions in future profits if a proposed ban on construction of new nursing homes in Indiana had become law this year, an Associated Press review has found.
Instead, the bill died after intense private lobbying by Republican House Speaker Pro Tem Eric Turner, who now faces scrutiny over his actions on legislation that would have directly affected his family.
Public and private financial documents show Turner and other direct investors in Mainstreet Property Group rely on building new nursing homes to make money, generating returns of up to 600 percent in some cases. Each deal for a new home that Mainstreet completes with HealthLease Properties in Canada, an affiliated company in which Turner and his family are also investors, can net investors a collective $2 million or more.
Turner, R-Cicero, maintains that business model would have survived the proposed moratorium, and a ban simply would have led them to do business in other states.
Financial analysts who reviewed a private Mainstreet financial document for The Associated Press disagreed, concluding that the Indiana ban would have drastically cut into the company's profits by placing the state – where many of its facilities are located and others are planned – off limits.
Turner's private lobbying against the ban in the final two days of the legislative session has drawn scrutiny from Statehouse leaders, with fellow Republican House Speaker Brian Bosma ordering the House Ethics Committee to investigate Turner's actions.
Supporters of the moratorium, which would have halted new construction for five years, argued it was needed to keep the market from being flooded and prevent older facilities from going out of business. But opponents of the ban, including Turner and his children, argued it violated free market principles.
The bill died after Turner's push during private meetings of the House Republican Caucus, where decisions are frequently made before lawmakers return to public debate.
"It looks like he stood to benefit the most from this bill dying," said Tim Sadler, a business consultant and president of the Fairfax Group, which operates nursing homes in Indiana.
Turner, who declined to be interviewed, acknowledged in a statement that he has an ownership stake in Mainstreet Capital Partners, which has an interest in Mainstreet Property Group. His son, Zeke Turner, is CEO of Mainstreet Property, and his daughter, Jessaca Turner Stults, is Mainstreet's registered lobbyist.
The lawmaker also said he has an investment in HealthLease Properties in Canada, a real estate investment trust started by Zeke Turner.
He declined to disclose the amount of his investment in the companies. State financial disclosure laws don't require him to provide that information. Zeke Turner did not respond to multiple requests for comment.
In a statement, Eric Turner said the construction ban would have had "no significant effect" on Mainstreet's business model.
"If a moratorium had passed, investment dollars in new facilities would have likely gone to other states and Indiana would have missed out on new jobs, new investments, and a better living experience for seniors," he said in the statement.
The Turners could have still made money elsewhere; they had already planned to begin constructing new homes in Kansas and Ohio. But leaving Indiana would have meant giving up deals – including taxpayer-backed loans – that have in many cases come from Eric Turner's political ties in Indiana. The cities of Marion, Wabash and Westfield all made loans to Mainstreet for projects.
Zeke Turner and Mainstreet officials testified before lawmakers that at least five of the company's projects in Indiana would be canceled if the ban was approved, and many others would be at risk.
One of Mainstreet's private documents used to lure private investors details at length their investment strategy and the profits they have made on previous deals.
Under its business model, Mainstreet arranges the financing for its facilities, then leases the completed buildings to a private operator. The buildings are then sold to Zeke Turner's HealthLease at a hefty profit. The private investors are paid back their initial investment, plus returns of anywhere from 14 percent to 18 percent, according to financial documents.
In the case of Wellbrooke of Westfield, a new home that opened last year, investors put in $750,000. They made a $4.5 million profit. For eight nursing home sales to HealthLease detailed in the Mainstreet document, Mainstreet investors made $34 million on an investment of $14 million, for a $20 million net profit.
According to the document, Mainstreet was looking to raise $60 million to build 12 new nursing homes at a cost of $199 million combined. In the case of three nursing homes it planned, Mainstreet expected to sell each one for roughly $20 million, collecting between $3.3 million and $5.3 million on each sale.
The document does not include expected sale prices for the other nine facilities.
At least two of those projects are now under construction.