No closure with Illinois tax-exempt ruling: expert
The Illinois Revenue Department stacked up about 85 applications from not-for-profit hospitals seeking property-tax exemptions over the past four years, waiting for the courts to sort out what’s demanded of hospitals in return.
A long-awaited Illinois Supreme Court ruling failed to deliver much clarity, so unless the Legislature intervenes, the next test may come from within that stack.
The Illinois controversy is specific to local property-tax exemptions as allowed under the state constitution, yet the debate has paralleled a broader national discourse about what hospital activities and expenses constitute charity and how much is enough.
Last month the court affirmed that state’s decision to strip the property-tax exemption from 202-bed Provena Covenant Medical Center in Urbana (March 22, p. 12). But the Illinois court did so with only three of seven justices standing behind Revenue Director Brian Hamer’s focus on the strict value of charity care and dismissed other forms of community benefit and Medicare and Medicaid shortfalls.
“This decision did not conclude the debate at all,” said John Durso, a lawyer who is a partner in the Chicago law firm Ungaretti & Harris. “It’s going to be years for another case to find its way through the process.”
A Revenue Department spokeswoman declined to provide an interview with Hamer and said it’s too early to comment on how he will approach the backlog in light of the opinion.
Many of those applications are for small ancillary properties rather than hospital campuses, and some are duplicates filed over the years as the department deferred acting on them. Others, though, represent parcels that are home to replacement hospitals and hospitals required to reapply for an exemption following a change of ownership.
The next main event could involve Provena’s Urbana neighbor 279-bed Carle Foundation Hospital. In 2004 the Champaign County assessor added four hospital parcels to the tax rolls and the Revenue Department upheld the move.
Carle Foundation is pursuing the administrative appeals process that landed the Provena case in the state’s high court, and that review has been idle pending the court’s decision. Carle Foundation has a separate lawsuit, however, that would circumvent the messy details of the charity debate. The lawsuit argues officials overstepped their authority in targeting previously exempt properties without any change in ownership or use.