(DUPAGE COUNTY) The state’s recent approval of some hospitals as nonprofits means that government agencies — especially schools — are now on the hook to refund taxes to the hospitals going back five years.
And that’s going to cost some of them millions.
The impact in Naperville will probably be mixed. Jay Strang, assistant superintendent of business for Indian Prairie School District 204, said that unlike other districts, 204 won’t have to scramble for funds because “this was something that wasn’t even on our radar.”
“We don’t have any hospitals located within our taxing district, so this isn’t something that is going to impact us,” Strang said. “In terms of how other school districts are going to deal with this, I can’t speak for that.”
However, Naperville School District 203 does have Edward Hospital in its district. District officials are examining the situation.
“The school district is seeking additional information before we determine what action we will need to take,” said District 203 spokesperson Susan Rice.
DuPage County Treasurer Gwen Henry told The Sun that the hospital would receive refunds based on its tax exempt status for 2009 and 2010, but not for 2011 “as the exemption for taxes already went through” by the time they applied.
“We have the exemptions filed for 2009 and 2010, and there may be one for 2008 and even 2007,” Henry said.
Henry said that Edward has two parcels including the hospital that have partial or full tax-exempt status. According to Henry, one of those parcels will receive approximately $17,500 in back taxes, an amount which pales compared to the money the hospital’s tax exempt portion will receive. Using the same percentage of taxes waived from 2011 when the hospital was exempt ($758,472), Henry estimates refunds due of $717,565 for 2010, $698,014 for 2009, $675,968 for 2008 and $132,500 for 2007, for a total of nearly $2.25 million.
“Hospitals had a tax exempt status that was taken away from them for not making enough charitable contributions,” Henry said. “They’re happy about this and they’re not, because the feeling is they’ve been paying money for a number of years they shouldn’t have been paying. In terms of District 203, they’re going to have to pay this back within the year, once they receive their tax levy.”
Schools budgets often have contingency funds built in, including fund balances that can be tapped for various reasons, but those balances are likely to be minimal given the millions of dollars’ worth of cost cuts that have already been made over the past five years in most districts.
Edward Hospital issued a statement Friday regarding the property tax exemption issue: “We have earned our tax-exempt status by providing nearly $100 million in community benefit last year including a generous charity care policy that exceeds the state’s requirements,” the statement said. “Edward Hospital & Health Services is a not-for-profit and has been for many, many years. Over the past few years, Edward has filed for property tax exemption with the state for a few parcels of land on and near our Naperville campus. However, for the past few years the Illinois Department of Revenue did not act on those applications, or the majority of hospital property tax exemption applications, until recently.
“Edward paid property taxes on parcels with pending applications for the years in question, as required by law, with the understanding that the money would be refunded provided that the tax exemptions were eventually approved. We had every expectation that our parcels would be deemed tax exempt, and each has subsequently been designated as such,” the statement said.
Many school districts in the area are feeling the pain. Valley View School District, which covers Romeoville and Bolingbrook, must pay Adventist Bolingbrook Hospital between $4.5 million to $5 million, according to Larry Randa, community relations director for the district.
Although Adventist CEO Rick Mace said in a statement that it paid taxes in protest and worked with county leadership since 2008, Randa said, the first Valley View heard about the issue was a couple of weeks ago.
In the case of Plainfield School District 202, it owes Naperville’s Edward Hospital $1 million it hadn’t budgeted, district spokesman Tom Hernandez said. That figure is on top of the approximately $1.7 million projected deficit after the district already cut $8 million since September.
“When you roll it all together, we’re at the bottom of the hill again,” Hernandez said.
Plainfield is in discussions with Edward about payment terms and planning. The hospital has been cooperative with the school district, Hernandez said.
“All we’re saying is, ‘holy cow, it’s going to cost us a million bucks,’” he said.
-- Naperville Sun
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