The issue of the
ten-year tax abatement for Porter Regional Hospital has been resolved.
Systems will keep its abatement after a five-member majority of the Porter
County Council on Tuesday determined the hospital had measured up to the
provisions set in the agreement for the tax breaks after the health care
provider accepted an assessed value of $130 million.
Voting to preserve
the abatement were Council President Dan Whitten, D-at large, Vice-President
Karen Conover, R-3rd, members Jeremy Rivas, D-2nd, Sylvia Graham, D-at
large, and Robert Poparad, D-at large.
Polarek, R-4th, abstained from voting, stating his wife works for Porter
Hospital, while Councilman Jim Biggs, R-1st, cast a “no” vote.
In a prepared
statement to the local media a few hours before the County Council held a
hearing regarding the fate of the abatement, Porter Hospital representatives
said the deal “will provide (an estimated) $9.7 million in tax revenues for
Porter County and Liberty Twp. residents and the Duneland Schools over the
next ten years.”
The hospital is
located at the northwest corner of U.S. 6 and Ind. 49 in Liberty Twp.
The Council earlier
this month stated PRH had not made good on its promise to build a 225-bed
hospital valued at or over $130 million. Its Chief Financial Officer Cheryl
Harmon said then that construction costs had exceeded $130 million, but the
assessed value should have been $39 million going by the model within the
Indiana Assessor’s Manual.
But Whitten and
other members who were on the Council during the time the abatement was
granted in 2009, said they remembered PRH officials “promising” a facility
of $130 million that would increase the county’s overall AV and benefit
By subsequently not
accepting that assessed value, PRH risked losing the abatement due to
non-compliance. PRH had appealed both its 2012 assessment of $34 million and
its 2013 assessment of $244.5 million, the latter of which the County
Assessor’s office figured with a national appraiser of hospitals.
continued discussions with County Assessor Jon Snyder, Porter did agree to a
$130 million assessed value for 2013 and 2014, as well as a $117 million
assessment for 2012 when PRH was 90 percent constructed.
attorney Scott McClure said 2012 has been determined as the first year the
abatement was to take effect, which also means the abatement is currently in
its third year.
recently filed their Form 322/RE abatement compliance forms from the
preceding years and asked the Council to waive their late submissions in
order to start the abatement retroactively.
Voting in favor of
the request to waive were Whitten, Conover, Graham, and Poparad. Polarek
abstained again while Biggs and Rivas were opposed.
Rivas said he voted
“no” to the waiver because during those years, the hospital did not meet the
criteria for the abatement but he voted in favor of moving forward with the
abatement now that PRH is in compliance.
the singular “no” vote, Biggs said outside of the meeting that he is against
granting the tax abatement because of the “current funding situation the
County is facing.”
“I don’t feel that
we’re in a position to hand out an abatement to a company whose earnings run
into the billions,” he said, believing the move would have a negative impact
on revenues for the affected taxing units like Duneland Schools.
critical of what he saw to be a lack of communication on the hospital’s part
in the Council’s search for answers on the abatement such as who owns the
adjacent medical office building and because of the disputes with the
Assessor over establishing an assessment that included a battle in Circuit
“It’s just been a
huge struggle,” said Biggs who questioned why the hospital has agreed to
$130 million now after two years of friction when they said they would
accept the assessment at the time Council gave the abatement.
According to the
Council’s budget specialist Vicki Urbanik, the County, Liberty Twp. and the
Duneland Schools would see more benefit with the abated $130 million in the
end than if the hospital were to be assessed at the $39 million AV it
claimed, minus the abatement.
With the higher
value, more AV will be increase the County’s certified net values over time.
Following the schedule, 100 percent of the AV will be abated the first year,
95 percent in the second, 80 percent in the third, 65 percent in the fourth,
50 percent in the fifth, 40 percent in the sixth, 30 percent in the seventh,
20 percent in the eighth, 10 percent in the ninth and 5 percent in the
assessments provided by the Assessor office, $0 of the hospital’s real
property AV would be included in the County’s certified taxable AV for 2012,
$6.5 million for 2013, $26 million for 2014, $43.2 million for 2015, $58.6
million for 2016, $68.6 million for 2017, $78.3 million for 2018, $87.5
million for 2019, $95.4 million for 2020 and $97.9 million for 2021. The
abatement will expire in 2022.
Snyder told the
Council that the AV will follow natural depreciation for commercial
property. For instance, the hospital’s total AV on real property is expected
to be $103 million in 2021.
Urbanik said it is
uncertain how the tax rate for Liberty Twp. would be affected with the new
AV as tax rates there have gone up about a percent or two in the years the
hospital has been there.
Snyder added the
reported $9.7 million the deal will bring over time is “a conservative
estimate” but agreed “we don’t know what the tax rate is going to be.”
Robert Wichlinski said he is happy to see the figures the Assessor will be
giving him are certain as his staff will now be able to figure the tax
revenue more accurately.
In the meantime,
praise was given among the Council, the Assessor, and the hospital for their
exertion in unraveling the issues surrounding the abatement.
“I’m happy it’s
settled. I commend all the parties involved,” said Graham.
“this is great news” and referred to the hospital as a “wonderful corporate
neighbor.” She said she is glad that certainty has been reached.
Whitten in a
statement to the press said this will prevent “a double hit” on taxpayers.
“The Porter County
taxpayers are now protected and will reap the benefit of the bargain that
was made with Porter Hospital LLC when the original tax abatement was
granted,” Whitten said.
The County will now
have a definitive list of what the real property value of PRH will be per
year, which also avoids many years of tax appeals and associated costs as
seen in the last two years, he continued.
McClure if the appeals will be “put to rest” with this agreement to which
McClure said yes.
Rivas asked if the
abatement would be on just the hospital itself and not the adjacent 60,000
sq. ft. medical office building reportedly owned by The Sanders Trust.
McClure said the abatement will be exclusive to Porter and therefore would
not include the MOB.
mentioned that, as part of the agreement, Porter will shell out an
additional $20,000 to the County for the appraisal conducted last year on
top of a separate $20,000 it had already paid out. The County hired Jack
Poteet of Hospital Appraisal Services for $50,000.
As part of the
resolution for the abatement, Porter is to pay $100,000 to the County each
year for the abatement.