Chesterton Tribune

 

 

Porter County assessor and hospital in court over appraisal

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By JEFF SCHULTZ

Porter County Assessor Jon Snyder testified in circuit court on Thursday that he believes he has statutory authority to conduct a private appraisal to determine “a fair and equitable” assessment for Porter Regional Hospital.

The hospital would say otherwise. It wants to know why the assessor’s office wants to hire an out-of-state appraiser when all properties are to be assessed under the guidelines set by the state.

Having filed a petition for a writ of production of books and records with the courts earlier this month, Snyder took the stand for nearly three hours Thursday afternoon saying the County Commissioners approved his recommendation to hire Jack Poteet of Hospital Appraisal Services LLC, based in Kansas, last November to aid in calculating what would be the market value in-use of the 430,000 sq. ft. health care facility located at 85 E. U.S. 6 in Liberty Twp.

Under direct examination by his attorney Christopher Buckley of Gordon Etzler & Associates, Snyder said he forwarded requests from Poteet to hospital officials in January and received a letter back “respectfully declining” to give information.

Snyder said he sent out a subpoena in May listing 28 items needed for the appraisal and the hospital honored two complete and one partial request. Snyder said he and a few of his staff inspected the facility and were not allowed in certain areas , including the adjacent 60,000 sq. ft. medical office building he believes is owned by Porter Health Systems.

“We do feel we need to go back to the facility a second time to get an assessment,” Snyder said.

Attorneys hired by Porter Hospital, Stephen M. Brandenburg and Sharon Stanizone of the Crown Point law firm Johnson & Bell, told County Circuit Court Judge Pro Tem David Matsey that the appraiser’s requests were “over broad and unnecessary” because Poteet’s entrepreneurial profit assessment approach is not included in the Indiana Department of Local Government Finance’s most recent property assessment manuals.

One such request would have required disclosure of all real estate transfers by Porter’s parent company Community Health Systems over the last five years which would require great effort and cost.

Snyder testified that with the records and information he has now on the hospital, an assessment cannot be completed. As stated in his petition for the writ, he said he would like to have the appraisal completed by Sept. 1 to prepare notices of assessment which are mailed to taxpayers later in the fall.

Local government units rely on yearly assessment figures to begin their budgeting for next year, Snyder added, and if the hospital issue is not resolved it could mean disruptions in the tax cycles.

According to Snyder, the state has three approaches in making property assessments Ðsales comparison, cost and income. All three can be used in the final assessment and the state gives county assessors local control, Snyder said, which was his explanation of why he can hire an outside appraiser without it being mentioned in guidelines.

In Brandenburg’s cross examination, he asked Snyder if he had hired an appraiser to “drive up the revenue” for the County by purposely raising the hospital’s assessment, to which Snyder replied in the negative.

Brandenburg then asked if Snyder’s motivation to hire Poteet was due to articles published that reported Poteet was able to achieve higher assessment figures using the entrepreneurial profit approach, to which Snyder also replied in the negative. Brandenburg also questioned if the County properly hired Poteet by seeking proposals for the job.

Snyder said he hired Poteet for his “experience, knowledge, expertise, qualifications É all of those things.”

The cross examination revealed that Snyder had not checked with the state if Poteet’s methods were permissible, but Snyder reiterated his belief that the state allows county assessors the freedom to hire appraisers and deviate from the guidelines if it is an equitable way of determining assessments.

“We are fully capable to do that,” he said.

Snyder said he has had appraisals done before for assessments on a few commercial properties.

Brandenburg questioned why the state would produce a 500-some page assessment manual “if county assessors are allowed to do whatever they want.”

Next Brandenburg asked if he knew any hospital in Indiana that had been assessed using the entrepreneurial profit approach. Snyder said he did not.

Brandenburg then asked Snyder if he had assessed the medical centers such as St. Anthony’s in Chesterton the same as he was Porter Regional Hospital. Snyder said he had not because those facilities are “smaller, more manageable. They are a different character.” Snyder characterized Porter Regional Hospital as “unique” for the county.

Snyder said he wished to pursue a different way to assess Porter Regional Hospital after it was assessed at $34 million on March 1, 2012, when construction was 90 percent complete. He said he felt “there was something wrong” after reading comments from Porter Hospital representatives in the media that the value is close to $200 million.

Snyder said he didn’t feel using the usual “cost-ladder” approach for offices and medical centers would reflect a fair assessment.

Poteet was present at the hearing but was not called to testify due to lack of time. Matsey scheduled the hearing to continue at 9 a.m. on Friday, July 26.

CEO comments

Hospital officials have been tight-lipped regarding the appraisal, but Porter Health CEO Jonathan Nalli who sat in on the hearing welcomed questions from the Chesterton Tribune afterward.

Nalli said Porter as well Community Health Systems wants to make sure their facilities are assessed using proper and legal methods and that it is not its intention to hold up the taxes for the county.

“We want to be treated like every other taxpaying business,” he said. “Why am I being held to a different standard? That is something I want to understand.” To his knowledge, no hospitals in the state have been assessed with an appraiser using the entrepreneurial profit method.

Nalli said the hospital has paid its taxes and is willing to work with the assessor or any other department of county government on the records they need as long as it is meets the statutes set forth by the state.

Answering to one of the points of contention, Nalli said the reason Porter Hospital did not give the assessor staff access to the 60,000 sq. ft. medical office is that the building is actually owned by a trust in Birmingham, Ala., who would be the one to grant access.

 

Posted 7/19/2013