By not willing to
accept a property assessment of at least $130 million, Porter Regional
Hospital risks losing its 10-year property tax abatement.
On Thursday the
Porter County Council made a “preliminary determination,” by a vote of 7-0,
that the hospital was not within the terms of that abatement and set a
hearing for Tuesday, June 24, after its regular business meeting, to vote on
whether the tax break should be canceled.
“Apparently we and
the hospital do not agree,” said Council President Dan Whitten, D-at large.
Chief Financial Officer Cheryl Harmon told the council a tax attorney for
PRH is working to resolve the assessment issue with County Assessor Jon
Snyder and requested that the council proceed with the abatement.
With that, Harmon
gave Council members a list of commitments which she said the hospital has
“met or exceeded” in accordance with the abatement form:
Porter is also
saying that it had made good on its promise of spending more than $130
million in construction costs for the abatement. The facility completed
construction in 2012 at the corner of U.S. Highway 6 and Ind. 49 in Liberty
But the point which
Harmon tried to make was that construction costs don’t mean the same thing
as assessed value. That is formulated with a model from the state’s
assessment manual, she said
assessment from the County Assessor the hospital received was about $39
million in 2012, based on that model, Harmon said. Porter appealed that
because it’s been a custom to do so in order to arrive at the right value,
unsuccessfully attempted to withdraw that appeal when the Property Tax
Assessment Board of Appeals raised it to $117 million.
A steep assessment?
Harmon showed a
comparison of assessments with other large medical facilities in Northwest
Indiana and claimed their replacement cost per square foot was $486, more
than triple of everyone else, based on the current assessment given by the
“There is no way a
225-bed hospital is that expensive,” she said.
As for the $244.5
million assessment given in 2013, Harmon told the council “It’s grossly
overstated. I’m sure you would agree if it was your building.”
As a compromise,
Porter said it was willing to settle for an $85 million assessment which
would still put it well above other health care facility assessments.
But Whitten said
that when the council unanimously approved the abatement in 2009, Porter’s
former CEO Jonathan Nalli and attorneys provided a cost-benefit analysis
presenting the benefits which taxpayers would receive of having a hospital
with an assessed value of more than $130 million, which was why he voted for
But it looks like
“somewhere along the way we got disconnected,” Whitten said. He said he was
“afraid” that the hospital would now claim that it had meant $130 million in
construction costs rather than assessed value.
If the council were
to continue the abatement but also accept the lower assessment on top of it,
Whitten said, “I feel the tax payers have been duped and I will take no part
Vice-President Karen Conover, R-3rd, said that although she would agree that
Porter delivers quality health care, she stands by Whitten’s comments. “You
promised us $130 million,” she told Harmon.
Sylvia Graham, D-at large, said that she was one of the council members at
the time of the abatement and also remembers being told the assessment would
be more than $130 million. “We’re playing with numbers now. I don’t
understand it,” she said.
attorney Scott McClure said that in his reading of the abatement resolution,
a figure of $130 million is estimated for the value of improvements, meaning
that is to be the assessed value.
Harmon echoed that
Porter is in the process of coming to an agreement over the assessment with
the County Assessor.
Council Member Jim
Biggs, R-1st, said that “this isn’t a flea market” in arguing over what the
value should be but he’d be willing to consider a new assessment if the
Assessor brought it to him. He said it should be considered that the County
had spent $50,000 of taxpayer money to hire a “national expert” to make a
McClure said that
the task at hand isn’t to decide the assessment, since that is not their
purview, but to judge whether the hospital is in compliance based on the
information it has in front of them.
By having the
County assessing the hospital at $244.5 million, Council Member Robert
Poparad, D-at large, said that it would appear the hospital is in compliance
as far as the council is concerned.
So far as he’s is
concerned, Whitten said, Porter’s disputing that figure means that the
hospital is not in compliance with its statement of benefits. “They have the
burden. I don’t think they’ve made it.”
Poparad ended up
making the motion to declare the hospital not in compliance which generated
a unanimous vote.
During the hearing
on June 24, both sides will get the chance to present their case.
McClure said the
council is the body which has the power to revoke the abatement. The
hospital would have the option of appealing a revocation in court.