06 Sep Beaufort is not the only SC city trying to determine what is taxable and what is not
After the City left the old city hall building on Carteret Street, the building was leased to a for-profit business. This was good for the city and good for the business.
However . . . once the lease was consummated, the Beaufort County Assessor put a taxable value on the building and levied a property tax on the city since leasing city property is not among the core functions of City Government. Rather than challenge this action and hide behind our non-profit status of a government entity, we paid the property taxes for schools, for the county and the city. It seemed to be the right thing to do.
Not long after, we began to think that, notwithstanding federal and state non-profit status, we needed to know he difference between non-profits that do not make a profit and those who work for non-profits but make a profit in doing so. Furthermore, we questioned whether non-profits that earn income outside of their non-profit mission should be paying business licenses.
Accordingly, we instituted a business registration for all non-profits. Those who do not operate outside of their mission, like renting property to residents and businesses thereby competing as a business with the private sector, will not pay a business license fee. Those who operate outside interests will be subject to a fee like any other business not the least of which is those who compete against them.
The following tells what is happening in at least one other city as municipal officials want to support non-profits but not in a way that it creates an unfair burden on others.
EXTRACTED FROM THE GREENVILLE NEWS
Leaders question tax-exempt status of GHS properties
Some Greenville legislators and County Council members have asked the state Department of Revenue to investigate whether Greenville Health System should be paying property taxes on several businesses they own.
At issue are the Life Center, a nursing home and some physician practices, said Councilman Lynn Ballard.
Nonprofit hospitals are exempt from taxes, he said.
But between the Life Center and two medical office buildings, the county has lost about $2 million in revenue since 2011, according to Councilman Willis Meadows.
“The thing that concerns me is, if we’ve lost $2 million in the last five years because they didn’t pay tax, this is $2 million that the taxpayers of Greenville County had to pick up,” he said. “That caused them to pay more taxes than they would have otherwise.”
Ballard said that in 2011, the Life Center paid $179,000 in taxes, but in 2012, it only paid $1,200 in city storm water fees. And it’s only paid storm water fees since, he said.
“The Life Center is a health club. What caused that property to get a tax break?” he said. “These are some significant issues we’re questioning.”
In addition to the loss of tax revenues, Ballard said that other health clubs pay taxes, giving the Life Center a competitive edge.
But GHS says it’s following tax rules set by the Revenue Department.
“We pay taxes according to the law,” said Larry D. Gosnell, GHS treasurer. “There are different sections applicable to governmental entities versus not-for-profits and for-profit entities.”
When it comes to the Life Center, he said, GHS owned it and the land it sits on for years and then sold it to a private company in 2009, which accounts for the taxes paid through 2011. In 2012, GHS bought the land back again, making the property tax-exempt again, he said.
“If we have ownership of the land,” he said, “the entire property is exempt as long as it’s used for public purposes as a governmental entity.”
Another property that houses the adjacent Center for Family Medicine also went from paying taxes to not paying taxes, Ballard said.
Gosnell said the same situation as the Life Center applies.
But Rep. Garry Smith wondered whether formerly taxed independent physician practices should be tax-exempt after being purchased by a hospital.
And County Councilman Joe Dill said losing the revenues is a big concern.
Meanwhile, the Cottages at Brushy Creek in Greer, an assisted living facility that GHS trustees recently voted to sell to private nursing home company Orianna Health Systems, paid $141 a year in public service and storm water fees but nothing in taxes in 2015, Ballard said, while NHC nursing homes in Mauldin and Greenville paid taxes.
“GHS as a governmental entity owns the land and buildings at the Cottages and they are used for public purposes,” so they are not taxed, Gosnell said.
Patewood Memorial Hospital pays no property taxes, and neither does St. Francis Eastside. Both are nonprofit hospitals.
But GHS’s three medical office buildings and an administrative building at the Patewood campus pay only storm water fees and no taxes while Bon Secours St. Francis Health System’s nearby medical office building pays $400,000 in property taxes, Ballard said.
And one GHS MD 360 Urgent Care Center in Simpsonville pays taxes while one in Greer doesn’t.
Gosnell said the land the Greer center is on is owned by GHS, and therefore is not taxed, while the land in Simpsonville is owned by a private company.
“Why should the fact that the hospital owns the land make anything on the land tax-exempt?” asked Meadows. “I don’t have a vendetta. We’re the stewards of the county tax roles and something isn’t making sense.”
Gosnell said that if a governmental entity owns the land, the entire property is exempt according to DOR rules.
While GHS was made a political subdivision by Act 432, some officials wonder whether the hospital system, currently a public nonprofit, can remain tax-exempt once it restructures to a private nonprofit as it’s in the process of doing.
“There is a lot of concern in the delegation and at the county level of so much tax money being shifted … because they’ve been able to negotiate with DOR a tax-exempt status,” said Rep. Mike Burns. “Consequently, the burden has fallen on the homeowner to continue county services for GHS and all their entities.”
He said legislators are looking at the issue statewide to assess the impact and determine whether any laws need to be changed.
A representative of the Department of Revenue said the agency will check into the matter and advise the officials of its findings.