Fed Hock To Further Challenge Holzer Tax Exemption

By
Steve Robb - Athens Messenger staff reporter

Dateline
Updated Wed, Apr 16, 2014 10:50 am
Holzer Clinic in Athens, Ohio

Federal Hocking Local Schools will challenge a determination that Holzer Clinic in Athens is eligible for a real estate tax exemption.

Supt. George Wood said he talked with the school district’s attorney on Monday, and Federal Hocking will contest the tax exemption.

A month ago, the Ohio Department of Taxation sent a letter to Federal Hocking and Tri-County Career Center stating that Holzer had been found to qualify for the tax exemption, but that the schools had 30 days to respond to the ruling. Both schools had opposed Holzer Health System’s application for tax exemption when it was filed last fall.

An attorney for Federal Hocking asked for more time to respond.

“Generally we would not have extended response time on this sort of issue,” taxation department spokesman Gary Gudmundson said Monday. “However, since (Federal Hocking) needed time to sort through thousands of pages of bond documents, we felt it was appropriate this time.”

Wood said the extension from the original 30 days to May 2 was requested because Holzer had made a change to its arguments in favor of tax exemption.

In a Feb. 13 letter to the Ohio Department of Taxation, an attorney for Holzer Health System reiterated Holzer’s claim that it is entitled to tax exemption because it is a nonprofit corporation that provides charity care at the Athens clinic, but the attorney also amended Holzer’s application to include a new argument.

According to attorney Michael Cullers, Holzer Clinic was purchased with proceeds from a bond issuance by Gallia County.

“The county issued the bonds and used the proceeds to purchase the subject property and other properties,” Cullers wrote to the Ohio Department of Taxation. “The county owns the property financed by the bonds and leases it to Holzer.”

The lease expires in 2042, he wrote.

Cullers argues that Holzer is entitled to the exemption under a section of Ohio law that allows tax exemptions for hospital facilities purchased with bonds issued by a public hospital agency. Under Ohio law, a county meets the definition of a public hospital agency, and the services provided by Holzer Clinic meet the definition of a hospital facility, Cullers wrote.

Records in the Athens County Auditor’s Office and Athens County Recorder’s Office indicate that Holzer Health System bought the clinic building and land in 2011 and recorded the sale in March of 2012. Neither office has any documentation showing that Gallia County owns the property.

Contacted by The Messenger, Cullers clarified that Gallia County has a security interest in the property because it issued the bonds, but the actual owner is Holzer Health System.

In a written explanation that Cullers provided to a Holzer spokeswoman who forwarded it to The Messenger, Cullers said that Holzer Health System leased the property to Gallia County, but then Gallia County leased it back to Holzer. Both leases expire in 2042.

“This financing lease structure was necessary to allow the issuance of the Gallia County bonds under (Ohio law),” Cullers wrote.

As The Messenger reported earlier, a March 13 letter from the Ohio Department of Taxation to the schools cited the bond issuance argument as the reason for finding that Holzer Clinic qualifies for the exemption.

“The evidence on record shows that the property is used as medical facilities, and was financed in whole or in part by obligations issued by a public hospital agency, as required by (the tax exemption law),” the letter reads. “The property is therefore entitled to exemption for tax year 2013.”

Wood declined to say what arguments Federal Hocking will use against the tax exemption.

Federal Hocking stands to lose about $100,000 annually if the exemption is fully granted.

Tri-County Career Center also receives tax revenue from Holzer Clinic of Athens, but less than $8,000 a year. Supt. Bill Wittman said in a voicemail to The Messenger that Tri-County does not intend to contest the tax exemption any further.

 

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