Fed Hock Files Arguments Against Holzer Tax Exemption

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Holzer Clinic in Athens is not entitled to tax exemption because it did not have a charity care policy in place by Jan. 1 of both 2013 and 2014, and because a bond-financing arrangement does not qualify it for exemption under Ohio law, according to Federal Hocking Local School District.

The district makes those claims in a recent filing with the Ohio Department of Taxation.

In March, the department sent a letter to Federal Hocking stating that Holzer had been found to qualify for property tax exemption, but that the school district had 30 days (later extended to May 2) to respond to the ruling. If Holzer Clinic of Athens gets the full exemption, Federal Hocking will lose about $100,000 a year in tax revenue.

Holzer Health System is arguing, in part, that the clinic is entitled to a tax exemption because it provides charity care.

“…The charity care policy, which appeared to be the basis for the original application (for tax exemption), was not in existence as of the tax lien date of January 1, 2013 and was still not in existence as of January 1, 2014,” the school district argues in its recent filing.

Included with the filing is an affidavit from an Athens-area resident who states he went to Holzer Clinic of Athens in October of 2013 to ask about getting charity medical care and was told the clinic did not have a charity care policy at that time, but might have one in February of 2014.

Earlier this year, Holzer Health System amended its application to include an additional argument for tax exemption based on an Ohio law that says “all hospital facilities purchased, acquired, constructed or owned by a public hospital agency, or financed in whole or in part by obligations issued by a public hospital agency” are entitled to tax exemption.

Gallia County, considered a public hospital agency under Ohio law, issued bonds in 2012 related to the merger that created Holzer Health System, which was deeded the Athens clinic in October 2011.

Federal Hocking is arguing that the bond issuance was just a refinancing of debt and therefore does not qualify the clinic for exemption under Ohio law.

“The Athens clinic was not purchased with financing issued by (Gallia County) since the deed to Holzer Health System was executed five months prior thereto,” Federal Hocking argues in its recent filing.

There is a lease arrangement under which Holzer Health System leased the clinic of Gallia County, which then immediately subleased it back to Holzer Health System.

“Under the terms of the lease, it was never contemplated that (Gallia) County would have any involvement in the transaction other than to serve as a ‘straw-man’ type entity that was being used to qualify the property for public financing and as a possible path to an exemption,” Federal Hocking asserts.