No regrets about Carle deal

No regrets about Carle deal

URBANA — Urbana school Superintendent Don Owen said he doesn't regret the legal settlement that will require the school district to continue refunding money to the Carle health system through 2018.

The annual payments are refunds of Carle property taxes both the school and park districts might have ultimately been able to keep, pending further litigation that could follow an appellate court decision earlier this week that favors the position of local governments in a long-standing lawsuit over eight years' worth of tax exemptions on several Carle properties.

"The settlement is what it is," Owen said Friday.

What he hopes for the future, Owen said, is for a property tax load that will be redistributed more evenly across Urbana properties.

Meanwhile, he added of the higher court decision: "It's a good sign."

Urbana schools and the Urbana park district settled their way out of the lawsuit between Carle and local taxing districts that wound up in the 4th District Appellate Court after now-retired Judge Chase Leonhard ruled the state's 2012 charity care/tax exemption law could be applied retroactively to Carle's exemption claims for tax years 2004-2011.

The appeals court decision in favor of local taxing districts was based on a finding that the state law — which established new standards for not-for-profit hospitals to receive charitable tax exemptions — is unconstitutional.

Under terms of the settlement signed by the school and park districts in October 2013, both districts agreed to refund parts of the tax payments to Carle that they'd been holding in escrow while the lawsuit was pending in the trial court, a move allowing both to use the remaining money and move on.

The park district had been holding about $1.9 million of Carle property tax money, and agreed to give $1.0125 million of it back to Carle.

The school district had $10.9 million in escrow, and agreed to refund $5.7 million to Carle, making payments annually through July 1, 2018.

Owen said the school district is still analyzing the appeals court decision with its attorneys.

While it's locked into an agreement with Carle, the school district doesn't have any such agreement with Presence Covenant Medical Center, Urbana's other hospital that also collected a refund from local taxing districts for three prior tax years when the state Department of Revenue enforced Covenant's claims retroactively under the new tax exemption law.

The city of Urbana is already taking steps to seek a $2.4 million refund of the money it paid Presence Covenant for the tax years 2004, 2006 and 2010, but all local taxing districts also had to pay Covenant and could be in line to get their money back.

Urbana's share would be the largest, though, because nearly all of Covenant's tax money went into a city tax increment financing district, according to Champaign County Treasurer Dan Welch.

For all county taxing districts other than Urbana, taxes refunded to Covenant that could be subject to come back to them for the three tax years ranged from under $1,000 for the Champaign-Urbana Public Health District and county forest preserve up to $35,110 for the Urbana school district, according to figures supplied by Welch.

Owen said the school district applauds Urbana for its work on the litigation, "and in the end, it will benefit the whole community."

Looking back at the settlement with Carle, he said the school district needed to get out from under the lawsuit and focus on its mission.

"We said our role was not to fight the tax battle of the city. It was to educate the children of Urbana," he recalled.

The school district likely saved hundreds of thousands of dollars in attorney fees by settling, he said, and attorney fees could continue for years more with potentially further litigation.

The school district also was contending with budget issues resulting from all the escrowed Carle tax money, when the state Board of Education viewed it as excess money and reduced its aid, Owen said.

"The Carle effect was hitting us twice," he said. "We've tried to explain that over and over."

While the school district needed to exit the lawsuit, it still supported the city in its efforts to oust the state charity care/tax-exemption legislation, Owen said.

"We as a school district greatly appreciate the work of the city, their work being advocates and stewards of the citizens of Urbana in this case," he said.

Tim Bartlett, executive director of the Urbana Park District, said stopping the park district's expenses in the lawsuit was also in the best interest of taxpayers.

The appeals court decision hasn't been discussed yet with the park board or district lawyers, he said, but he assumes it won't change anything about the park district's continuing payments to Carle.

"My understanding is we would follow our agreement unless there was a need to revisit it," he said.

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andrewscheinman wrote on January 09, 2016 at 12:01 pm

It would be interesting to hear from Carle on this.  Will they stop pursuing their lawsuit and -- perhaps -- give the money back to the schools and the park district?

mgd wrote on January 09, 2016 at 4:01 pm



Mary Gates DeRosier