Hospital seeking $10 million in property taxes

Hospital seeking $10 million in property taxes

URBANA — Another hospital tax exemption lawsuit that's been quietly looming over Champaign County taxing districts while the more prominent Carle case has held center stage has returned to the courtroom for the first time in two years, and there are millions of dollars at stake for both sides.

In a lawsuit that was first filed in April 2015 and then put on hold five months later, Presence Covenant Medical Center is seeking a refund of $10 million in property taxes it paid on dozens of properties — plus interest — for several tax years from 2003 through 2012 for which it didn't have tax exemptions.

"This is a lawsuit to kind of fill in the blanks," Covenant's lawyer, Steven Pflaum, said.

If exemptions on properties for certain tax years are blanks, there are a lot of them Covenant wants to fill in.

There are 68 properties at issue — 58 in Urbana and 10 in Champaign — according to the original lawsuit that was stayed to give the Carle property tax exemption lawsuit time to work its way through the courts.

The Carle health system's long-standing lawsuit with local and state taxing authorities went to the Supreme Court in March, and is now back in circuit court.

At stake in the Presence Covenant case is the hospital's belief that it's entitled to charitable tax exemptions for all the years it hasn't had them over about a decade.

Champaign County Treasurer Dan Welch said tax years 2003, 2005, 2007, 2008, 2009, 2011 and 2012 remain in question , along with some properties for 2004 and 2006.

His calculation on the interest local governments could owe, as of May 1, should Covenant Medical Center prevail in this action, is just over $1.5 million — if Judge Jeff Ford ordered a refund to be made on a "certificate of error" basis. That's a document used by taxing authorities to correct an error on a tax bill.

Pflaum contended interest has been accruing at $500,000 a year on Covenant's back property taxes.

Of all the taxing districts with the biggest liability if Covenant wins this lawsuit, the Urbana School district would owe the largest chunk of the refund, or $5.4 million, not including interest, according to Welch.

In a status hearing Monday morning, Ford granted Assistant State's Attorney Joel Fletcher some extra time — a month — to rewrite a motion to dismiss the lawsuit and confer with his current clients.

The defendants include Welch, the county board of review, its individual members and the county supervisor of assessments, but since the original suit was filed, the supervisor of assessments and two of the three members of the board of review have changed.

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