Presence Covenant Hospital To Get $1.2 Million Tax Refund

Champaign County Treasurer Dan Welch says he will be ready to send a $1.2 million property tax refund to Presence Covenant Medical Center, as soon as funds are delivered by the city of Urbana, which owes the lion’s share of the money.

The tax refund is for the year 2010, the third year for which local governments have been ordered to refund property taxes to the Urbana hospital.

Welch said it is the most recent year for which Presence Covenant filed an appeal. The appeals came after the hospital lost its tax-exempt status, due to a challenge by Champaign County in 2002.  A state law passed last year that gives non-profit hospitals a broader charity tax exemption covers the tax challenges. Treasurer Welch said Presence Covenant may try to seek property tax refunds for other past years.

“Presence believes that they get to go back three years for every one year that they got an appeal”, said Welch. “So if they got 2010, they could go back to 2007, 2008 and 2009. We don’t agree with that.”

Urbana Mayor Laurel Prussing said she does not agree with it either, and thinks any such requests will lead to litigation.

Prussing said property tax exemptions for hospitals put a disproportionate burden on cities where they own substantial property. She argues that while Presence Covenant’s services are spread out over people in several counties, its property tax exemption is unfairly concentrated in Urbana, where most of its properties are located.

“So what that means for Urbana residents and businesses, is that they are picking up the cost for all the other people who are receiving the supposedly ‘charity’ care from the hospitals,” Prussing said.

The mayor said they are currently talking with an attorney to determine the best way to transfer their portion of the Presence Covenant property tax refund, before a Sept. 23 deadline. The funds come from a city tax increment finance district that includes Presence Covenant's main hospital campus. The money has been held in escrow, pending a final resolution of the tax dispute between the hospital and Champaign County.

Meanwhile, Prussing supports legislation in Springfield that would grant exceptions to hospital property tax exemptions for cities like Urbana, where tax exempt buildings would reduce property tax revenue by a substantial amount.