Supreme Court Rules Against Provena Covenant’s Tax Exempt Status

The Illinois Supreme Court has ruled that Urbana's Provena Covenant Medical Center will have to pay property taxes to Champaign County dating back to 2002.

Justices determined Thursday that the hospital did not provide enough charity care to qualify for its tax exemption, upholding an appellate court ruling. That amount in taxes is expected to be around $8 million.

The Champaign County Board of Review initially recommended to the Illinois Department of Revenue that the hospital be denied the exemption. Chair Laura Standefur says after reviewing financial statements that her board found a few reasons for turning the hospital down, but it started with the amount of charity care. Sandefur says it's hard to define, but the board knows when it's not at the appropriate level.

"Charity, I think, is kind of that same way," Sandefur said. "Less than one percent, is that exclusive use? What defines exclusive or even majority use? None of us on the board could really look at those numbers and think that that was used exclusively for charitable purposes."

Champaign County treasurer Dan Welch says it's still not clear how the roughly $8 million in property taxes should be collected. He says the majority of the funds would be earmarked for Urbana's Tax Increment Financing, or TIF, district. But he says Urbana city leaders may be able to change how those funds are divided. Mayor Laurel Prussing has already suggested breaking down those funds among taxing bodies, including more than $4 million for schools, $1.2 million for the city, and $720,000 for Champaign County.

Provena officials released a written statement on the Supreme Court decision. Local Hospital Board Chairman Cody Sokolski says he's deeply disappointed in the ruling, noting that the hospital provided more than $38 million in free care and other community benefits in 2008. Provena Covenant CEO David Bertauski says he hopes the ruling prompts a dialogue among elected officials and hospitals over how charity care should be defined.

Six years ago Provena's tax exempt status for 2002 was revoked after the state department of revenue sided with Champaign County officials. A circuit court judge overturned the ruling, but an appeals court later reversed it again in the state and county's favor. In the meantime, Provena has been putting contested tax money - more than a million dollars a year -- into a fund that remained tied up pending the Supreme Court ruling.