Recently stripped of its property-tax exemption, St. Luke's Regional Medical Center in Boise, Idaho, got some good news last week from the state Board of Tax Appeals.
The board overturned a 1996 decision by the Ada County Commission that denied the hospital property-tax exemptions on two parking lots, a satellite medical center and a building that houses parts of the laboratory, X-ray and internal medicine departments.
The board's Aug. 11 decision comes at a time when the hospital is asking the state to undo another decision by county officials.
Last month, the county commission, sitting as the Board of Equalization, ruled that all St. Luke's property should be placed on the county's tax rolls because it no longer qualifies as a charitable corporation under state law (Aug. 11, p. 38).
The recent positive ruling by the state gave the hospital renewed hope for its latest appeal.
"We hope it'll be indicative of how they'll rule," said Bill Bodnar, vice president of corporate development for 267-bed St. Luke's.
It's a case the Idaho Hospital Association is watching closely because only three of the state's 42 acute-care hospitals are for-profit.
"They deserve the exemption," said Steven Millard, the association's president.
If St. Luke's doesn't win its latest appeal, the hospital could end up with annual tax bills of $2 million to $4 million.
In its ruling on the 1996 case, the state board said the county was "very courageous" in raising questions about tax-exempt status but seemed "a bit too extreme in its determination, stretching case law" and ignoring legislative intent.
"This is `big business,' but this board would cringe if government had to pick up the whole cost of healthcare services provided by this hospital and its satellite facilities," the ruling said.
Therefore, the state board concluded:
Almost 52% of the parking lots can be tax-free because that's the proportion of a nearby medical office building St. Luke's uses that qualifies for an exemption.
Some 75% of a satellite medical center in Meridian, its parking lots and space donated for emergency medical technicians can be exempt. However, 23 acres of bare land being held for future expansion must be assessed and taxed at market value.
A center that houses some of the hospital's departments can be exempt.