WYOMING — MetroHealthHospital is facing a summer property tax bill of nearly $2 million in Wyoming for its new hospital, even though the organization is a nonprofit.
The bill far outpaces the organization's property tax liabilities in Grand Rapids and tops the amounts it paid over three years for other properties it owns in Wyoming, mostly in the MetroHealthVillage. The $150 million, 208-bed hospital is set to open Sept. 30.
"It turns out this is not unusual at all. Construction projects like this are taxable even though we're a nonprofit," Metro Health spokeswoman Ellen Bristol said. "It's taxable until we see our first patient."
Wyoming City Assessor Gene Vogan said the tax bill is based on a $39.3 million property value assessment, with a taxable value of $37.4 million, for the new hospital building, as of Dec. 31, 2006. The hospital occupies 28 acres in the MetroHealthVillage. State law demands that assessments must be half of market value.
The bill of $1.98 million is due Aug. 31. Bristol said the bill covers the entire year, and she expects it will be prorated to account for the three months of 2007 that Metro Health will be occupying and operating the new building.
In Grand Rapids, Metro Health has carried no property tax burden for the 50-year-old hospital at 1919 Boston St. SE.
"I've been here 23 years and it's always been tax-exempt," Grand Rapids City Treasurer Al Mooney said.
After Metro Health's move next month, the old hospital will be demolished to make way for Beacon Hill at Eastgate, a $60 million assisted-living center for the elderly. That development has been granted Renaissance Zone status, eliminating state and local taxes for residents until 2017.
Metro Health has paid property taxes to Grand Rapids for its office building at 1925 Breton Ave. SE, which houses medical and administrative offices and a clinic. According to the city's Web site, the state equalized value of the property for the 2007 tax year is $203,300, while the taxable value is $162,974. The current property tax bill is $7,754.
Metro Health, under its legal name MetropolitanHospital, owns several other properties in Wyoming, which together carry a property tax liability of about $80,000 for summer 2007 bills, Vogan said. For the tax years 2004, 2005 and 2006, Metro Health has paid more than $1 million in property taxes in Wyoming, according to the city's Web site.
Warner, Norcross & Judd lawyer Jeff Power, who works with nonprofits, said it's not unusual for nonprofit organizations to pay property taxes in Michigan. Nonprofit religious and educational institutions are exempt from property taxes under the state constitution, he said. For other organizations, state law lays out the criteria: The property must be owned and occupied by the entity seeking the exemption; the organization must be a nonprofit charitable institution; and the property must be used by the organization solely for the purpose for which it was created.
"It's a three-part test," Power said. "You have to meet all parts of the test; otherwise it's no go."
Large nonprofits may opt to offer the local government a voluntary payment in recognition of the services they require, such as police, fire and roads, he said.
A nonprofit must apply to the local assessor for property tax exempt status, he added.
"They haven't shown me a single paper that indicates that (nonprofit status), even though I've requested it," Vogan said of Metro Health last week.
Vogan noted that state law allows property taxes to be collected on sections of buildings that may be owned by a nonprofit but leased by a for-profit enterprise.
"They could have for-profit entities using the space," Vogan said. "It could be labs, a pharmacy. Just from personal experience, I know that emergency rooms at times are basically leased to a group of doctors that then run a business."
For example, according to Grand Rapids' Web site, Spectrum Health Hospitals paid well over $100,000 in summer taxes on 38 parcels in the city of Grand Rapids.
Trinity Health, the nonprofit parent company of Saint Mary's Health Care, paid $13,122 to the city for property taxes on a single parcel.
Vogan said that should Metro Health prove nonprofit status for the new hospital at 5900 Byron Center Ave. SW and it is taken off the assessment rolls, it is still a major benefit for the suburban city of 70,155.
"Its value is for the magnet it is," he said, referring to the medical offices, retail, residential and other taxable development that is going up in and around MetroHealthVillage