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Board: Nursing homes are taxable properties

October 27, 2004|by DON AINES

chambersburg@herald-mail.com

CHAMBERSBURG, Pa. - In a case involving millions of dollars in tax revenues, the Franklin County Board of Assessment and Revision of Taxes ruled Tuesday that the nursing homes at Menno Village and Penn Hall should be taxable properties, a decision that a Menno Haven Inc. official says will be challenged in court.

The assessment board voted to grant an appeal by the Chambersburg Area School District and the Borough of Chambersburg to make the nursing homes subject to property taxes in 2005. Both have been tax-exempt since they were built, according to court records.

"Menno Haven will fully defend our right to a tax exemption of our nursing facilities as well as our right to a tax exemption for all our facilities," said David R. Bishop, the chief financial officer for Menno Haven, which owns both Menno Village and Penn Hall.

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Since 2001, Menno Haven has filed annual appeals for tax exemptions for the entire complexes at the Menno Village and Penn Hall retirement communities, Bishop said. The appeal for the 2005 tax year also was denied Tuesday by the board of assessment, which is made up of the three county commissioners.

Those appeals have been the subject of litigation in the Franklin County Court of Common Pleas, according to Welton Fischer, the county's attorney. Pending the outcome of the litigation, Fischer said Menno Haven has paid taxes on its independent living cottages, with the taxing authorities holding 25 percent of the revenues in escrow accounts.

The amount of revenue is not inconsequential, Bishop said. The school district, the largest taxing authority, has collected about $2 million in taxes since the first appeal was filed and will have to return the money with interest if Menno Haven wins in court, he said.

If the nursing homes are taxable, Bishop said it will cost Menno Haven another $170,000 a year.

At issue is whether the retirement communities and nursing homes qualify as charitable organizations under state law. That was the subject of testimony at an Oct. 18 hearing before the assessment board.

Commissioner Cheryl Plummer questioned Tuesday whether the nursing homes qualified as a "purely public charity" that donated a substantial portion of its resources to the underprivileged.

Citing testimony at the Oct. 18 hearing, Commissioner Bob Thomas said Menno Haven requires a person to have up to $90,000 in assets before they are admitted to the nursing homes. "That was clearly stated and it was not refuted," Thomas said.

Commissioner G. Warren Elliott on Tuesday said testimony showed Menno Haven had not disbursed any money from its benevolent care fund in 2002 or 2003.

"Are they really offering their services to persons who are legitimate objects of charity or are they, by design, excluding them?" Fischer asked.

Bishop testified on Oct. 18 that a substantial percentage of patients in the nursing homes are on Medicaid, and reimbursements are well below the actual cost of care. That care, he said, is considered charitable.

Bishop said Tuesday the Pennsylvania Supreme Court previously upheld "the precedent of a nursing home being granted an exemption under substantially similar circumstances" and the state Department of Revenue has granted the homes an exemption from sales taxes based on the same criteria.

Menno Haven also is pursuing a lawsuit in which it alleges the school district violated the Pennsylvania Sunshine Act when it authorized filing the nursing home appeals at its Aug. 18 meeting, according to court records.

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