Tax in question on new fitness centers

Wednesday, August 11, 2004

To tax or not to tax, that is the question facing Cape Girardeau County Assessor Jerry Reynolds in regard to the city's two new multimillion-dollar health and fitness centers.

Officials at Southeast Missouri Hospital and Saint Francis Medical Center say HealthPoint Plaza and the Health and Wellness Center, which will be operated by each hospital, respectively, should be exempt from paying property taxes, just as the hospitals themselves are.

Some members of the Cape Girardeau School Board feel the fitness centers are separate, profit-turning entities that should be taxed, a decision that would mean more than $300,000 in additional property tax revenue for the school district.

The question facing Reynolds is whether the hospitals' new health and fitness facilities, which are scheduled to open this fall, also come under the "charitable" definition that allows the two medical organizations' other facilities to be tax-free.

"The hospitals are adamant that those facilities are exempt," Reynolds says. "It's complicated. I haven't made a decision yet."

Under Chapter 137 of Missouri statutes, hospitals may be considered charitable organizations and therefore are exempt from paying property taxes. Such is the case with both Southeast Missouri Hospital and Saint Francis Medical Center.

Officials at both Southeast and Saint Francis said the facilities will offer medical services, such as rehabilitation therapy, and educational programs.

"We're more aligned with hospital services and not those of a free-standing fitness center," said Steve C. Bjelich, president and CEO at Saint Francis.

Universal Fitness, which is operated by Saint Francis, is tax-exempt because it is "an extension of Saint Francis' mission and ministry," Bjelich said.Similar information on Main Street Fitness, Southeast's current fitness center, was unavailable Tuesday night.Saint Francis' Health and Wellness Center will cost an estimated $19.7 million which, assessed at the current rate of 32 percent, has a valuation of $6.3 million. With the school district's tax rate of $3.99 per $100 assessed valuation, the school district could gain $250,000 in property taxes from the new facility if it is not exempt.

Officials at Southeast Missouri Hospital said the cost of HealthPoint Plaza, which is in the building formerly occupied by Albertsons, is confidential. However, Reynolds said that in past years, when the building sat vacant, it was assessed at $2.5 million. From that amount, the district received around $32,000 in tax revenue annually, money the district will lose if the facility becomes tax exempt.

"All programs at HealthPoint Plaza are based on the perceived needs of the community," said Jim Wente, president of Southeast Missouri Hospital. "We're satisfied that what we're doing falls well within our tax-exempt purpose."

Wente said HealthPoint Plaza will have a charitable program as well that will provide scholarships to the facility for community members who have medical referrals and proof of financial need.

Met with board members

At a meeting with Reynolds Monday, school board members said they felt the facilities should be taxed because of membership requirements. However, superintendent Mark Bowles said the school's take on the issue was not based on any knowledge of how tax-free status is determined.

"We don't know how the assessors judge that. Maybe selling subscriptions doesn't make a difference," Bowles said. "Property tax is meant to be stable and keep schools on the front end of growth. If something isn't assessed where it should be, it undermines the district's funding base. We need a ruling that's fair to the hospital and to schools."

If Reynolds rules that the facilities should be taxed, the district would begin seeing the benefits of those additional funds in 2005. Reynolds said it may be a situation where a part of each building, such as the area that houses rehabilitation and other medical services, is tax-free while the fitness center areas are taxed.

"In appeals, I know tax commissions typically have been lenient with health facilities in saying they are exempt," Reynolds said. "Maybe it could be a little of both."

335-6611, extension 128

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