Sale of hospital will reduce tax digest

SHEILA A. MATHEWS :::

The Griffin-Spalding County Hospital Authority has entered into a memorandum of understanding that will result in Spalding Regional Hospital being purchased by WellStar, a non-profit entity. As such, WellStar will not pay property taxes, resulting in a total local tax digest decrease of $750,241.47.
Based on 2015 information from Spalding County Tax Commissioner Sylvia Hollums, when the personal and property taxes are combined, Spalding County’s loss will be $281,370.21, the city of Griffin will decrease $138,646.44 and the Griffin-Spalding County School System will be cut by
$329,384.16.
According to Hospital Authority Treasurer Cal Oxford, who on Monday made a presentation regarding this matter to the Spalding County Board of Commissioners, this negative impact
was taken into consideration during the negotiation process
with WellStar.
“Now, the issue that everybody has asked me about and I have tried to remain silent is the question about taxation. As I said, WellStar is a non-profit and as such they’re entitled to take the properties off the tax record and I’m sure they’ll do so. Had we bought it, I guarantee you we would have taken the property off the tax record. It’s just not feasible for a non-profit to pay property taxes. That’s one of the reasons non-profits are designed – they’re designed to put money back into the community,” Oxford said
before later adding, “I have gone about as far as I want to go with this at this point, but I think what the Hospital
Authority has been able to do for this community should be applauded because we really didn’t have a lot of leverage.
We really didn’t have a lot of things to deal with, but fortunately, Tenet and WellStar recognized that this community is going to have some needs and they stepped up to help us make this happen, so I think we’ve got the best possible agreement we could have.”
The “best possible agreement” Oxford referenced was detailed Monday and includes short term voluntary tax payments by WellStar.
“What they’ve agreed to do is year one, to pay the full
amount of whatever taxes are due up to a maximum amount of $900,000 the first year. The second year, they’ve agreed to pay this community $600,000 flat, no matter what. The third year, $300,000,” he said.
Despite the loss of local tax revenue, Oxford said the Hospital Authority believes WellStar is the best possible
option for Griffin-Spalding County.
“I’ll tell you, WellStar is the best possible operator of
this hospital we could have picked. They are going to be a welcome addition to this community. They support communities and put 100 percent of their money back into the community. They’re committed to a service area that is designed by the northwest quadrant of Georgia…we’re the anchor leg of the south, this hospital will be,” he said. “We are in a very desirable position geographically to grow as a WellStar community and the people at WellStar are very impressive. They’re committed to community. They’re
committed to growing their hospitals, and as such, they’ve agreed to make some voluntary payments to this community in lieu of taxes, which they’re not obligated to do, and you have to understand that. They aren’t obligated to do anything in that regard.”
Oxford also discussed other benefits the Hospital Authority
believe will result from the purchase by WellStar.
“The community is getting something in return. The community is getting a great, great hospital operator…
these guys seem to be in a league of their own,” he said. “I think if WellStar does what they verbally tell me they’re going to do and what they’re going to do in this agreement – putting up to $40 million in capital improvements, they’re going to spend up to $40 million
guaranteed – they may spend more than that, but that’s what they’ve guaranteed to spend…that could create jobs. There’s a lot of good that could happen out there.”
Oxford stated the Hospital Authority, as representatives of the city of Griffin and Spalding County, did not specify the division of the monies WellStar will voluntarily pay through 2018, and explained that city, county and school systems officials will need to enter into an intergovernmental agreement (IGA) to determine the split.
“What I had envisioned is that it would be prorated as it currently is, but I don’t know if that’s necessarily what you want to do with it. The money will go to the tax commissioner. It’s not hers; it’s yours. You’ve got to
figure out how to split it up,” Oxford said.
In a later interview, Spalding County Manager William Wilson said this tax digest decrease will impact the county, but he believes the Hospital Authority represented
taxpayers well.
“I think the authority did a good job negotiating the contract and protecting the taxpayers. The way they staggered the impact on the tax digest will assist everyone
to making that adjustment,” Wilson said.
He said he was aware contract negotiations had been ongoing, but was not privy to the specifics of those discussions prior to Monday evening. He said the information did not come as a surprise, but the impact is
important and will have to be addressed.
“I believe it’s roughly $280,000, which is about one-fifth of a mill. That’s county only, that’s not the school, that’s
not the city,” Wilson said. “If you look at our CAFR (Comprehensive Annual Financial Report) online, they’re our
second largest taxpayer and our second largest employer, so it is a major blow, but the way they’ve staggered will help everyone to adjust. With the size of our general fund, it is something that’s going to have to be dealt with. It isn’t a major hit or a major loss, but it does have an effect on the budget. I guess you could call it a major loss. That’s really semantics.”
Oxford agreed with Wilson’s assessment that the contract provides local governing bodies some time to adjust to the tax digest decrease.
“Look, I tried to get it (the voluntary tax payments) continuous. I tried to get 20 years. I tried to get five years, but we did get three years and that’s more than they
were obligated to do. That does give you some time to plan. That gives you some time to try to shift, plan, whatever you’ve got to do. You know there’s a shortfall coming; you know there’s a hole, but it isn’t next week. That’s the beauty of it. You’ve got some time to plan,” Oxford said.
The sale is expected to close the first quarter of 2016.

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