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State declares Elmhurst Hospital tax-exempt, local taxing bodies to adjust levies

Published: Tuesday, Feb. 26, 2013 5:12 p.m. CDT • Updated: Wednesday, Feb. 27, 2013 3:18 p.m. CDT

ELMHURST — Some local taxing bodies are reconfiguring their property tax levies following the state's decision in February to grant tax-exempt status to the majority of Elmhurst Memorial Healthcare's new facilities.

The hospital has been waiting on a ruling for its new hospital since opening in June 2011, and some of its other properties since 2009.

The city and library plan to abate, or remove, the $692,505 the hospital would have paid in property taxes this year from their levies. Without abatement, that amount would be spread across the tax bills of every other property owner in the city. The city's finance committee recommended that course at its Monday meeting, committee vice chairman Kevin York said, and the entire city council will likely vote on the issue next week.

Elmhurst School District 205 does not plan to abate because it factored in the tax-exempt status when it formulated its 2012 levy and budgets for 2013 and 2014, according to district officials. Abating funds would take substantial sums from those budgets, District 205 Board President Jim Collins said, and would require laying off teachers or making other cuts.

Property taxes fund a much larger percentage of the school district's budget — 85 percent, Collins said — than it does the city's, which has several funding mechanisms including sales taxes.

The state's ruling only concerns the hospital's 2012 tax status, so money collected by taxing bodies in 2009, 2010 and 2011 might have to be refunded to the hospital in the future, if the state makes rulings for those years, according to Elmhurst Assistant Finance Director Tom Trosien.

The school district said it kept those funds from 2009, 2010 and 2011 in reserve, in case the funds have to be returned.

If EMH is successful in its appeal for tax-exempt status for those three years, the total refund due to EMH will be approximately $2,978,437 including an interest cost to D205 estimated to be $53,940.

In 2011, the city placed the property taxes it collected from the hospital in a segregated fund, in case it needs to be returned. It did not do that in 2009 or 2010, Trosien said.

The city does not know how much the liability might be for those two years if the state determines the money needs to be returned to the hospital. If it does, the amounts will be much less than this year, because the new hospital hadn't been built, and the only property in question was the Center for Health.

A hospital spokesperson said its tax-exempt status will save about $5 million in taxes this year.

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