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Valley View admin: $3.6M owed to hospital will lead to programming cuts at schools

Published: Wednesday, March 13, 2013 12:35 p.m. CST • Updated: Tuesday, July 29, 2014 9:59 p.m. CST

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BOLINGBROOK — Millions of dollars in property tax reimbursements owed to Adventist Bolingbrook Hospital will force "imminent" programming cuts at Valley View schools, according to a top district administrator.

Valley View Assistant Superintendent Gary Grizaffi revealed Monday that the school district must reimburse the hospital for $3.6 million in property tax reimbursements paid to the school district from 2009-11 — taxes the hospital paid under protest as it sought non-profit tax exemptions.

In June, the hospital finally was granted the tax exemption, setting the stage for the hospital to seek a court ruling to recoup the taxes it paid since opening in 2008. In December, a Will County court gave Adventist Bolingbrook Hospital the favorable ruling.

"School programming will have to be reckoned with," Grizaffi said in a phone interview Thursday. "Moving forward, this will have a dramatic impact on our financial well-being. I don't know specifics, but it will have a substantial impact on programming."

Grizaffi said the school district was first informed of the debt in January. He notified the board of education publicly during its meeting Monday.

The Valley View School District Board of Education is expected to further discuss the impact on the district "over the next month or so" during budget meetings, Grizaffi said.

And the school district is not alone in owing a debt to Adventist Bolingbrook.

The village of Bolingbrook, Fountaindale Public Library District, Bolingbrook Park District, DuPage Township and four other Will County governing bodies will also shoulder a burden to repay the hospital.

None, however, are faced with a tab as large as the school district's, as school districts largely depend on property taxes for funding.

The nine impacted Will County entities have three years to repay the hospital, interest-free.

The village of Bolingbrook has to repay $456,479, according to village attorney Jim Boan. Village administrators will likely dip into the general fund to compensate the hospital, Boan said, adding that the debt was not a factor in the village's recent decision to consolidate several departments, including the police and fire departments.

The Fountaindale Public Library and Bolingbrook Park District will pay $288,065 and $333,332, respectively. Similar to the village, both the library and park district will rely on their general operating funds to finance the payments, according to administrators.

"We did not plan for this but we will abide by the court ruling and pay the hospital using our general fund," park district executive director Ron Oestreich said. "We will take necessary steps to be more cognizant of some of the expenditures for 2013, 2014 and 2015."

Meanwhile, Fountaindale Public Library Executive Director Paul Mills said the library is likely to pay back the money in a lump sum.

"The Fountaindale board will be discussing paying the money back in a lump sum," Mills said. "It is money we did not anticipate having to spend and it will affect our mid-term and long-term goals."

Administrators for each of the Bolingbrook governing bodies claimed they were informed of the reimbursements owed to the hospital in January, but Illinois hospitals have been battling for tax-exempt status for more than a decade.

When Adventist Bolingbrook opened in 2008, they were not "denied" tax exemption; instead, the decision was deferred, as hospitals were being evaluated on a case-by-case basis.

According to a memo from Adventist Bolingbrook Hospital CEO Rick Mace, the hospital had paid property taxes under protest since 2008, Mace said.

"We believed that in our situation, the morally right decision was to pay our taxes, under protest, to Will County in full," Mace said in the memo. "(Adventist Bolingbrook Hospital) let the county know we were certain the hospital would be recognized as deserving tax-exempt status. We fully expected to receive a refund of our tax payment."

Mace and hospital officials declined further comment.

The debt could grow, too, as the hospital is awaiting a court decision for property taxes it hopes to recoup from a fourth year — 2008, the year Adventist Bolingbrook Hospital opened.

If courts rule the hospital can recover the 2008 property taxes, Valley View's debt to the hospital would grow to $4.8 million. All four years of recouped property taxes — 2008 to 2011 — would equate to a $7 million reimbursement for the hospital.

In his memo, Mace said the funds will translate into more efficient, comprehensive care for Bolingbrook residents.

"As you know well, $7 million is not an insignificant amount," Mace said in the memo. "It translates into emergency care 24 hours a day, 365 days a year for our community’s most underserved residents. Unfortunately, every dollar tied up elsewhere is a dollar not spent on sick and needy patients. We have conveyed those concerns, and we believe those who serve us have heard."

The other Will County government bodies that will be affected are the Will County Forest preserve, Joliet Junior college, Will County, Will County Building Commission, DuPage Township.

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