Should Spring Harbor pay property taxes? Ga. Supreme Court to decide

The ongoing dispute over whether Columbus’ Spring Harbor retirement complex should pay city property taxes is now before the Georgia Supreme Court.

Having so far lost in its effort to collect ad valorem taxes on the development that serves wealthy retirees, the Board of Tax Assessors has appealed its latest defeat from the Georgia Court of Appeals to the Supreme Court, which is to hear arguments Monday.

So far the courts have ruled Spring Harbor is public property and thus exempt from such taxes.

The 40-acre site is owned by the Columbus Regional Healthcare System, which leased the land to the Medical Center Hospital Authority for $10. The Hospital Authority financed the construction with $74.66 million in revenue bonds in 2004 and refinanced those bonds in 2007.

Columbus Regional and the Hospital Authority signed a 40-year lease June 1, 2004, allowing the authority to build, own and operate the facility on the healthcare company’s land. Spring Harbor opened on River Road in 2005.

In 2007, the authority sued the tax assessors board, the tax commissioner and the city government, asking the court to rule that Spring Harbor is public property and its use furthers the legitimate interests and functions of the authority.

In 2012, both sides filed motions asking a judge to rule on the issue in a summary judgment.

In 2015, the authority won in Muscogee Superior Court as Judge Arthur Smith III ruled Spring Harbor “qualifies as public property, and therefore, it is exempt from ad valorem property taxation.”

The authority won again last year in the Georgia Court of Appeals, which upheld the judge’s ruling.

“Hospital authority property is public property and therefore exempt from ad valorem taxation, as long as the use of the property or its income furthers legitimate functions of the hospital authority,” the Court of Appeals wrote.

It referred specifically to the 2007 Superior Court language validating the refinancing of the bonds:

“Spring Harbor is a wonderful community asset and one which does address a public need of an identifiable class of citizens, the elderly….Therefore, the court does find as a matter of law and as a matter of fact this ‘residential retirement community’ is a project contemplated under the Hospital Authorities Law.”

Attorneys for the tax assessors argue hospital authorities get property tax exemptions in exchange for providing healthcare to the indigent, not for establishing retirement homes for the rich.

“This case presents the question of whether a retirement community that serves only healthy and wealthy people – who can pay six-figure ‘entrance fees’ and annual five-figure ‘monthly fees’ – is exempt from Georgia ad valorem property taxation based on the assertion that all the buildings and other improvements comprising the retirement community are ‘public property’ owned by a hospital authority,” they wrote.

“Spring Harbor is a retirement community for only the wealthy which does not fulfill this indigent care mission, and the structure under which it is operated does not support exemption from Georgia ad valorem property taxation on grounds that Spring Harbor’s facilities are ‘public property.’”

They said statements in the bond validation “do not adjudicate the issue of exemption from property taxation” and “should not be binding and conclusive as to that issue.”

Attorneys for the hospital authority counter that complaining about Spring Harbor’s “amenities and the financial prerequisites for residency” does not address the central issue.

Under the law, no hospital authority project may be operated for profit, and Spring Harbor is not, they said, so it is properly exempt from ad valorem taxes.

This story was originally published June 19, 2017 at 10:00 AM with the headline "Should Spring Harbor pay property taxes? Ga. Supreme Court to decide."