Supreme Court ruling keeps Spring Harbor legal battle over property taxes alive

A ruling this week by the Georgia Supreme Court appears to have prolonged a decade-long battle over whether the Medical Center Hospital Authority should be paying ad valorem property taxes on Spring Harbor, a retirement community in north Columbus.

The Supreme Court, in a decision released Monday, reversed decisions by a Muscogee County Superior Court judge and the Georgia Court of Appeals that would have allowed the retirement facility to qualify as “public property” and therefore avoid having to pay ad valorem property taxes.

The Supreme Court sent the case back to the lower courts.

Two things are clear about the high court ruling this week: the case is not over, and neither side is prepared to claim victory or defeat in the case, which was originally filed in 2007.

“We are still trying to study the opinion and get a grip on what will happen next,” said Randy Lomax, an attorney for the Board of Tax Assessors. “It is not over.”

Though it is not over, it was the first battle victory recorded in the ongoing legal war for the Board of Tax Assessors in its bid to get the property on the city tax rolls.

Andrew A. Rothschild, who represents the Medical Center Hospital Authority, agreed that the case is not over. Though the Supreme Court appeared to send the case back to the Appeals Court, Rothschild in a prepared statement said it would be removed back to Muscogee County Superior Court.

“The Georgia Supreme Court has returned the case to the Superior Court for additional findings,” Rothschild said. “The Georgia Supreme Court has absolutely not ruled that any property taxes are owed by the Medical Center Hospital Authority. We are firm in our position on this matter, and it would be unwise to comment further on this pending litigation.”

Superior Court Judge Art Smith ruled in favor of the Hospital Authority, stating that its “property interest in the facilities and improvements constituting Spring Harbor qualifies as public property, and therefore, it is exempt from ad valorem property taxation,” according to the news release from the Supreme Court. Specifically, the trial court ruled that, “the validity of Plaintiff Hospital Authority’s property interest in Spring Harbor under the ground lease, and the validity of the ground lease itself, has been established by the Superior Court of Muscogee County in two separate bond validation orders, one in 2004 and another in 2007.”

Those validation orders are issued through Superior Court and were independent of the ongoing lawsuit. Those court orders allowed the Hospital Authority to borrow $74.66 million to construct Spring Harbor, which has a wide range of senior living arrangements from single-family homes to full nursing home care on the 40-acre complex off River Road. The original loan was acquired in 2004 and it was refinanced in 2007.

In June 2004, the Hospital Authority entered into a lease agreement with Columbus Regional so the Hospital Authority could “construct, own, and operate” Spring Harbor and lease the real estate owned by Columbus Regional for a term of 40 years, according to the Supreme Court facts in the case. For $10, the Hospital Authority leased the land, according to facts in the case.

The Board of Tax Assessors appealed Smith’s ruling to the Georgia Court of Appeals, arguing that the Hospital Authority’s interest in the property was not exempt as public property. But the appellate court affirmed the lower court’s ruling, finding that it was bound by the earlier Superior Court bond validation orders.

The Board of Tax Assessors then appealed to the Georgia Supreme Court.

At issue was whether the Court of Appeals was wrong in determining that the bond validation orders conclusively determined that the property is “public property” and therefore exempt from ad valorem taxation.

The Supreme Court sent it back to the lower court on a unanimous opinion written by Justice Carol Hunstein.

“When property is held not by the State itself, but instead by an instrumentality such as a hospital authority, whether it is ‘public property’ depends on whether the instrumentality ‘holds title only for the benefit of the State and the public,’” Hunstein’s opinion stated. “... Consequently, the bond validation proceedings did not conclusively establish whether the leasehold interest of the Hospital Authority is ‘public property’ for tax purposes, and the superior court below should have drawn its own conclusions about taxability.”

This story was originally published October 17, 2017 at 2:51 PM with the headline "Supreme Court ruling keeps Spring Harbor legal battle over property taxes alive."