Is Columbus’ Spring Harbor exempt from property taxes? Judge rules again in case
A Muscogee Superior Court judge has ruled again that Columbus’ Spring Harbor retirement development off River Road is public property exempt from ad valorem taxes.
It’s a victory for the Medical Center Hospital Authority that developed the 40-acre complex on land owned by Columbus Regional Healthcare System Inc., but Judge Arthur Smith III has ruled in the authority’s favor before, and his decision was appealed.
Columbus attorney Robert Lomax, who represents the Board of Tax Assessors that maintains Spring Harbor is subject to taxation, said no decision on an appeal has been made yet. He declined further comment.
“We agree with the ruling,” said attorney Andrew Rothschild, who represents the hospital authority. He also declined to comment further.
13 years in court
The issue has been in litigation for more than a decade, having been appealed to the Georgia Supreme Court, and sent back. Smith’s first ruling that Spring Harbor deserves its tax exemption has not been rejected, but the Supreme Court in 2017 sent it back for additional findings.
The lawsuit was filed in 2007, when the hospital authority sought a tax board declaration that Spring Harbor was entitled to the exemption under Georgia law.
In 2012, both litigants asked Smith to issue a summary judgment, meaning neither felt a jury trial was warranted as crucial facts were undisputed.
In April 2015, Smith decided the hospital authority’s “property interest in the facilities and improvements constituting Spring Harbor qualifies as public property, and therefore, it is exempt from ad valorem property taxation.”
Spring Harbor opened in 2005. As the landowner, Columbus Regional Healthcare System signed a long-term lease with the public hospital authority to build and operate the complex.
To finance the project, the authority in 2004 issued bonds to borrow $74.66 million for construction. The loan was revised and the lease extended in 2007. Each time the bond issues were validated legally by orders from Muscogee Superior Court.
The Hospital Authority’s June 2004 lease with Columbus Regional was for 40 years, allowing the authority to “construct, own, and operate” Spring Harbor. The lease in 2007 was extended to 60 years.
The appeals
The Board of Tax Assessors appealed Smith’s 2015 ruling to the Georgia Court of Appeals, which in 2016 affirmed Smith’s decision, based on language in the Superior Court bond validation orders.
The board appealed to the Georgia Supreme Court, arguing the lower courts erred in finding the bond validation orders alone conclusively determined Spring Harbor is “public property.”
In the Supreme Court’s unanimous 2017 ruling sending the case back to Smith, Justice Carol Hunstein wrote:
“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…. 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.”
In his latest ruling, Smith wrote that the Supreme Court said the central question is whether the hospital authority’s interest in Spring Harbor is for “public purposes,” advancing the government authority’s legitimate functions, and not for “private gain or income.”
Smith said Spring Harbor “meets a critical healthcare need” in the Columbus area, offering 196 independent living units, a health center with 28 assisted living units, 30 dementia units and 40 private skilled nursing beds. The residents’ average age is over 75, he wrote.
Citing the court precedents Hospital Authority of Albany v. Stewart in 1970 and Sigman v. Brunswick Port Authority in 1958, Smith wrote: “Both a port authority and a hospital authority are statutorily created ‘government entities’ and, therefore, hold property as ‘public property’ exempt from taxation.” That exemption holds “so long as the property itself and its income, if any, advances or furthers the purposes of the public or governmental entity,” he said.
Spring Harbor, as the Superior Court “established incontestably” by validating the bond issues, addresses “a public need of an identifiable class of citizens,” and is a “public project addressing a real community need,” Smith wrote, noting the authority’s financial statements count Spring Harbor’s income or losses as those of the authority, which treats Spring Harbor as an “operating segment.”
This story was originally published November 11, 2020 at 9:51 AM.