Houlton solves tax quandary Town, hospital share split decision regarding exempt properties

HOULTON – A recent decision by the town concerning a request from Houlton Regional Hospital that some of its properties be considered tax-exempt has resulted in both sides getting some of what they wanted.

Last June, the hospital asked that four properties – three on site and one off site – be listed as tax-exempt because, according to hospital officials, they met the state standards for benevolent and charitable organizations. The request covered hospital property valued at more than $2.9 million.

The request was denied last year because it was made after the April 1 deadline.

Based on a preliminary estimated tax rate of $26 per $1,000 of property valuation, if all of the property covered by the hospital’s request had been deemed tax-exempt, it would have meant a tax loss to the town of $75,524.

In a letter dated May 1 to acting Town Manager Cathy O’Leary, Assessor Laureen Bither said she decided that some of the hospital’s claims were valid but she questioned others, noting that, “I am not convinced they meet the qualifications for exemption.”

The units approved by Bither for exempt status are the Company Doc building on Hartford Street, which houses the hospital’s Industrial Medicine Department; various sections of Medical Office Building III that house such facilities as cardiac rehabilitation, the education center, the public relations department and hospital clinics; and parts of the Tri-County Medical Office Building that contain the HRH Auxiliary gift shop and the Houlton Regional Health Services Foundation.

Those properties have an assessed value of $1,473,700, which at the 26-mill rate used by Bither will mean a tax loss to the town of $38,316.

Hospital units that Bither felt did not meet the exemption standards were two suites in the Northland Medical Office Condominium leased to private physicians, suites in Medical Office Building III occupied by hospital-based physicians’ and three suites in the Tri-County Medical Office Condominium occupied by hospital-based doctors or leased to private physicians.

Those units have an assessed value of $1,431,100, which at the 26-mill rate mean the town will hold on to $37,208 in assessed taxes to the hospital.

“The net result is about 50-50, with the town retaining approximately half the valuation in question and the hospital obtaining exempt status on approximately half the valuation,” Bither wrote in her May 1 letter.

The hospital has the right to provide additional information to Bither to make its case further for exemption of some or all of the properties Bither did not consider exempt, or it may appeal to the town’s board of assessment review.

Thomas Moakler, the hospital’s chief executive officer, said Friday he would suggest to the hospital’s board of directors when it meets next week that it accept Bither’s decision.

“That will be my recommendation, though [Bither’s] decision will have to be reviewed by the hospital’s board,” He said. “It will be up to them.”

“The areas we got exemptions on were hospital departments, just like radiology and the lab,” he continued. “We felt we were entitled to that.”

As for the other properties that are rented or leased to physicians, “I think her decision was proper,” Moakler said.

With about half of the hospital properties in question now listed as exempt, Bither has estimated that the mill rate for the 2001 municipal budget will increase by about one-quarter mill, or 25 cents per $1,000 of property valuation.

In January, the Town Council took $243,000 from the town’s undesignated fund balance and made additional cuts in the 2001 budget in order to reduce the preliminary property tax rate from $27.50 to $26.50.

That figure is not final, however, and won’t be until all of Bither’s valuations for the town are completed and town officials learn the assessments from SAD 29 and the county.

“Once we get all the other figures in, we’ll have to go through everything with the [council] chairman to determine the mill rate,” O’Leary said Friday.

An estimated 20 percent of the property in the town already is tax-exempt, according to town officials. With a combined valuation of $42.5 million and at the 2001 preliminary tax rate of 26.5 mills, they would be worth more than $1 million in revenue to the town.