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County Could Get Zero from HCA Sale This Year

By Leslee Kulba- Not long ago, the Buncombe County Commissioners only held brief, bimonthly public meetings, with commissioners serving as liaisons to committees here and there.

But over the last two years, special committees of commissioners have been forming, and the number of worksessions has been multiplying. In addition, the 15-minute housekeeping meeting held prior to the formal public meeting has transitioned into a two-hour wash-and-rinse cycle for upcoming agenda issues.

Given the work schedules of the rank-and-file, this could be viewed as a step backward in transparency.

Actually, it replaced the nonpublic meetings the former county manager now under federal investigation was holding with three commissioners at a time to work around open meetings laws.

While this doesn’t have the appearance of participatory democracy, since public comment is only welcome at the polished formal meetings; representative democracy is still the best form of government for a jurisdiction the size of Buncombe. Given the scope of government and the time commitments of the new schedule, it is good we elect representatives to perform due diligence and that those now serving are so dedicated.

One topic at the April 2 pre-session was the latest estimate of the impact of the sale of the tax-exempt Mission Health to for-profit HCA. Tax Assessor Keith Miller said staff had first come up with a working assessment of $940 million, but that has now been weakened to $647 million.

Miller gave an overview of some of the variables. The county had assumed a sales price of $1.6 billion, but the actual sales price was only $1.5 billion. Subtracted from the $1.5 million were the hospital’s nontaxed business assets, its assets outside Buncombe County, and its personal property. According to statutorily-defined schedules, the county may only collect real, not personal, property taxes this coming fiscal year. Miller added that spreadsheets supplied by the hospital itemized over 100,000 “rows” of personal property, and the county has contracted with Tax Management Associates to put a value on all that.

Miller said staff had to assess 70 real estate properties. For satellite buildings like medical offices and warehouses, assessors could look at comparable commercial properties. Assessing the main hospital was more complex. Mission had never been assessed, and there were no comparables. Hospitals vary in so many ways, not the least of which are organizational structure and size, so a cost analysis would be required.

Assessors had looked at schedules for-per-square-foot values for hospitals and estimated Mission’s quality, condition, and depreciation for the first estimate. HCA had since been able to provide blueprints for square-footage calculations and engineering reports on maintenance needs. Other considerations included the tower, which remains under construction and had an estimated value of $230 million as-is at the time of sale; and three floors of St. Joseph’s hospital, which will not be utilized. Once the tower is complete and the personal property assessed, HCA’s Buncombe County assets are expected to have a $1.17 billion valuation.

Miller said county staff’s assessment was inline with that of HCA’s appraiser, raising the proverbial eyebrow of Commissioner Al Whitesides and Chair Brownie Newman. Miller smiled and said, “I get what you’re saying.” He explained the county tax office wouldn’t have gone along with HCA’s assessment if it didn’t “make sense,” and it had been inline with in-house estimates. Furthermore, it was aligned with the values on deed stamps from Mission’s sales in other counties and the allocation ratios for those counties. This was not to say HCA’s appraisal was accurate; the county sent them a list of omissions just last week. Nonetheless, HCA was now negotiating with its own contractor to get the assessment lower. That said, hiring an independent party to appraise the hospital could cost $150,000, which Newman said could be justified by millions in returns.

Then, County Manager Avril Pinder asked Miller to tell the commissioners about the appeal. Miller confirmed that HCA was formally appealing the $647 million, so Finance Director Jennifer Barnett was using a $500 million estimate for budgeting. The county is trying to settle with HCA, but appeals can take a long time. HCA has the same chain of recourse any citizen would access should they dispute an assessment.

If discussions with county staff don’t go well, HCA can go to the local Board of Equalization and Review, and, from there, stand trial at the state’s Property Tax Commission, where Miller said some cases in which he has been involved have sat for three years. If HCA doesn’t like the outcome of that review, they can take the case to the state’s Court of Appeals and upward. While it was apparent HCA wouldn’t have to pay anything while the matter was under appeal, Miller said appellants typically pay what they think they owe so they can collect interest on the difference instead of paying it.

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